If the trend continues, 2017 will be the third straight year of growth for the music industry. It’s still a far cry from the glory days of the 90’s when CD sales were booming. This new growth spurt can be attributed to streaming and to specific services like Spotify and Apple Music. According to the latest report from the RIAA, revenues from streaming music services accounted for 62% of the total market for the first half of 2017. Total revenues from streaming platforms were up 48% to $2.5 billion.
Cary Sherman, Chairman & CEO, RIAA said, “Today we report the state of the U.S. music business mid-way through 2017. Retail revenues for recorded music increased 17%, powered by 30 million music subscriptions and a talented array of artists and the professionals who support them. Our story continues to be one of great promise, but our footing is fragile, and a sustained, durable recovery is jeopardized by a fundamentally uneven playing field.”
Take a look at how much the business has changed. Two years ago, digital downloads was the largest format, and streaming was basically an infant. In 2017 things are dramatically different. 80% of revenue now comes from digital services.
Bloomberg reports that Spotify and Apple Music have converted millions of people who bought singles and listened for free into paying subscribers. More than 30 million people in the U.S. paid for a music subscription, more than triple the sum in 2015.
Despite the strong Streaming sales Sherman warned how fragile things were by pointing out what he calls the “value gap.” That would be the revenue generated from ad-supported streaming on platforms such as YouTube and Spotify. While sales from paid subscriptions increased by at least $650 million, total revenue from ad-supported streaming amounted to just a fraction of that gain. “We estimate that there may be a TRILLION streams in 2017, counting both on-demand services and digital radio (some 460 billion in first half of the year). Wrap your head around that staggering number. It is encouraging but also speaks to the foundational challenge that continues to confront the music community. To the fan, there is often little difference between the multitudes of services available, yet the payouts to creators are very different and vastly impacted by outdated or abused laws and regulations. And that’s why a united music community continues to be incredibly animated about music’s “value gap” and calls upon policymakers — and our business partners — across the globe to do better and address these inequities.”
Read the full RIAA report HERE