For the first time in the history of the German recording industry, online streaming services such as Spotify and Apple Music have surpassed compact discs in terms of revenue.
According to a statement published by the German Music Industry Association on July 18th, sales of music on digital formats was higher than revenues from CDs, DVDs and legacy vinyl LPs.
As the situation stands today in Germany, streaming music sales represent 58.9 percent of revenues for the industry while their physical media counterparts make up 41.1 percent. The revenue realized by streaming music services — including paid subscriptions, advertising and straight downloads — exceeded $405 million during the first half of 2018.
While these sales figures represent an increase of more than 35 percent compared to the previous year, there is an interesting factor that caught the attention of industry analysts: overall revenues are down two percent in comparison to the same reporting period in 2017.
CD releases by popular artists such as Die Toten Hosen and Ed Sheeran were pretty strong last year; in fact, they generated more revenue than their digital counterparts on a year-to-date basis.
Compared to music lovers in the United States, Germans have not been as enthusiastic about the trendy return of vinyl LPs. For the first time since 2006, the trendy format experienced a slight decline.
Although German music industry analysts are not surprised to see digital streaming overtaking CDs in 2018, they were somewhat puzzled as to why it took longer than in other major markets such as the U.S., the United Kingdom and France.
Industry leaders prefer to see revenue from streaming subscribers rather than from advertising sources, and they will be paying attention to platforms such as YouTube to ensure that royalties are being handled adequately.
It should be noted that Germany is home to the Fraunhofer Institute, a technology research firm credited with developing many of the audio compression and encoding techniques that eventually became the MP3 digital format, which in turn served as the basis of the streaming music revolution.