Streaming Only Accounts for 21% of Recorded Music Revenue…

It’s growing fast, but why isn’t it higher?




Data compiled by Statista, using RIAA figures.

23 Responses

  1. Alex

    How does this compare to the growth in digital downloads say 10 years ago? All new formats take time to grow. Some sort of perspective would be useful.

    • TuneHunter

      There is no perspective or hope. We are are on the bullet train to less than $14B music industry in 2014!

      BBC started subscriptions in 1927, ads around free about the same time – they never been primary source of income for recorded industry or musicians. Same goes for Spoofy, Tube or Pandora, the power houses of ads and subs. The limit of global income is for both methods is at 30 to 40 billion dollars by 2025. At that point we will erase 100 billion dollars of music as a merchandise (obvious to an idiot) and 30 out 43 billion dollars in global Radio revenues.

  2. GGG

    Why isn’t it higher? Because Spotify can’t market for shit and 90% of the articles about streaming are how much payouts suck.

    • Mike C.

      Good point #2. Many people believe 21% is too high, want to go back to selling CDs and downloads.

      As for marketing, tho, the reason Spotify isn’t profitable on $600M+ of revenue is their marketing expenses. Every dollar that isn’t spent on royalty payouts goes to marketing (well, there’s also engineering i spp’se, but it’s mostly marketing).

      • GGG

        Where do they market? I live in NYC and in the last few years the only legit campaign I’ve seen for them are those ads for people using Spotify/music to communicate emotional moments over FB chat. That started recently online, I think I see it on Hulu. I honestly don’t remember any other legit campaign besides the initial invite-only thing, though.

        • Mike C.

          So do I, and true, it’s not like see Spotify everywhere in nyc. I couldn’t tell you how far a few hundred mil goes in marketing these days. So, maybe ur right, they can’t market for sh*t.

          Then again, it’s a big world. Maybe they arent concentrating on new york.

  3. TuneHunter

    …and what are the revenues? They are afraid to verbalize the number!

    RIAA and labels with total and blind excitement with Spotify, Pandora and Vevo slave inside YT pirate empire are in suicidal mode.

    Drastic disruption required to prevent zombies to go over the cliff!

  4. Anonymous

    I love how the the exact same story is running on Hypebot without the “only” in the headline.

  5. Jordan Owens

    Because any of my family over the age of 35 have MASSIVE collections of traditional media used to listen to music. I would assume that a lot of people are like this, and thus they still only buy CDs occasionally and listen to a lot of traditional radio.

    I dunno, maybe I’m stupid for thinking that this is semi-logical, but that is just my opinion of course. Feel free to tell me I’m wrong.

    Jordan Owens
    Sour Mash Recording Industries, LLC
    @jordanowens45 @smrimusic

  6. Faza (TCM)

    Why isn’t it higher? Several things of the top of my head:
    1. Per-subscriber revenue is capped at a very moderate level and independent of usage,
    1a. There is a fairly small population of high-value music listeners (who might even consider paying this not-very-significant amount for unlimited listening),
    2. Most people are casual music listeners – at best – and consider streaming to be too expensive,
    2a. Lowering the per-subscirber unlimited listening price might get a few more low-usage people on board, but will also cut the revenue from power-users (who are likely already well below their reserve expenditures),
    3. Getting more users on board – even if for free – is much better for your company’s valuation than milking every customer you have for what they’re worth and actually making a profit,
    3a. Nobody in any streaming company gives a flying burrito about music industry revenues and will continue to not do so until they suddenly realise that nobody’s giving them licences anymore,
    3b. In its desperation, the music industry has jumped on streaming as a way of rebuilding their declining revenues in a world where nobody seems particularly keen on seriously curbing piracy, despite all evidence that the cure is nearly as bad as the disease.

  7. johnc

    Most people do not really listen to Music anymore, and are happy with listening to “something” in their smartphone, or Radio or whatever they use. There is so much else to do…….and you cannot listen to music in a concentrated manner while you are playing games or watching tv.

  8. Willis

    Stats are funny. 21% of a diminishing overall annual number? I’d rather have 14% of an increasing, larger annual revenue.

  9. Cynical

    I disagree with Faza above. Not the whole story, but a major part of it:

    a) Free streams don’t support high enough royalties to make the dollars higher. Artists lose out, the public gets the idea that streaming music isn’t valuable enough to pay real subscription fees for, and services like Pandora plead for even lower royalties.

    b) Streaming services that users would pay for require interactivity, and the DMCA (bought and paid for by the major labels in the mid-90s) all but prohibits that under the guise of creating a statutory license for dumb webcasts only. Streaming services that subscribers would love and happily pay for are all impossible to start unless you have the wherewithal to chase down licenses from some 4,000 label members of the RIAA — IF anyone will deign to take a meeting with anyone who’s not already one of their own.

    If there were interactive licenses available for reasonable rates, and service providers would start off by trying to serve underserved fans of musical niches (and there are lots of those with highly vociferous fans), you’d see profitable business models develop that would serve the audience, the artists, and the copyright holders.

    • Faza (TCM)

      I’m finding it hard to follow what you’re saying here.

      Ad a) I’ll be the first one to say that free streaming tiers are the scourge of the model as is, but I can also see that – as far as streaming services go – they’re the main value driver. “Value” as in “valuation”. I can’t think of a single streaming service that is actually bothered about the bottom line… much. (Pandora may or may not qualify.) However, if you’re trying for a liquidity event (as Spotify, for example, seems to be), attracting more users by giving them free service certainly looks like a viable option. (I’ll gloss over the fact that there’s a circle of hell reserved for people who think like that.)

      Ad b) “[Interactive] streaming services are impossible to start” – do you have a time machine and can I get a ride? The services at issue here (Spotify, Deezer, Beats etc.) are interactive. They always have been. No, people aren’t particularly keen to pay for interactivity (or, rather, might be more keen if they couldn’t get it for free). It should also be pointed out that none of these services have had all that much trouble securing interactive licences – rights holders seem strangely keen to close streaming deals.

      I assume your issue is with “reasonable rates” and to that I say that the current rates are indeed unreasonable – they are too low (which is the crux of the problem). The industry going rate seems to be around 70% of revenue, all-in (labels and publishers). Given how creative streaming services have been with minimising their cost of delivery (witness Spotify’s use of peering to shift bandwidth costs onto their customers), one must ask what exactly are they taking 30% off the top for. Clearly, the only value they have on offer is that provided by the rights holders and they are busily undermining other revenue sources. Again, I will pass over the problems when it comes to splitting the royalties payable (if only because I’ve already written too much about it elsewhere).

      Niche services would only make sense if:
      a. This music was unavailable anywhere else,
      b. The users of these services would be monetised at much higher rates than existing streaming services do.

      Neither of these seems particularly probable, given that existing services already cover most of the long-tail, niche material, that a potential user can easily seek out and listen to for free.

      Streaming is, quite simply, a really crap business model, however you slice it. The sole reason for its existence is the production of valuable stock. Hopefully, that bubble has already burst.

  10. FarePlay

    The number isn’t higher because of the low conversion rate from free to paid subscribers. It’s a business breaking problem that can’t be solved by trying to find ways to compensate artists less.

    • hippydog

      well, if the money isnt there..

      After I read about the EVR shutdown, i automatically assumed that them blaming it on the “licensing” was just them whining..
      I started doing some simple calculations..
      As things scale up, a small to mid size web broadcaster would NOT being able to sell enough ads to make ends meet.

  11. TruthSeeker

    The lede question just seems incredibly silly.

    “Why isn’t it higher?” Really?

    Starting with the pure mathematical perspective: It’s not higher because the value of a number can not be higher than itself. Simply – 21% = 21%.

    But, as we can reasonably assume that what you meant to say is “Why hasn’t streaming generated a more significant portion of overall revenues?” the answer really is: “Because physical sales only dropped 12% and digital downloads only dropped 1% in the same previous-year period.” Again, streaming revenue is 21% of the total 100% of revenues. Simple.

    It is obvious that what you REALLY wanted to say is something along the lines of: “Why hasn’t streaming increased overall revenues, more.

    But seeing as streaming revenue increased an incredible 49% in one year, while physical and digital sales revenue fell by 12% and 1%, respectively, in the same period, that really seems like a ridiculous question. That is looking the proverbial gift horse right in the mouth.


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