One-third of 2015's music industry revenue is from streamers

Streaming services generated a third of all music revenue in first half of 2015

napster canada music streaming headphones — Sascha Kohlmann/Flickr

The music industry isn’t doing well, but revenue from streaming music is holding it back from a catastrophic slide. That’s the Cliff Notes of a new Recording Industry Association of America (RIAA) report released this week. It shows streaming still going strong, but just how that will affect the flailing industry as a whole remains to be seen.

Music streamers like Spotify, Pandora, and YouTube contributed 33 percent of total recorded music revenues in the first half of 2015, according to the report. That increase has kept music-industry revenues, which decreased just 0.5 percent year-over-year to $3.166 billion, from significantly declining, even as CD sales are in free-fall and digital downloads continue to slip.

Permanent digital downloads, which include song and album sales from iTunes, Amazon, and other music stores, still accounted for the largest proportion (40 percent) of the first-half of this year’s recorded music revenues. That said, as streaming rises, download sales are inevitably decreasing, down 4 percent year-over-year.

Nearly half of every streaming dollar tallied in the U.S. thus far ($478 million) comes from the 8.1 million paid subscriptions to services like Spotify Premium, while royalties from services like Pandora and SiriusXM made up the bulk ($387 million) of the rest of this revenue. The much-maligned “freemium” streaming services, which rely solely on ads to bring in the bucks contributed just $163 million, or 16 percent of total streaming revenues. Notably, Apple Music wasn’t a part of the conversation as the newly-spawned streamer launched on the last day (June 30) of 2015’s first half with a three-month free trial.

And while physical formats like CDs and records are no longer the leading format, they still accounted for 24 percent (or $691 million) of revenues during this period. CDs brought in about two-thirds of that cash, while the vinyl revival brought in another $221 million, or 30 percent of that cash. Vinyl sales continue to skyrocket, jumping an impressive 52.1 percent over last year alone.

Taking a bird’s-eye view of the trends for the coming year, RIAA chairman Cary Sherman was still lukewarm on streaming revenue, despite the format’s rise to power.

In a statement, Sherman said streaming music’s continued growth shows that music remains in high demand, but streamers need to consider whether the rates they pay artists are equitable. “ … Intense demand and billions of streams does not always equal fair-market rates or a fair playing field,” he said. “Addressing that is an essential element of fulfilling the enormous promise of today’s digital marketplace.”

We’ve heard that broken record for some time now. However, while it’s clear that streaming isn’t going anywhere, just if, when, and how it will become a viable format for the throngs of artists making pennies on the dollar in the new music landscape remains to be seen.

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