US streaming music revenues eclipse CD sales for first time, as rebrand of Apple's Beats looms

Posted:
in iPod + iTunes + AppleTV edited March 2015
Revenue from music streaming is now overshadowing CD sales in the US, according to new data published by the Recording Industry Association of America on Thursday, signalling a sea-change in favor of services like Spotify, Pandora, and Beats Music.




Music streaming revenues from 2014 totalled $1.87 billion, up 29 percent year-over-year, while CD sales fell 12.7 percent to $1.85 billion, the RIAA said in a report shared with CNet. The streaming category includes not just standard Internet radio but also Sirius XM, and music video sources such as Vevo and YouTube.

Downloads held the lion's share of revenue at $2.58 billion. That however is a decline of 8.7 percent from 2013, and indeed overall US music revenue dipped 0.5 percent to $6.97 billion.

Streaming revenues accounted for 27 percent of the market last year, up from 21 percent. Downloads shrank from 40 to 37 percent, and physical products -- including not just CDs, but vinyl and cassettes -- claimed 32 percent in 2014.

Within the streaming milieu, free but ad-supported on-demand services saw their revenue surge 34 percent to $295 million. This was nevertheless dwarfed by paid subscriptions, which rose 25 percent to $799 million.

The shift towards streaming has posed a serious issue for Apple, which dominates the downloads market by way of the iTunes Store. Its current streaming service, iTunes Radio, has failed to gain much traction, but the company is believed to be working on a rebranding of Beats Music to provide an on-demand iTunes choice.

Comments

  • Reply 1 of 19
    I don't see streaming as a good thing at all in its present incarnation. Also, I think it's wrong to lump in Internet radio with streaming; it's quite a different thing. Frankly, here in England, most people only ever listen to music via free radio or the usual suspects: YouTube/Vevo. Teenagers are the ones who tend to gorge on music, as they have the most free time and lap it up.

    Then life intervenes.

    Ultimately, I think people still want to own music, and that is the only way that musicians will be able to earn any decent money off recordings. The streaming paradigm is just too like radio and doesn't have enough value.

    Whilst I would love a streaming service from Apple, it would only be to supplement iTunes and CDs, and I would only be prepared to pay a small amount (say, $5 a month) if it included some kind of discount for purchases. I will never pay a penny for pure streaming.
  • Reply 2 of 19
    hmurchisonhmurchison Posts: 12,116member
    I'm not surprised. $10 a month about an album a month purchased but grants access to a much wider catalog. I'd like to see Apple find a way to straddle the bridge between those that occasionally like to own the music versus rent.
  • Reply 3 of 19
    calicali Posts: 3,495member
    This is terrible.

    With Jimmy Iovine in board I'm sure a solution is coming.

    I have teens in my life and about %90 of their music streaming is from unofficial YouTube channels.
    YouTube stands back and hardly does anything about these uploads. It's as if they do it on purpose to take money from Apple.
    Giggle would rather not make a penny off these listeners than to have them potentially pay the artists and Apple.
  • Reply 4 of 19
    rp2011rp2011 Posts: 159member

    love Spotify, and other than maybe an internet apocalypse, there in no better way to access and listen to music..as a consumer. My bomb shelter has physical copies in both hand crank and braille. 



    For musicians I think it can work for them too, they have gone through many format changes and survived. They will make it through. This is far better than piracy, which this significantly minimizes. The music is streaming through the internet, paid for or not.

  • Reply 5 of 19
    I've been ahead of the handheld streaming trend for years, using my transistor radio to listen. :lol:
  • Reply 6 of 19
    dimmokdimmok Posts: 359member

    I like spotify....but will switch to Beats as soon as my 60 Day Trial Period is over.

    Gotta support the team.

  • Reply 7 of 19
    booboobooboo Posts: 48member

    "...iTunes Radio, has failed to gain much traction..."

     

    I'm not sure how hard Apple has really been pushing it.

     

    I used to listen to iTunes Radio quite a bit when I was using bluetooth speakers around the house, but I stopped using it when I got a Sonos system. (Sonos supports Beats, and a bunch of other streaming services, but not iTunes Radio.)

     

    So now we listen to Pandora a lot, along with our iTunes library and internet radio. I'd still be listening to iTunes Radio if Sonos supported it.

  • Reply 8 of 19
    jfc1138jfc1138 Posts: 3,090member
    "using my transistor radio to listen"

    The problem for us control freaks is that's not OUR music.... sometimes we just want to shuffle 1200 beach music tracks. Sometimes we don't.
  • Reply 9 of 19

    And this just in, Streaming revenue was also higher than cassette tape sales.

  • Reply 10 of 19
    gatorguygatorguy Posts: 18,455member
    cali wrote: »
    This is terrible.

    With Jimmy Iovine in board I'm sure a solution is coming.

    I have teens in my life and about %90 of their music streaming is from unofficial YouTube channels.
    YouTube stands back and hardly does anything about these uploads. It's as if they do it on purpose to take money from Apple.
    Giggle would rather not make a penny off these listeners than to have them potentially pay the artists and Apple.
    YouTube has paid out in excess of $1Billion in song royalties to the rights holders.
    http://www.billboard.com/biz/articles/news/digital-and-mobile/5893900/youtube-has-paid-out-1-billion-to-music-industry-in

    And yes Google enforces legitimate copyright notifications. Ever heard of Content ID? Probably not unless you upload videos with music to YouTube.
    http://mashable.com/2012/02/17/youtube-content-id-faq/
    http://youtubecreator.blogspot.com/2014/12/mystery-solved-what-happens-when-you.html
  • Reply 11 of 19
    Quote:

    Originally Posted by booboo View Post

     

    I used to listen to iTunes Radio quite a bit when I was using bluetooth speakers around the house, but I stopped using it when I got a Sonos system. (Sonos supports Beats, and a bunch of other streaming services, but not iTunes Radio.)


     

    My big beef with iTunes Radio is that it seems almost as repetitive as Seattle's horrid terrestrial radio (okay, I'm sure it's not just Seattle). I really enjoyed iTunes Radio at first but got turned off when my stations kept playing the same songs over and over again. I just revisited last week after nearly a year away from it (largely because I finally upgraded my 1st-Gen AppleTV to a current 3rd-Gen which supports it) and found it was still playing the same rotation of songs.

     

    Pandora is better, but Spotify radio seems to generate the largest diversity of songs for me.

  • Reply 12 of 19
    ingelaingela Posts: 217member
    Quote:

    Originally Posted by djames4242 View Post

     

     

    My big beef with iTunes Radio is that it seems almost as repetitive as Seattle's horrid terrestrial radio (okay, I'm sure it's not just Seattle). I really enjoyed iTunes Radio at first but got turned off when my stations kept playing the same songs over and over again. I just revisited last week after nearly a year away from it (largely because I finally upgraded my 1st-Gen AppleTV to a current 3rd-Gen which supports it) and found it was still playing the same rotation of songs.

     

    Pandora is better, but Spotify radio seems to generate the largest diversity of songs for me.


     

    Yeah I thought Pandora was ok...until I tried Spotify. But I could never get behind a algorithm to sift through music for me. It always included music I could not stand. I can turn on regular radio for that. On the other hand, Spotify lists curated by ME and other PEOPLE who's taste I respect is where it's at,  not an algorithm. 

  • Reply 13 of 19
    I've never understood why Apple didn't sort this out overnight a year or more ago.

    In iTunes right now I can "preview" any track I want, which means I get to chose the song I listen to without buying it, but I can only listen to about 1 minute of it.

    I can also listen to 100% of some songs without buying the song, but only if the song is more-or-less randomly chosen for me by iTunes Radio.

    Just introduce a pay-per-month service which lets me "preview" 100% of the song. Let me queue them. Show me related tracks.

    That's it, 80% of spotify functionality covered by changing the preview limit to 100%.
  • Reply 14 of 19

    We've had Spotify for years, but I really like the Beats Music interface on my iPhone.

     

    Will move to iTunesBeats as soon as it launches.

  • Reply 15 of 19
    larz2112larz2112 Posts: 193member
    Quote:

    Originally Posted by Gatorguy View Post





    YouTube has paid out in excess of $1Billion in song royalties to the rights holders.

    http://www.billboard.com/biz/articles/news/digital-and-mobile/5893900/youtube-has-paid-out-1-billion-to-music-industry-in

     

     

    The article you provided says nothing about song royalties. Based on the content of the article, it seems the majority of payment was from ad revenues over "several years", which could be 2 years, could be 4-5 years, so that $1 Billion statistic is not as compelling. The total payout number is somewhat meaningless because it's always going to be a relatively large number. I'm sure lots of factories in China can proudly boast that they pay out millions of dollars in salaries over several years, while actually paying their employees about 80 cent an hour. What is important is the percentage of revenue generated that is paid to the artist(s) and songwriter(s). How much revenue is generated by a view of a song on YouTube, and what percentage of that revenue is paid to the artists and songwriters? That is what matters most.

     

     

    If you do enough digging you will discover that streaming services and YouTube are screwing artists and songwriters just as bad if not worse than record companies were several decades ago. For every statistic someone throws out that shows how much a streaming service has paid out, I can show you 2-3 times as many statistics to show how little they actual pay, and how songwriters specifically get screwed.

     

    http://www.benzinga.com/news/14/08/4762380/streaming-music-and-royalties-who-pays-the-most

     

    http://www.digitalmusicnews.com/permalink/2014/04/03/streamingstatements

     

    The mentality that musicians shouldn't mind making almost nothing from streaming because it's great exposure is a flawed one. The argument I often hear goes something like this, "streaming is great exposure, and it helps them sell more records, concert tickets, merchandise". While this may be true for the artists, to what degree is debatable. In Addition, the songwriters make no money off of concert or merchandise sales. They do make a royalty from every record sale, but when the song is readily available for free from multiple streaming services, the motivation to actual buy a record is diminished, especially with the younger demographic. To make matters worse, songwriters have no control over their songs being made available on streaming services. The artists have the control. That is why Taylor Swift was able to pull her songs off of Spotify, because she is both the songwriter AND the artist. 

     

    I don't mind streaming services, I just think they should be more equitable in compensating the people who create the content, because without the music, their streaming business would not even exist.

  • Reply 16 of 19
    gatorguygatorguy Posts: 18,455member
    larz2112 wrote: »
    The article you provided says nothing about song royalties.

    ?? Huh ??
    "Google Inc. disclosed on Sunday that its YouTube video platform has paid out more than $1 billion to music rights holders"

    As for the songwriters themselves getting screwed it's no different than writers being screwed by publishers and artists being screwed by galleries, or even employees being screwed by ownership/upper management. The ones with the money have the power. You really thing Google has a choice of who to pay anymore than Apple does? Whoever holds the rights expects the payment.

    Note too that the post was in response to a poster who implied that Google didn't pay for use rights. They do.
  • Reply 17 of 19
    larz2112larz2112 Posts: 193member
    Quote:

    Originally Posted by Gatorguy View Post





    ?? Huh ??

    "Google Inc. disclosed on Sunday that its YouTube video platform has paid out more than $1 billion to music rights holders"



    As for the songwriters themselves getting screwed it's no different than writers being screwed by publishers and artists being screwed by galleries, or even employees being screwed by ownership/upper management. The ones with the money have the power. You really thing Google has a choice of who to pay anymore than Apple does? Whoever holds the rights expects the payment.



    Note too that the post was in response to a poster who implied that Google didn't pay for use rights. They do.

    Again, it says nothing about "ROYALTIES". You are making an assumption based on the confusing sentence structure of the headline. Paying music rights holders ad revenue is NOT the same as paying them performance royalties. They are two separate forms of revenue. The headline does not say that YouTube paid out more than $1 billion in royalties, it says they paid over $1 billion to music rights holders. And if you read the article, it makes no reference to music performance royalties, only to ad revenue.  I'm sure the $1 billion includes both ad revenue and royalties, but it's misleading to claim $1 billion in royalties were paid when a good chunk of that was actually ad revenue and not royalty payments. And again, while the total number seems like a lot, which is why companies like YouTube and Spotify always use them, if you look at the actual percentages that get paid to the content creators it is extremely low. Google DOES have a choice when it comes to what percentage they want to pay to artists and songwriters who contribute to the popularity and traffic to their site.

  • Reply 18 of 19
    gatorguygatorguy Posts: 18,455member
    larz2112 wrote: »
    Again, it says nothing about "ROYALTIES". You are making an assumption based on the confusing sentence structure of the headline. Paying music rights holders ad revenue is NOT the same as paying them performance royalties. They are two separate forms of revenue. The headline does not say that YouTube paid out more than $1 billion in royalties, it says they paid over $1 billion to music rights holders. And if you read the article, it makes no reference to music performance royalties, only to ad revenue.  I'm sure the $1 billion includes both ad revenue and royalties, but it's misleading to claim $1 billion in royalties were paid when a good chunk of that was actually ad revenue and not royalty payments. And again, while the total number seems like a lot, which is why companies like YouTube and Spotify always use them, if you look at the actual percentages that get paid to the content creators it is extremely low. Google DOES have a choice when it comes to what percentage they want to pay to artists and songwriters who contribute to the popularity and traffic to their site.

    The same choice that Apple has with both Beats and iTunes Radio I presume. So you would advocate both Apple and Google pay the rights holders what is legitimately and legally owed and in addition try to accurately determine the songwriters and performers and pay them an additional amount over and above what the rights holder agreed to share with them? You really do think the problem belongs to Apple and Google and not the ill-considered bad-faith contracts and/or poor judgement exhibited by the performers when negotiating with the publishers,. Charge Apple/Google with covering for music industry practices, fixing what they do after the fact.

    OKAY then.
  • Reply 19 of 19
    larz2112larz2112 Posts: 193member
    Quote:
    Originally Posted by Gatorguy View Post





    The same choice that Apple has with both Beats and iTunes Radio I presume. So you would advocate both Apple and Google pay the rights holders what is legitimately and legally owed and in addition try to accurately determine the songwriters and performers and pay them an additional amount over and above what the rights holder agreed to share with them? You really do think the problem belongs to Apple and Google and not the ill-considered bad-faith contracts and/or poor judgement exhibited by the performers when negotiating with the publishers,. Charge Apple/Google with covering for music industry practices, fixing what they do after the fact.



    OKAY then.

    That's not my point at all. You sure have a knack for misinterpreting what you read. Like referring to ad revenues as royalties, or taking someone's comment that Google does little to police illegal channels and interpreting it to mean that they think Google doesn't pay royalties.

     

    My point is that streaming services like Spotify pay squat in terms of royalty payments. How that gets divided up between writer and publisher is a different story, but that's not my point. In fact, in the article I posted a link to, the artist owns 100% of the copyright (both writer and publisher) to most of his music, so he gets the full royalty payments for the majority of his songs. 

     

    http://www.digitalmusicnews.com/permalink/2014/04/03/streamingstatements

     

    His song got played on Spotify 2088 times and he received 60 cents. Do you know how much that is per stream? Less than three one hundredths of a cent! Look elsewhere on his statement and you see that Pandora is even worse, paying a total of 33 cents for 5,776 streams. That's less than six one thousandths of a cent, or $0.00005713 per stream to be exact. And that's the entire royalty payment paid 100% to the artist who owns both the writer and publisher copyrights. There is no record label taking a share, he is the sole owner of his music and receives 100% of the royalty payment. 

     

    I really don't understand how anyone can argue that getting paid 33 cents for 5,776 plays of your music is fair. I'm not asking or expecting that every artist makes a king's ransom, but I think a more equitable royalty payment structure is needed.  I don't think that is asking too much. If streaming services like Spotify can't afford to do that then they have built a business model that is only sustainable by exploiting the very artists that allow their business to exist.

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