Exclusive: Streaming Revenues Now Surpass $1 Billion Annually In the US…

That’s according to revenue statistics shared with Digital Music News by label trade group RIAA, and it includes everything from Spotify to Pandora to YouTube to Sirius XM Radio.  Anything that falls under ‘access’ instead of ‘ownership,’ ad-supported or subscription.  “Collectively, [access services] went from just 3 percent of total industry revenues in 2007 to 15 percent in 2012, totaling over $1 billion for the year,” an executive from the group shared.

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The more exact total, according to the RIAA count, is $1.033 billion.  On the subscription on-demand front, the group counted 3.4 million subscribers, averaged across the year.

Sounds great, but there’s only one problem with this picture: streaming revenues are still just a fraction of CD revenues, and CDs are tanking.  Which means the overall pie is also still shrinking (see below).  According to the RIAA, CDs raked $2.5 billion in 2012, though digital formats (including downloads) now account for nearly 60 percent of overall recorded industry revenues.

Unclear is whether upfront advances to companies like Spotify are being factored into this calculation.  The advances, often millions per label, are now becoming a business model unto itself for struggling major labels.  And, according to sources close to these transactions, very little of the advances or subsequent major label payouts make it back to artists.

And what about Pandora, which is currently begging Congress to lower its royalty obligations?  Well, there’s a reason why labels have little interest in softening these rates.  According to the RIAA, online radio and satellite formats now account for 44.7 percent of broader streaming revenues.  And that’s a lot of money.

 

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10 Responses

  1. Mr. Truthy
    Mr. Truthy

    Too bad a lot of this money goes into the SoundExchange black hole and doesnt get distributed to the right labels and artists.

    Reply
  2. Yves Villeneuve
    Yves Villeneuve

    If the average price of a CD, $12 in 2012, continues to drop by $1 per year, in two years retailers will begin making losses on this product with a wholesale price of $9.97 per copy. Not sure if retailers are willing to do that. In the past and present, major labels have had little interest in its retailers making a profit.

    Reply
    • Visitor
      Visitor

      I would look for them to end up halving their inventory. Stock only the top sellers. CDs take up a lot of floor space and produce relatively little revenue for retailers.

      Reply
  3. Anon
    Anon

    The pertinent sentences: Unclear is whether upfront advances to companies like Spotify are being factored into this calculation. The advances, often millions per label, are now becoming a business model unto itself for struggling major labels. And, according to sources close to these transactions, very little of the advances or subsequent major label payouts make it back to artists.

    It is true that major labels receive tens of millions of dollars in advances from interactive streaming companies, none of which is shared with artists. It is keeping them afloat is these tough times.

    Reply
    • Cloaked Visitor
      Cloaked Visitor

      This is 100% true. Plus, factor in RIAA, IFPI, and the labels’ litigation settlements ~ perhaps Escape Media Group (aka Grooveshark) one day soon.

      Anyway, IF this money comes in, none of it trickles down to the artists UNLESS they audit the labels and this “discrepancy” gets picked up.

      Reply
  4. Visitor
    Visitor

    “Streaming Revenues Now Surpass $1 Billion Annually In the US”

    Let’s not get confused…

    YouTube is indeed interesting: 1 billion clicking visitors/month shouldn’t be ignored.

    But I’m not sure why Spotify is relevant here…

    They don’t contribute to the math in any significant way, and they’re worthless from an artist’s point of view.

    Reply
  5. danwriter
    danwriter

    Maybe I’m reading this wrong but shouldn’t this read:

    “…upfront advances FROM companies like Spotify…”

    Reply

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