On-Demand Streaming Subscriptions Account for 3% of Music Spending…

Add them all up – Spotify, Beats Music, Deezer, Rdio, Rhapsody, Xbox Music, Sony Music Unlimited – and this is what you get.  Paid, on-demand subscription services account for just 3% of overall music spending.

109breakdown2014

30 Responses

      • FarePlay

        Here’s the number that really matters: 3%. 3% of an industry that has lost over 20% of recorded music sales over the past two years. The fact that they’ve been reporting a 54% increase in streamed songs is meaningless.

        Meaningless until you understand how much they’re contributing to the destruction of recorded music revenue that could be going to songwriters and musicians. Because clearly they don’t want to report from a revenue perspective.

        Leveling the playing field? It looks more like a sinkhole. 35% for live performances? Break that number out and it flatlines for superstar, expensive ticket, artists of which they’re a handful. I wonder if that number even reflects stub-hub and the other legalized ticket scalping services.

        As far as vinyl. I’ve seen numbers as high as 6%, which means this small niche comeback throws off as much money if not more than streaming music.

        Reply
      • Faza (TCM)

        One thing I’m missing here is a time scale. Do these figures apply to total spending per annum, monthly or what?

        (My guess is that the $109 figure is total annual spend, but if Nielsen specified the period, don’t leave us in the dark, please.)

        Reply
        • Paul Resnikoff
          Paul Resnikoff

          $109 average per-user spend per year, in 2014. Or, to quote Nielsen directly:

          “On average, consumers spend $109 annually on music activity.”

          Reply
          • Name2

            including live concerts and festivals.

            Figures don’t lie, but liars figure.

  1. Anonymous

    yo, how about a more exhaustive break down??

    by age, by genre, by major, by indy, etc. etc.

    help get a bit better understanding of what the numbers mean to each person in that, in your and many of your readers industry… not my industry, i have nothing to do with it, but just as a suggestion for your readers not including me…

    im just observing to see who to add to the list…

    Reply
      • John Matarazzo

        Yo!! I’ll tell you what’s exhaustive here…the streaming business model.
        It’s a catastrophe for the music business.

        Reply
  2. Shant

    No matter how people listen to music, you cant beat a good old, high quality Vinyl or CD. People minds seems to be more compressed these days with online streaming business .

    Reply
  3. Derp

    This is a bit misleading, since online streaming services make ad revenue. People may not be spending it there much, but there is money being made nonetheless.

    Reply
    • Paul Resnikoff
      Paul Resnikoff

      Good point. ‘Wallet spend’ is what consumers are paying for directly. There are of course other revenue generators: advertising, performance royalty payments, etc.

      Reply
  4. ryry

    What kind of conclusion are we supposed to draw from this chart? I guess we are should think that 3% is very low and therefore the streaming subscription does not work. But applying that same logic to other income sources, same would true for Vinyls, Cassettes or DJ Events.

    It also poses the questions at what percentage a working model starts? Is 7% enough? Or are festivals and gift cards also “not working”?

    Another way to read this chart ist that streaming subscriptions account for around 9% of the recorded music spendings. Still one has to remember that this in about average spend per person. Unless you know how many persons have a premium subscription for streaming and how many buy downloads or CDs, the current percentage sais nothing about the potential income of a certain source or where it is in its product life cycle. That reach together with a year-on-year change would provide a better picture.

    Reply
  5. ryry

    What kind of conclusion are we supposed to draw from this chart? I guess we are should think that 3% is very low and therefore the streaming subscription does not work. But applying that same logic to other income sources, same would true for Vinyls, Cassettes or DJ Events.

    It also poses the questions at what percentage a working model starts? Is 7% enough? Or are festivals and gift cards also “not working”?

    Another way to read this chart ist that streaming subscriptions account for around 9% of the recorded music spendings. Still one has to remember that this in about average spend per person. Unless you know how many persons have a premium subscription for streaming and how many buy downloads or CDs, the current percentage sais nothing about the potential income of a certain source or where it is in its product life cycle. That reach together with a year-on-year change would provide a better picture.

    Reply
  6. Remi Swierczek

    The situation is tragic if Pandora & iHeart Radio is part of that 3%.

    Reply
    • Paul Resnikoff
      Paul Resnikoff

      Streaming radio (non-satellite) is almost entirely ad-supported. It’s revenue contributions are likely very low, but not identified in this study. Paid streaming radio is probably rounding error.

      Reply
  7. johnc

    I get the Impression when travelling by bus, subway, etc. that many people do not listen to music, they just tap a song on Spotify or other streaming apps, and move on to the next. This is not what listening to music is about, evoking emotions and getting involved with the sonic experience. MP3 sucks, and a whole generation of teenagers are messing up their hearing ability and have no taset whatsoever fro good sound. Listening to music needs an aural surrounding, earplugs only provide an artificial acoustical experience. Back to the roots: —> buy music and listen with concentration to it, then you can enjoy it. It used to be this way.

    Reply
  8. John

    Reputable news sources report the news without negative or positive implications. If Digital Music News is ever going to be taken seriously they have got to stop putting “…” at the end of every title about Spotify and saying things like “Paid, on-demand subscription services account for just 3% of overall music spending”.

    Reply
    • Paul Resnikoff
      Paul Resnikoff

      New York Times caption: “A poor young boy, suffering in a newly-impoverished farming household, survives on just a single potato for dinner”…

      I made that up. But do you think it’s biased? I’d say more accurately descriptive.

      Reply
  9. Hippydog

    and how much does terrestrial radio pay?
    right.. thought so..

    and how much does torrenting pay?
    zero..

    Reply
  10. Anon

    This is only what consumers/individuals spend, but rights owners receive a lot of money from other users of music (satellite radio, internet radio, airlines, etc). Also, as Derp says, there’s a lot of advertising revenue being made, too.

    Reply
  11. Anonymous

    This chart is very misleading. It seems to be based on what people are spending. Not what is actually getting funneled back into the music industry. For example, satellite radio revenue is being included in it’s own category instead of just the royalties SirusXM actually pays. Only a sliver of that money is actually going to the music industry.

    The 3% slice of the pie being spent on on-demand music is likely to be bringing in more money for the music industry than the 9% for SiriusXM. SiriusXM only pays 13.9% of their subscription price while most on-demand streamers pay 70%.

    Reply
  12. Roger Bixley

    On streaming services, what we don’t pay for in actual money we pay for in time. Time spent listening to and viewing ads, which pay the royalties (small as they may be) to artists and labels. Because that is not factored into this chart, it’s pretty misleading.

    Reply
  13. YouDontKnowMe

    Looks like a healthy data to me: about one third of all the money is spent for live concerts. This is what music was about for centuries – live performances. So things are returning back to normal.

    Reply

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