Say what you want about music streaming services, turns out indie music labels aren’t complaining.
The adoption and subsequent growth in revenue generated from music streaming is nothing short of staggering. Spotify has 24 million active users and 6 million paying users. And with music streaming services like Rdio, iHeartRadio, Pandora, Music Unlimited, and Rhapsody, there are globally as many as 20 million users who are reportedly paying – a 44 percent bump in 2012 – according to the IFPI’s Digital Music report 2013.
In fact the market penetration of music streaming is considerably high. 62 percent of Internet users have used a digital music service before, and 81 percent of users between the ages of 16 and 24 used a digital music service in 2012.
So how does this contribute to lining the pockets of the music labels on board with streaming services?
The revenue generated from digital revenues jumped 9 percent to $5.6 billion in 2012, with as much as 10 percent of digital revenue the same year made up of subscription streaming services. More importantly, 92.11 percent of respondents (based on a survey of 20,000 music labels conducted by music rights agency Merlin) reported streaming and subscription revenue bumps between 2011 and 2012. To break things down a little more, 33.33 percent of respondents saw an increase of over 100 percent, while just 7.02 percent’s streaming revenue remained unchanged, and only 0.88 percent of respondents saw a decrease in streaming revenue.
All of this, including download revenue, which 63.87 percent of respondents reported increased, 73.04 percent of respondents saw an increase in total business revenue. All-in-all, the report suggests that changes in the music consumption habits are benefiting labels.
Digital music has gotten rid or decreased physical costs like vinyl, cassettes, and CDs. Now with digital distribution and digitized music, those costs have been counterbalanced. The Merlin report notes that now music fans have far more avenues to discover new music. They’re not just limited to visiting the local music shop, or opening up a Billboard magazine, so overall we’re consuming more music and becoming interested in more acts and artists we’re willing to pay money for.
“Freedom of choice created by limitless ‘shelf’ space and a proliferation of social media taste maker filters is leading fans, no longer herded by the expensive, tightly controlled media channels and store fronts of physical retail, to discover and enjoy more music than ever.”
The report adds, “The nature new generation services have put a lot of the control back into the hands of the rights owners.”