A proportional map of recorded music format revenues, using US-based tallies from the Recording Industry Association of America (RIAA).
CDs maintained a sizable chunk of recorded music sales in 2015, part of a sales map that now features a large number of competing formats. According to US-based, 2015 stats from the RIAA, CDs, subscription (paid) on-demand streaming, internet radio, and downloads all grabbed substantial portions of a recorded music industry that totaled $7.09 billion in annual revenue.
In terms of the format breakdowns, the old strongholds are shrinking, including:
CDs: $1.52 billion (down 17.0%); 21.7% of the total.
Song Downloads: $1.23 billion (down 12.8%); 17.5% of the total.
Album Downloads: $1.09 billion (down 5.2%); 15.5% of the total.
Ringtones, Ringbacks: $54.6 million (down 17.7%); 0.8% of the total.
Music Videos: $6.4 million (down 52.8%); 0.09% of the total.
And, here’s where al the growth is coming from:
Subscription (Paid) Streaming: $1.22 billion (up 52.3%); 17.4% of the total.
Internet Radio (‘Non-Interactive Streaming’): $802.6 million (up 3.8%); 11.3% of the total.
Vinyl (LPs, EPs): $422.3 million (up 32.2%); 6.0% of the total.
Ad-Supported (Free) Streaming: $385.1 million (up 30.6%); 5.4% of the total.
Synchronization (‘Sync’) Royalties: $202.9 million (up 7.0%); 2.9% of the total.
Then, there’s the issue of the broader industry total, and whether it’s likely to grow. Despite immense growth around streaming music (particularly paid, on-demand platforms), the broader recorded music industry in the US gained a scant 0.9%. That reflects a recovery and potential bottoming, though it’s unlikely the music industry can recover a decades-plus plunge of more than 65%.
Meanwhile, the traditional breadwinners are continuing to tank. That includes the CD and paid downloads, both of which are experiencing double-digit year-over-year declines, and could be essentially become negligible within five years.
All of that is putting greater emphasis on a totally different mix of revenue-generators, particularly live shows, branding relationships, and emerging publishing channels. Additionally, a number of artists (from Kygo to Wale) are moving beyond the album format, and successfully satisfying a totally different consumer preference.
Blech, that’s a horrible chart style.
Congratulations, RIAA.
You’ve created a schism in American music consumption which matches the wealth disparity in effect for Americans:
* $0 market is up.
* $(overpriced vinyl) market is up.
* $~10 digital acquisitions down
* $~10 shiny discs down
I strongly STRONGLY recommend you stop pissing off the people still willing to hand over $10-20 a month to streaming companies because they value music and put their money where their mouths are.
Well I suppose we should be thankful that we’re not in the newspaper print business.. it’s completely a loss maker.
The figures of paid downloads isn’t as bad as you might think.. Hit songs can still sell a million plus downloads… that represents a lot of royalty money.. (somewhere in the region of $700,000).
Now I realize a million paid downloads isn’t really comparable to a million streams.. but just thinking in terms of stream revenue… a million streams (which is not a minuscule amount) would still only pay something in the region of ~ $4000 .. maybe less..
Vinyl is an interesting phenomenon – it’s a hassle for the label as there’s so much work and expense in the record manufacturing and selling business.
Artwork label, insert and cover design and printing
Disc preparation, test pressings and final units pressings
Warehousing of final stock
Sourcing a distributor who can get the records into shops
Motivating a distributor to accept your product and to actually go the next step to get shops/stores to order your stock..
Then you have to wait on the dreaded returns for full credit to start rolling in
Then you have to pray that the distributor will actually account back to you and
pay you for the non returned stock.
The small independent record label:
In the old days of record distributors you would have to have another release ready to roll off the presses in order to drive the distributor to pay you for the first release.. Often the labels would have a hard time in order to get paid for their releases or the distributors would close (go broke or run off..) before anyone got their accounting (and money)..
If you’re a band you have the benefit to direct sell your records at your gigs and bypass all this nonsense.. but if you’re purely a recording entity then you have to deal with the risky business of distributors and retailers who would much prefer to not have to pay for your product or delay the payment out for as long as possible..
Of course this is a bit of a skeptical view of the bricks and mortar world of record manufacturing and retailing for the small independent label .. but one many of us would have experienced back in the 80s and 90s…
Is this bad?
Looks like advances in technology have created a lot more ways for the music industry to make money.
For me iTunes paid downloads is still the one that keeps our businesses ticking over…
The Super Hit ..
Now if you’re extremely lucky and have come up with all the elements that bring about a Super Hit .. then you’ll get riches from left, right and all over…
A good example is “Lean On” Major Lazer/DJ Snake
“Lean On” has sold over 2 million copies in the United States alone,
is the most streamed song of all time on Spotify with 700+ million streams globally,
and over 1 Billion views/streams on YouTube.
The makers of the track have enjoyed a financial windfall of over three million dollars (growing every day) in earnings from the recorded music track..
To paraphrase what their manager said “hey, the recorded music business is in fine shape… we’ve made millions from this one song alone…”.
As Bob Lefsetz says .. now more than ever it’s about the hit..
A lot of noise for FLAT market with less than 1% growth!
We would have 5% decline if Apple boys wouldn’t get hooked on D.Ek’s DOPE.
Expect terrible 2016 unless we start conversion of just Radio to $100B music store!