Streaming: The Music Industry’s Largest Revenue Generator

Today, the RIAA released data confirming that streaming is the U.S. music industry’s single largest revenue-generator.

Streaming Revenue Hits 34.3%
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For the first ever, streaming made up the largest component of the total U.S music industry revenue in 2015, which marks a major milestone for the format.  The revenue mix in 2015 displays the ”most balanced revenue mix in recent history,” according to the group.

Major format categories Streaming, Digital Downloads, and Physical all took approximately one-third of the total industry revenue piece.

But streaming accounted for the biggest share, with 34.3%.

This is partially offsetting digital and physical declines, or at least what’s left of them.  ”The continued growth of revenues from streaming services offset declines in sales of digital downloads and physical product,” spun Joshua  Friedlander, SVP of Strategic Data Analysis at the RIAA.

In 2014, physical product accounted for 33% of overall music industry revenue, and digital accounted for the other 67%.  In 2015, as digital revenue grew 3% overall, revenue from physical product shrunk 3%.

Streaming - Music Industry's Largest Revenue-Generator
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Streaming is driving digital music revenue with unprecedented growth over the past five years.  In 2010, Streaming made up 7% of the total music revenue, which slowly grew to 9% in 2011. From 2011, Streaming grew 6% year-on-year until 2014.  Between 2014 and 2015, Streaming grew 7%, which is the largest percentage year-to-year growth so far.

This indicates that streaming is growing at a far stronger rate, and generating more income than ever before.

Streaming - Music Industry's Largest Revenue-Generator
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But streaming itself is a varied and complicated terrain.  The streaming category includes revenues from a wide range of subscription services, both paid (i.e. Spotify, Apple Music, Tidal, etc.) and ad-supported (i.e. YouTube, ad-supported Spotify etc.) as well as streaming radio services (i.e. Pandora, SiriusXM).

Of that pie, paid subscription services were ”the biggest – and fastest growing – portion of the streaming market,” according to the data release.  Power-players like Spotify, not to mention heavyweight entrants like Apple Music, are powering the paid growth.

Streaming - Music Industry's Largest Revenue-Generator
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This could become a big future breadwinner.  Between 2014 to 2015, paid subscription revenue increased from 7.7 million to 10.8 million, which is the highest year-to-year increase since 2012.  Indeed, it’s no coincidence that paid subscription revenue increased at the highest rate between 2014 and 2015, thanks to a paid-only emphasis by both Apple and Tidal

”Total streaming revenue exceeded $2 billion for the first time ever.”

Streaming - Music Industry's Largest Revenue-Generator
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The notion that streaming services have saved the music industry from deep decline, is one that Spotify CEO, Daniel Ek’s has been saying for a while.  With streaming services racking up a recorded $2.4 billion in revenue in 2015, and taking the largest share of U.S, music industry revenue, it’s becoming harder to argue against this bold assertion.


15 Responses

  1. Remi Swierczek

    Stampede to streaming dwarf land!
    Big names like Apple, Google or Amazon on Daniel Ek’s DOPE legalized by stupefied UMG shrinking $200B of music goodwill to $20B of subs and ads!

    • Eilo

      Down With Free Streaming!
      Up With Paid Streaming!
      Free The AThe rtists! Free The Music! Everybody Else Pays. No One Gets A Free Pass.

  2. Gaetano

    @Charlotte – Great data-driven piece. I’d expect the streaming numbers to keep increasing as there’s been no signs of slow down yet.

  3. smg77

    Boom…streaming is the future and the future is now.

  4. Remi Swierczek

    Gaetano & smg77 – what kind of medication are you consuming?

    All inclusive STREAMING kills common sense music monetization and has to change the business model or musicians (except for few glorified mega stars) will continue in starvation mode!

    Music is worth $200B to an imbecile, 1999 CD revenue equals $60B in todays dollars!

    Daniel Ek’s proven business model will NEVER bring more than $20B in subs.

    Let’s WAKE UP and convert Radio to $100B music store NOW!

    • Bongo

      Your incessant nonsensical ramblings about misplaced billions with a capital B is both bushed and wacked.

      Wake up? Hows bout you go take a nap on your own “grassy knoll” and give us all a rest from your meaningless and absurd ethereal rants.

      • Remi Swierczek

        Go to Bongo Bongo in Cancun or Punta Cana – they will spin your head and you will see $200B music business obvious to and IDIOT!

      • Anonymous

        “If at first the idea is not absurd, then there is no hope for it.”

        ― Albert Einstein

    • smg77

      The only crazy person around here is the person who thinks consumers are going to pay a per-use fee for shazam.

      • Remi Swierczek

        Shazam or master Shazam Google music PIMPING services should be illegal under new fair use act.
        In digital times name of the tune makes you an owner of the tune.

  5. Nicky Knight

    Seriously.. take a look at any independent record label income accounts and you will see that the majority of revenue is still coming from iTunes and the paid download.

    Unless you have a brand that commands millions and millions of ad/monetized YouTube videos then revenue will from streaming isn’t likely to make you rich.

    If you have benefited from an equity arrangement with major streaming companies then you certainly will get rich.. Don’t confuse those financial reward arrangements with royalty payments..

    • Name2

      Nonetheless, the writing is on the wall: the ownership stakes and the licensing contracts make the majors rich. They’re not going to rock the boat now. The penny has dropped (so to speak). And if the past 100 years is any indication, they’re not going to bother paying any artist except the biggest, squeakiest wheels.

      So it’s here. Get used to it.

      But lets stay with the real movers-and-shakers in your corner of the market: the people who bought paid downloads for years but now find streaming suits them. iTunes “music” is an exercise in settling for less. Unless Apple has started selling lossless titles in any meaningful number, the sound quality is better on Spotify than on a $10 iTunes album download. Find some way to stop hitting your customers in the eardrums with a shitty (iTunes) or inconvenient (vinyl) product.

      I see albums with individual unavailable tracks all the time on the streaming services. So limit the songs you’ll let go for free. Make 3-5 songs available that best tell the album’s story. If a person can’t make that purchase decision on that, then (genre depending) they’re probably lying. A Taylor Swift-level act can survive if 10,000 people decide not to buy her album because streaming. You can’t. Deal with that fact. Stream if you wanna, don’t if you don’t.

  6. Anonymous

    Those numbers are deeply misleading.
    If part of your streaming revenues come from being a co-owner of streaming companies ( the case in Major labels owning parts of Spotify ) , that changes the meaning of the phrase = “Streaming: The Music Industry’s Largest Revenue Generator”
    80% of the music industry ( anyone who is not a major label) is NOT a co-owner of Spotify.

  7. EILO

    Yeah.! Bring RADIO back to the young’ins. Edumacating them when their 10 years of age. Invest in youth. Makes more sense…given commercial RADIO and HIGHER performance fees! as opposed to the “shooting fish in a barrel” FREE FREE FREE (DOWN) STREAM services.

    • Name2

      Perhaps you’re not in the US, but here, radio doesn’t pay for performances. Many people are feverishly trying to get $$ every time a song is played somewhere, though, including radio. So that dream is still alive.