Streaming Accounts for Just 4 Percent of Global Recording Revenues, Study Finds…

That’s according to research just shared by top industry analyst Mark Mulligan, who found that streaming revenues are just 12 percent of the broader, digital, global pie.  In turn, digital formats now account for 34 percent of global recording revenues, according to the IFPI figures for 2012 (see p.6).

All of which means streaming accounts for about 4 percent of overall, global recording revenues.  “It’s not so much the fault of the Spotify model, but streaming in many ways just isn’t ready for mainstream,” Mulligan told an audience at SXSW.

And guess where the rest is coming from?  ‘Other digital’ is mostly paid downloads, with iTunes still an extremely formidable force in this space.  “For all of the hype around streaming, we’re looking at, for 2012, 12 percent of digital revenues coming from digital streaming,” Mulligan confirmed.

“[Spotify CEO] Daniel Ek [just revealed] 6 million subscribers, but 6 million subscribers compared to the 400 million credit card-linked accounts in iTunes, it’s just a drop in the ocean.”

Hype, meet sober statistical analysis.  “And however much you try to make that shape grow, you’re not going to make it the majority digital [revenue contributor] in the next five years unless downloads collapse.  Now, downloads could collapse I suppose if Apple did something really serious with streaming, but we know that downloads are increasing as well with all of Apple’s expansion.  Downloads are getting new customers as well.”

“We’re seeing titles like ‘Now’ doing well as a result of new digital customers coming on board via the iPhone, and Apple is getting digital music customers via the iPad.  And this is important, because we know that when the iPod started going into decline, that’s when downloads fell off a cliff and moved from double-digit growth to single-digits.”

“When Apple sneezes, the music industry catches a cold.”

Written while listening to LONG.LIVE.A$AP (Deluxe Version).

10 Responses

  1. matthew king kaufman

    seems music rental isn’t the present. i wonder if it’s the future. it’s a bulk purchase ala record clubs of the bygone era. it will attract a certain %, but never be the number 1 choice of the music purchaser.

  2. HansH

    Streaming has taken off in just a few countries. Of course you get a small percentage when you compare this to global revenues.
    Doesn’t say a thing IMHO

  3. V(iii)ctor

    Nearly 70 percent of the US have never even heard of streaming/Spotify. We live in a tech- music- bubble, which makes us thing it’s much higher or will be much higher.

    • HansH

      Here in The Netherlands 60% never heard of Spotify and little over 10% is using the service.
      In 2012 streaming accounted for 16% of recording revenues.
      Took two year to get there. It takes time….
      BTW 6 million subscribers account for about 720 million a year. That’s not what I would call a drop in the ocean! You can have 400 million creditcard linked-accounts, but how much do they spend in average?

  4. Kent

    Youtube is now coming out with their own streaming service this summer to compete with the likes of spotify, rhapsody, rdio etc…Give it time people…60% of teenagers go to youtube to listen their music. How nice would it be to start making money off them via subscriptions and ads…

  5. cool

    Even if Spotify have 8 million paying users, that’s only about $1 billion a year in revenue.
    This is nothing. Itunes can sell 1 billion songs easily in a few weeks.

  6. JTV Digital

    To me, and from an artist standpoint, streaming is complementary to downloads.
    It’s nothing but an additional revenue stream + a good way of exposure / promotion.
    Yes as an artist you won’t make a fortune by being on Spotify BUT you have to be there to remain visible.

  7. TK

    As with any product life cycle, there are various stages (4 to be exact: the Introduction stage, the Growth stage, the Maturity stage and the Decline stage). Streaming and subscription services are transitioning from the Introduction stage to the Growth stage, so I feel that it is a little premature to compare these services to downloads as downloads are now in the Mature stage. The Mature stage is where the most money is made. Apple is in a very unique position and should be cautious in entering the subscription/streaming market as the company stands to cannibalize its download revenue by focusing on a very minute part of the digital music business in comparison to its current focus: downloads. If I were Apple, and I had 400 million iTunes users, and enough cash and resources to design and market the world’s premiere streaming service to compete head to head with any player in the U.S. or elsewhere, I would continue to capitalize on downloads for now, and wait until subscriptions and streaming becomes a bigger piece of the pie, then I would make a move.

    How do you like the A$AP album? Great stuff, huh?