Research Confirms That Streaming Kills Download Sales…

May 10th, 2013:

“We have data that’s proving and demonstrating the fact that streaming revenue is additional to actual unit download consumption or physical music sales…”

Katie Schlosser, Spotify Account Manager of Label Relations, speaking at NARM.

September 12th, 2014:

“Streaming consumers are buying few albums.  30 percent of consumers are music streamers and a fifth of these consumers pay to stream.  Streaming has driven new market growth in countries such as Sweden but in larger markets such as the US it is denting digital music buying.

 

“The first wave of subscribers was harvested directly from the most valuable download buyers, denting download sales in the process. 23% of music streamers used to buy more than one album a month but no longer do so. Download sales are affected most and will continue to feel the pinch with 45% of all music downloaders also music streamers.

 

“Thus, although streaming and subscriptions will grow by 238% on 2013 levels to reach $8 billion in 2019, download revenue will decline by 39% – only five percent less than the rate at which CD revenues will fall – leaving streaming and subscriptions representing 70% of all digital revenue.”

Mark Mulligan, MiDiA Research

‘The Streaming Effect: Assessing The Impact Of Streaming Music Behaviour’.

 

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46 Responses

  1. TuneHunter

    Streaming and ads around free are not SUITABLE GROUND fro new music house!

    Labels have been pulled into the SWAMPLAND ground leading to oblivion of music industry.

    There’s no happiness for labels or musicians and there is no future for over glorified music NERDS.
    YouTube the child of the KING of THE WEB being the NERD ONE!

    We are in process of contraction of $100B of music goodwill and $43B of actual global Radio revenues to just $35B of ASHES in 2025!

    Reply
    • sitewontletmelogin

      How to fix the music biz

      1.) Stop asking the venues to pay when music plays. Start asking the people who are playing the music in public to pay.. Small distinction I know.. but important.

      2.) Expand the powers of the PROS (Performance Rights Organization), & the Collectives.. Basically, for anything broadcast (Venue, TV, Radio, Streaming, Websites, podcasts, yada yada).. ANYTHING.. It goes thru the PRO’s … The PRO’s then pay the artist/label..

      3.) How do they track who should get paid? ANYONE who wants a license (one off licence for a specific song, or a blanket yearly licence, it doesn’t matter)… Must provide a list of what was played and for how many people, and then pay on the agreed amount (depending on the circumstances)

      Reply
      • Insider

        sitewontletmelogin, instead of re-posting this strategy multiple times, you might want to dust off your Business 101 thinking cap and consider whether any of these proposals would actually work to slow the crumbling of music revenues. Put another way: the good thing about these proposals is that they’re all doable; the bad thing is that there are good reasons why none of them have been done.

        Reply
  2. Willis

    Sure, whatever…blame streaming, but while you are at it, blame piracy, the production of crappy music and shoddy artists, also.

    Reply
    • TuneHunter

      We’ve the most fertile times, with thousands of super talents victimized by priority to GROOM few heavy duty live gladiators – you don’t know how to sell music you got to sell tickets.

      Piracy? …not big deal, just force all music and lyric ID guys to sell-only mode and 70% will be gone!

      THINK how much music can be sold if you burn on daily basis BIG question mark in 2 billion brains of freeloaders pampered by SERVANTS like Shazam.

      Reply
      • sitewontletmelogin

        How to fix the music biz

        1.) Stop asking the venues to pay when music plays. Start asking the people who are playing the music in public to pay.. Small distinction I know.. but important.

        2.) Expand the powers of the PROS (Performance Rights Organization), & the Collectives.. Basically, for anything broadcast (Venue, TV, Radio, Streaming, Websites, podcasts, yada yada).. ANYTHING.. It goes thru the PRO’s … The PRO’s then pay the artist/label..

        3.) How do they track who should get paid? ANYONE who wants a license (one off licence for a specific song, or a blanket yearly licence, it doesn’t matter)… Must provide a list of what was played and for how many people, and then pay on the agreed amount (depending on the circumstances)

        Reply
    • smg77

      DMN has decided to stake out an anti-streaming position but the future of digital music is streaming so what are they going to write about? Ari and Nina are trying really hard to make something of this site but all the anti-streaming propaganda is killing it.

      Reply
      • Jeri Mandering

        I don’t know about Nina but Ari is responsible for most of the unprofessional drivel around here now a days. I don’t know why he was hired.

        Reply
        • GGG

          Say what you will about Ari’s articles, there’s more “research” by way of experience in one of is than there is in 10 of Paul’s.

          Reply
  3. Fareplay

    Research confirms that JW is counting. DMN > Spotify. Paul’s version of whack-a-mole.

    Reply
  4. JTVDigital

    Sorry Paul but these 2 graphs do not show anything.
    Display the yearly volume evolution in terms of revenue from downloads vs. streaming in the same graph, then we’ll see.
    This data is probably available publicly, check in the IFPI reports maybe.
    When I check my numbers, I still see Spotify at approx 10% of iTunes global revenues, and the Spotify trend is flat.

    Reply
    • TuneHunter

      There is no better way of delivery.
      We just have to monetize at the discovery moment.

      Reply
      • sitewontletmelogin

        How to fix the music biz

        1.) Stop asking the venues to pay when music plays. Start asking the people who are playing the music in public to pay.. Small distinction I know.. but important.

        2.) Expand the powers of the PROS (Performance Rights Organization), & the Collectives.. Basically, for anything broadcast (Venue, TV, Radio, Streaming, Websites, podcasts, yada yada).. ANYTHING.. It goes thru the PRO’s … The PRO’s then pay the artist/label..

        3.) How do they track who should get paid? ANYONE who wants a license (one off licence for a specific song, or a blanket yearly licence, it doesn’t matter)… Must provide a list of what was played and for how many people, and then pay on the agreed amount (depending on the circumstances)

        Reply
  5. yawn

    and downloads killed CDs, and CDs killed cassettes, and cassettes killed 8 tracks.

    boring. so what? things change. move with the consumer or get left behind

    Reply
  6. Anonymous

    I hope china is copying those algos
    Cause I want to use the first Chinese search engine.
    I know they will collect my info but hey they are far away.

    Reply
  7. Name2

    $1.29 for an MP3, even at 320kbps, is bad value for a serious music listener.
    A whole album, worse. Serious music listeners figured this out a long time ago.
    My guess is that it’s only done when something is too convenient or too otherwise unavailable to resist pulling the trigger.

    Casual music listeners will do what they will.

    And teens will continue to play console games and look at you funny.

    Reply
  8. JAIO

    why do we keep rehashing this subject? Music, as opposed to the recorded representation, is the property of the creator. In the same way that a live show cannot be owned by the attendee, neither can music be owned by the listener. What is the property in question; is it the music, or the “physical” device used to convey the music?

    What difference does it make the manner of delivery, when what matters is how it’s all monetized.

    What we’re really talking about, unless I miss the point, is disruptive technology: “A disruptive innovation is an innovation that helps create a new market and value network, and eventually disrupts an existing market and value network, displacing an earlier technology.” Anyone who’s ever gotten a degree in history knows well this storyline.

    The reality in my lifetime is that 99.75% of us who have made music have been unable to build sustainable careers from either recordings, or from going out and playing live, locally – and that is where most of us are – local.

    I book dozens of acts a year for local outdoor shows, festivals, and small room gigs. I do sound for over a hundred acts a year. I advise and consult on business related issues (the money and how to earn it). I live in a top 20 market area. What I see is the iceberg under the water – with the tip exposed for all of us to see. What I see is the 99.75% of us who only earn the equivalent of part time money.

    Do the math.

    Let’s say the average local gig pays $500 (on average across all gigs a band might play). 100 shows = $50,000. Most local bands don’t do 100 shows a year. Most do fewer than 50.

    Let’s say the average price out the door for a local band cd is $7.00 (factoring those given away, and those sold for full price of say $15.00). It’s been my experience that the average local band “sells” about 250 cds worth of material a year … that’s $1750 in revenue.

    Now I know bands that earn $5000 + per show and can move 3000-5000 units. I know bands that are full time. But this represents the minority – not the majority – and it’s been that way since I broke into the business professionally in the 70s.

    What we constantly rehash is pie in the sky for the average local player – the brass ring, the power ball lottery. The dream.

    We know tech changes. We know legislation lags. We know these things.

    Some of you guys are, I believe, professionally knowledgeable about the industry, and you see the real numbers. Some of you guys are poseurs without a clue. I see a lot of anger and resentment in some, and resignation in others. I’m betting the average age of those posting here is 40-ish.

    Here’s my advice. Figure out how to deal with prevailing technologies. For us old guys – our days are either gone or nearly gone. Our kids and grandkids (I’m in the 55-64 demo) are rewriting the way things are done. My grandkids don’t “own.” They have no interest in ownership. That seems to belong to those who are in the 35+ demos.

    I learn more from this site than any other I visit. Thanks to Paul and his team for keeping the “sex drugs and controversy” up front and prevalent, because as any good publisher knows – that’s what sells.

    See you guys at the bar.

    Reply
    • FarePlay

      Have you ever wondered as a third generation music pro, why you didn’t teach your kids the value of supporting a craft that clearly has importance to you? Not all kids believe music is simply for the taking, they understand the value of contributing.

      I’ve had this conversation with my son, who is 30 and he purchases music and I’ve encouraged that behavior by giving him music over the years as presents.

      Reply
  9. eric

    At some point, someone will recognize the fundamental role that supply and demand are playing, as well. There’s simply a lot more content, so there will obviously be a devaluation of competitive products (songs) vis a vis an era when there was less competition for ears/eyeballs/etc. It’d would be nice to see that context (basic economics) brought into the discussion when debating the ability of artists to earn a living off their compositions.

    Reply
    • FarePlay

      Your analysis leaves out 2 salient factors.

      1. The number of listening channels, legitimate and unauthorized, has exploded exponentially.

      2. The amount of desirable, sought after content has not increased dramatically, a problem compounded by the lack of curation and over-abundance of mediocre work.

      Reply
      • GGG

        Your number 1 is part of the “problem,” though, if you want to call it that, and agree with what he’s saying, i.e. there’s so many bands and so many places to hear them. While Top 40 is still reigning king in side by side comparisons, there’s probably the same amount or even more people who consume music elsewhere, it’s just split up between various other outlets.

        And 2, I’m not even sure how we could measure that, but I think it’s a bit of both, so I agree and disagree. The last 10-15 years has seen a growth in music blogs, the explosion of the US festival market (and growth overseas as well), growth of local promoters like Bowery Presents to account for live show popularity (in major markets, not necessarily Bumblefuck, America), etc, which obviously all point to things meeting demand for music consumption.

        While I certainly agree there’s far too many mediocre, or worse, bands out there, I think you still refuse to acknowledge that something can be sought after and not be a household name. You still operate with the mindset where if it’s not on radio, it’s not good enough. The internet completely shut that down. I come across bands all the time, usually metal or warped tour types, that have hundreds of thousands, sometimes even millions of Facebook likes, but I’ve never heard of them. Just because you or I don’t know who they are, or don’t like them, doesn’t mean they aren’t popular.

        Reply
      • JAIO

        The amount of desirable, sought after content has not increased dramatically, a problem compounded by the lack of curation and over-abundance of mediocre work.

        If you believe this, you’re not listening. In over 40 yrs of doing music (and I’m third generation), I’ve never heard as much great music being done as today. “Mediocrity” is a weak excuse for not exploring. IMO of course.

        Reply
  10. Stupify

    Please clarify that “on demand” streaming (i.e. Spotify) is killing download sales. Yes – it is the same product, only one if FREE and one cost $1.29. Hard to compete with free.

    On the other hand, a non-interactive radio service that truly fosters music discovery would feed download sales. However, the on demand services (i.e. Spotify) are stealing those physical and digital sales as well as the artists rev share since artists dont participate in the Spotify’s true gravy train.

    Reply
  11. Travis Tay

    As a recent college grad, I simply dont understand the point of “buying” a song when its free on Spotify! To me, its makes no sense and is not rational to throw money away. Sorry guys but at least I pay for Spotify. My friends laugh at me because almost all of them still get music for free from Grooveshark or even less reputable sites.

    Reply
  12. Name2

    People need to stop lying about Spotify.

    1) Spotify Mobile Free is restricted to “Shuffle Mode”. You can pick a specific artist, album, or playlist, but unless you upgrade to premium, it’s not a song-on-demand jukebox, but shuffle-only. (On Tablets, songs can be picked on demand. The “Shuffle Mode” restriction is dropped.)

    2) “High Quality” (320kbps) streaming is not available unless you go Premium.

    3) You get ads unless you go Premium.

    If people think Spotify Free is a “good enough” substitute for what MP3-retailers are peddling for $1.29 a pop, I am not sure the problem is Spotify.

    Reply
    • sateeb

      The artists and all connected with right down to the performers on the track should get a cut of the Advertising on Spotify. This will bring more to the musician and Record Co.s.

      Reply
  13. JAIO

    The problem is not Spotify. They are simply the conveyance mechanism. My children see no value in purchasing or owning either and they are 25-38. The older ones use Pandora, the younger ones Spotify, and all of them use YouTube and FM radio. If they want to “own” they buy a download, but that seems rare to my eyes.

    Reply
    • FarePlay

      Unfortunately, the problem goes deeper. Not only don’t the numbers work for artists, the numbers don’t work for Pandora and Spotify. They continue to complain about the high cost of content, when the reality is they are failing at getting people, your kids age, to pay for their service.

      I had lunch with a Copyright attorney today and he pointed out that if Pandora is forced to pay for pre-1972 compositions and the ruling stipulates that Pandora’s payments are retroactive they’re doomed. So you can talk all you want about what the kids want, but you may end up mixing the sound on the Titanic.

      Reply
      • JAIO

        the reality is they are failing at getting people, your kids age, to pay for their service.

        I believe that that’s exactly what I was suggesting 😉

        As a vet in the game, I see the 25-34 as a lost demographic when it comes to anything more than “the “experience.” I consult on several rooms and events. The rooms are all failing to draw the “experience” crowd of 25-34s. The events are huge with this age group. When it comes to recorded music, they all eschew “owning,” in favor of less permanent and more fluid types of discovery.

        Reply
        • FarePlay

          Actually, that wasn’t what you said at all. What you did say was your kids didn’t purchase physical product, not that they didn’t contribute in any way, i.e. Not paying to stream music either. Also, I find your playing the vet card annoying as if that gives your brilliant insights more heft in the conversation.

          Reply
  14. Jason

    I was thinking a good streaming service could use a pay system based on who I listen to. Say I pay the service $10 per month. The streaming service would take half that for themselves for providing the service, then the other 5 bucks would be distributed to the artists and/or labels based on who I listened to that month. If I only listened to one band that month, then that band gets the $5. If I listened to 2 artists equally that month, then each artist would get $2.50. And so on. Lets say on average a subscriber listens to songs from 20 different bands in a month. Then that’s $0.25 that bands are receiving from each listener every month which would seriously add up if the service had thousands of subscribers, or hundreds of thousands. And its way more than artists are making now from Spotify.

    Reply
  15. Manfred Sperl - Germany

    I buy all my records never copied a record myself from the Internet. I like to have all the informations
    the inlets give you. Must know who`s on the guitar or drums and so on. That is my imention in the
    future too.

    Reply
  16. Mr Zen

    What about other services including Amazon’s autorip? They only show iTunes which I never used because of its crappy DRM and relatively poor quality. I quite happily stump up for hi res downloads and elsewhere buy the Cd and get Autorip. Spotify is fine but I use it for convenience (when travelling) and for finding new artists which I often order as Spotify’s hi quality streaming ain’t all that great.

    Reply

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