Streaming Revenues Overtake Music Downloads for the First Time Ever

Overall Recording Industry Sales Grow for First Time Since 2011

RIAA logoThe Recording Industry Association of America (RIAA) reported overall industry sales data for  2015 this week, revealing that for the first time in history streaming music was the single largest component of industry sales. Revenues from streaming sources accounted for 34.3% of total revenues, beating out music downloads from services like iTunes and others which accounted for 34% of total revenues.

Overall sales increased 0.9% to $7 billion, the first overall industry growth since 2011.

See more on the growth of streaming in music industry sales…

Streaming services of all types, whether paid subscriptions, internet radio, other non-subscription services (YouTube Vevo), and advertising-supported non-paid subscription services all saw increases in 2015. In fact, streaming revenues grew a combined 29% to $2.4 billion (first time over $2 billion) – to offset declines in download and physical media revenues and drive the overall industry to growth.

The RIAA noted that paid subscription streaming services grew the most, swelling 52% to $1.2 billion, perhaps due to the roll-out of Apple Music, Tidal and other newer services. The number of paid subscriptions grew 40% to an average of 10.8 million subscribers from 7.7 million in 2014.

Physical Media is Down, But Vinyl Continues to Grow

Physical media saw revenues drop from over $2.1 billion last year to $1.9 billion this year. Hardest hit was CDs which dropped 13.9% in units and 17% in value.

Recording Industry Sales

This pie chart shows the breakdown of the music industry revenues by category. For the first time ever, streaming was the largest component at 34.3%, overtaking digital downloads and physical media.

Vinyl LPs continue to experience impressive growth, with revenues increasing 32.2% to $416.2 million. While still a relatively small part of the overall business, vinyl revenues have been regularly growing for the last ten years.

Streaming Stokes Music Industry Controversy

The news of this relatively dramatic shift to the dominance of streaming music revenues is likely to stoke industry controversy over the issue of low royalties from ad-supported free streaming. A report by Bloomberg Business noted that the RIAA is pushing the services offering free streaming to convert more listeners into becoming paid subscribers.

“We, and so many of our music community brethren, feel that some technology giants have been enriching themselves at the expense of the people who actually create the music,” Cary Sherman, chairman and chief executive officer of the RIAA, wrote in a blog post, as quoted by Bloomberg. “We call this the ‘value grab’ — because some companies take advantage of outdated, market-distorting government rules and regulations to either pay below fair-market rates, or avoid paying for that music altogether.”

Chart showing streaming

This graph shows how each category of streaming has grown. Note that SoundExchange Distributions refers to internet radio and other non-subscription music streaming services.

Musicians Seek More Control

The 2015 data is surely being studied by musicians and record labels who are gearing up for another round of negotiations with service providers. Spotify, the largest service with 30 million subscribers, is scheduled to negotiate new contracts with each of the three largest record labels this year. As part of the negotiations, artists are asking for control over whether their music is made available for free.

Last year, Taylor Swift, one of the most popular female entertainers of the day, pulled her latest album from the free streaming services and only allowed it to be run in full via paid subscriptions. The album was a huge hit. Other artists are looking for this same ability as a way to lift their royalties.

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