The RIAA’s Mid-Year Revenue Report: The Good (Streaming), The Bad (Downloads) & The Ugly (CDs)

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The Recording Industry Association of America (RIAA) has released its mid-year 2018 report.  Here’s how the US-based recorded music industry is performing.

The report was officially published today, and contains lots of substantial gains.  Let’s jump in.

For starters, total revenues are up 10% to $4.6 billion, compared to last year’s $4.2 billion in revenue.  That’s softer than last year, partly because of a slowdown in streaming’s surge.  Other factors, including a tanking CD and plunging downloads, further tempered gains.

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The RIAA’s report says that music streaming accounts for 75% of that revenue, or $3.4 billion.

That’s up more than $1 billion from the mid-year report from 2015, just three years ago.  Interestingly enough, paid music subscriptions account for around 75% of the total streaming revenue for the first half of 2018.

A quick breakdown of Paid Subscriptions, Ad-Supported Audio & Video, and Digital and Customized Radio services shows just how vital paid-tier plans are for music streaming services.

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Paid-tier subscriptions were up 33% compared to last year’s mid-year report, with $2.5 billion in revenue.

A quick breakdown reveals that $528 million of that revenue came from services like Amazon Prime, Pandora Plus, and SiriusXM.  $369 million is attributed to free, ad-supported tiers from services like YouTube and Spotify.

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The ad-supported figure is up 21% compared to last year, but the RIAA points out how little revenue comes from ad-supported services compared to paid subscription plans.  Indeed, ad-supported remains a weak revenue contributor overall, despite continued advances and experiments in various ad technologies.

“Advertising supported on-demand revenues for music from services like YouTube, Vevo, and the ad-supported version of Spotify grew 21% year-over-year to $369 million,” the report indicates.  “While Nielsen has reported that these services streamed hundreds of billions of songs to fans in the U.S. in [the first half of] 2018, revenues from ad-supported on-demand platforms make up only 11% of total streaming revenues.”

The paid-tier subscriber growth rate is 48% more than last year’s number, with an estimated 46.4 million paid subscribers in the first half of 2018.  The RIAA report estimates that streaming services are adding about 1 million paying subscribers per month.

That figure only counts fully paid subscription tiers.

The streaming success is being dragged by a dismal situation around downloads.

According to the report, digital downloads have dropped 27% in total revenue, bringing in $562 million this year compared to $765 million on last year’s mid-year report.

The $562 million figure is the lowest revenue earnings for digital downloads in more than ten years.  Both individual track sales revenues and digital album sales revenues were down this year by more than 25%.  The whole digital downloads category only accounted for 12% of total industry sales for the first half of this year.

It’s a classic case of cannibalism, with downloads getting devoured by the more evolved streaming format.  Streaming itself is also cooling off, which is understandable.

Revenues from shipped physical products were also down in the first half of this year, with revenue decreasing 25% to $462 million.

The RIAA’s report notes that this is a higher rate of decline than seen in previous year’s reports.

Revenues from CD sales dropped 41% in the first half of this year.  But vinyl sales are still seeing a resurgence of popularity, as they were up 13% compared to sales last year.  The RIAA says revenues from shipments of physical items accounted for only 10% of revenues for the first half of 2018.

While vinyl records may be experiencing a bit of a renaissance among music connoisseurs, this report showcases just how powerful music streaming has become for generating revenue.  Paid-tier subscription plans are the future of the music industry.

And judging by the sales performance of digital downloads; those might be going the way of the Dodo soon enough.

One Response

  1. Remi Swierczek

    Streaming plateau is almost here and music industry NERDS will have less and less of optimism orgasms as UMG activated suicide will become evident a to zombie.

    My projection is still for optimistic $30B of global subs and ads by 2030.
    In the meantime1999 CDs are worth today $60B and will be worth $80B in 2030.

    Music is absolutely the best product for internet marketing. It is bigger than digital ads that make Google $100B+ corporation. All we need is new fair use act to lock it in virtual walls, away from BIG TECH and start $300B obvious to BORAT global music business.