Still Think Streams Are Killing Downloads? Think Again

Spotify payments are ridiculously bad for artists, but are Spotify streams killing iTunes downloads?

That probably depends on the artist in question, and in many cases the answer is yes.  But on the aggregate, the early answer seems to be that both formats are rising – and paid downloads aren’t getting cannibalized one bit.

Here’s a look at US-based revenue data shared by the RIAA, specifically for the years 2004-2011.  Paid download revenues are on the top, subscription streaming revenues are on the bottom, and units are in millions of dollars.

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13 Responses

  1. Steven Corn (BFM Digital)

    I’ve done our own analysis here at BFM. I can’t find any evidence that streaming services affect download sales at all. Not only are these revenue sources additional revenue, I consider streaming services to be an essential component for discovery of new music.

  2. Yves Villeneuve

    We should take into consideration, download growth could be larger without the subscription model. The latter gives a price break to higher than average music consumers.

    • mr. know it all

      Why don’t you show us a graph to support your argument?

      You have no data and I doubt you have much in terms of personal music sales to show us anything to support your claim.

      • Yves Villeneuve

        I enjoy being called ‘mr. know it all’

        • Raren

          Your opinion is consistently the most useless on this website. Please stop.xp

          • Yves Villeneuve

            Everyone is entitled to their delusions, including you and I.

    • Food For Thought

      agreed.

      as the streaming services scale to the general population and people become accustomed to not owning their digital files (just as they once had to “learn” to get used to not owning a physical product) it is simple logic to understand that streaming will negatively affect download sales.

      however, that’s not entirely a bad thing. the artists and labels that release good music that people want to hear will make more (and more) money as more and more fans begin paying $xx per month for their subscription service of choice (or their YouTube or their Pandora).

      whereas once we master side creators lived off a single $15.98 or $9.99 transaction, this is simply the migration of music master economics to the songwriter composition economy – which is smaller per use payments that (for the good ones) pays in perpetuity. think this is bad? ask any songwriter that’s written a good song? i’ll bet he has a smile on his face.

      ultimately this transition will be healthy for all. good artists will receive ongoing compensation that may potentially surpass their old model and new artists or hobbyists will, as Stephen Corn says above, have the opportunity to be discovered.

  3. Matt

    Well its about a week since I’ve subscribed to one of those all you can listen to services and, unless I need to dj with the songs, I’m not sure I will every buy another mainstream album via download.

    With those services you are litterally walking through a music shop, arm out, and knocking all the albums into your cart.

    Try it out…you’ll like it.

    PS – and I still think every internet connection should pay a tax just like blank cassettes had a levy on them applied.

    • Same Boat

      I am alte arrival to streaming and agree with you in part. I think a large group of consumers will be diverted from purchasing and instead stream. However, I think the streaming experience will be less enjoyable once they realize they have to pump in more adds to keep it a free service

  4. Manuel Tessloff

    I have recently seen some research showing that the typical “Downloader” and the “Streamer” are basically two different consumer groups. There is only a comparably small sub-set of music listeners who do both. That might be an explanation that – at least for now – both formats grow.

    Cheers
    Manuel

  5. steveh

    Hang on a minute everone!

    These figures are MISLEADING. Because they do not factor in the steep decline in CD revenues.

    It’s very clear that people’s digital music ownership is shifting format from CD to downloads. This is particularly evident in the last couple of years where full album sales on iTunes have rocketed compared to single track sales.

    If a graph was made combining revenues of CDs and digital dowloads it would not show growth – it would show a fall.

    Ownership revenues = declining

    Streaming revenues = rising

    Paints a somewhat different picture does it not?

    But even that is not the whole picture. There are numerous reports from Spotify enthusiasts that they will “never buy a download again – I don’t need to”. If that is not “cannibalisation” then I don’t know what is. The VC investors in Spotify have been convinced that they are investing in an “iTunes killer”.

    The problem for the investors – and for Spotify – is that it’s killing iTunes a bit but not killing iTunes anything like enough.

  6. lifer

    Streams (listening)= the new radio (listening)

    Downloads (buying) = Physical (buying)

    Did unlimited radio plays cannabilize or promote sales?

    Streaming put some choice of playlist back in consumer hands as radio has digressed into irrelevancy outside of its extremely limited stylistic pallete. We cannot ignore that growth in the electronic dance genre as a significant live performance revenue generator is parallel to radio’s narrowcasting to the same genre.

    It is as it always was. The maturation of rock, just as jazz/classical/romantic were once mass market popular, is a fait accompli.

    Just as an occassional classical or jazz piece can still become a mass market success there will always be opportunity for an Adele but likely not enough to support four “majors” and probably not enough to support three majors with their current overhead models.

    But the smaller records labels, the Jajaguwars, Secret Candians, Bella Unions, and all the micro-labels are doing quite well as (very) small businesses with low overhead and targeted markets.