Streaming services like Apple Music dominate music industry revenue

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Apple Music and other paid subscriptions are now the biggest source of revenue in a growing music industry, with streaming alone encompassing 75 percent of money earned, far beyond any other contributor.

RIAA revenue graph


According to the 2018 Mid-Year Music Revenues Report, released this week by Recording Industry Association of America (RIAA), the U.S. music industry saw an increase in overall revenues. Those revenues rose to $4.6 billion in the first half of the year, up from $4.2 billion the same time in 2017.

Three-quarters of the industry's revenues in the first half of 2018 came from streaming, compared to digital downloads at 12 percent and physical sales falling to 10 percent. Meanwhile, streaming revenues grew to $3.4 billion in the first six months of the year, a 28 percent jump over 2017.

Of those revenues, RIAA said, $2.55 billion came from paid subscriptions to Apple Music, Spotify, Tidal and others, although the association did not break out the different services. The $2.55 billion figure is an increase from $1.9 billion in the first half of 2017 and $1.1 billion the first half of 2016.

Apple Music reportedly overtook Spotify as the top subscription streaming music service in the U.S. in July.

There are now a total of 46.4 million paid music subscriptions in the U.S., up from 31.5 million a year ago and 20.3 million two years ago, the RIAA said. At the same time, as business models have shifted, U.S. digital download revenues have plummeted to $562 million in the first half of this year from over $1 billion two years ago.

In the full year of 2017, streaming contributed 65 percent of the industry's revenue, RIAA said earlier this year.

In its new report, RIAA recognized that even with the streaming success, the industry faces challenges.

"Finding an audience amongst an extraordinary range of music choices, competing for the user's attention against other entertainment options on the ubiquitous smartphone, and being prominent on dozens of different digital platforms is not only critical for success, those are attributes that uniquely reside within today's record company," Mitch Glazier, RIAA's president, said regarding the results.

Comments

  • Reply 1 of 10
    As a musician of sorts, it's humbling to discover people from around the world streaming "Golf Balls & Condoms." It's disheartening, however, to discover that enjoying or/and enduring it five times in a row generates a whopping .00001 cent for its creator.
    decodering
  • Reply 2 of 10
    claire1claire1 Posts: 446unconfirmed, member
    I wonder how much of the pie Apple takes?

    You can bet they get almost all of digital downloads. 
    edited September 21 watto_cobra
  • Reply 3 of 10
    Based on this, I suspect in 10 yrs it will be hard pressed to locate physical or digital media. The music industry will love this, since consumer will not be able to have their hands on the actual content, if they want to hear it they have to stream it and pay every time it is played. The record labels could not understand where this was heading 15 yrs ago. Apple did, they pulled every last $ out of digital downloads and when that started to ween off, they jumped into stream and with in a 2 yrs are near the top of this market.

    Again Apple let everyone else take the arrow watch what they did right and wrong and came up with a better method.
  • Reply 4 of 10
    As a musician of sorts, it's humbling to discover people from around the world streaming "Golf Balls & Condoms." It's disheartening, however, to discover that enjoying or/and enduring it five times in a row generates a whopping .00001 cent for its creator.
    Interesting thought. It seems like, the first time you listen to something, it shouldn't generate much money for the artist at all, because you're just previewing it. Maybe it sucks and you hate it, and you're never going to listen to it again. However, if you play it a second time, that should generate the highest payout to the artist, because the replay indicates the listener actually liked it so much they want to hear it again. But then, subsequent listens should decrease in payout along some curve back down to the tiny amount the artist is currently getting for every listen. That would probably give a boost to the artists who are actually enjoyed most, at the expense of not paying out anything to the artists who get a single listen from lots of people, but where few people actually like them enough to listen again. Something like that. I'm just spitballing.
    king editor the gratetycho_macuser
  • Reply 5 of 10
    JWSCJWSC Posts: 192member
    Physical media...  

    I’ve likely got around $5,000 worth of CDs that I’ll never listen to again that have been packed up in boxes for several years.  Their resale value is dropping precipitously.
    king editor the grateviclauyycjbdragon
  • Reply 6 of 10
    chasmchasm Posts: 832member
    claire1 said:
    I wonder how much of the pie Apple takes?

    You can bet they get almost all of digital downloads. 
    Apple "takes" 100 percent of the $10/month you pay, and then pays artists whatever the royalty arrangement calls for, based on how much music you actually stream/listen to, i.e. Apple doesn't get 30 percent of their royalty. If most people are like me, I'd take a stab at saying about a third of your monthly $10 goes to the songwriters + publishers + rightsholders on average (not counting the three free months you got initially), but of course if you stream music pretty much all the time that figure goes up.
    watto_cobra
  • Reply 7 of 10
    19831983 Posts: 1,101member
    How long now before Apple discontinues it’s own paid downloads. I’m not looking forward to that day as I still prefer to pay a one time fee for tracks/albums and own them rather than renting them from a streaming service!
  • Reply 8 of 10
    As a musician of sorts, it's humbling to discover people from around the world streaming "Golf Balls & Condoms." It's disheartening, however, to discover that enjoying or/and enduring it five times in a row generates a whopping .00001 cent for its creator.
    That’s one of the reasons I continue to buy music I really like beyond the monthly subscription I have.

    I also look for music I want to buy on Bandcamp, where the artists get a fairer share of revenues, before buying it through other services (I only buy CD-quality or better files)).

    To me, it’s worth paying more when it comes
    down to that.
    king editor the gratechasm
  • Reply 9 of 10
    greg uvan said:
    As a musician of sorts, it's humbling to discover people from around the world streaming "Golf Balls & Condoms." It's disheartening, however, to discover that enjoying or/and enduring it five times in a row generates a whopping .00001 cent for its creator.
    Interesting thought. It seems like, the first time you listen to something, it shouldn't generate much money for the artist at all, because you're just previewing it. Maybe it sucks and you hate it, and you're never going to listen to it again. However, if you play it a second time, that should generate the highest payout to the artist, because the replay indicates the listener actually liked it so much they want to hear it again. But then, subsequent listens should decrease in payout along some curve back down to the tiny amount the artist is currently getting for every listen. That would probably give a boost to the artists who are actually enjoyed most, at the expense of not paying out anything to the artists who get a single listen from lots of people, but where few people actually like them enough to listen again. Something like that. I'm just spitballing.
    This is so dumb. Let’s explore the logical extrapolation of this idiotic idea:

    It seems like, the first time you eat a dish at a restaurant, it shouldn't generate much money for the restaurant at all, because you're just sampling or tasting it. Maybe it sucks and you hate it, and you're never going to eat it again. However, if you order it a subsequent time, that should generate the highest payout to the restaurant, because that indicates the patron actually liked the dish so much that they returned and ordered it again. But then, subsequent orders should decrease in payout along some curve back down to the tiny amount a food truck might get for every meal sold.  That would probably give a boost to the restaurants making dishes that are actually enjoyed most, at the expense of not paying anything for the restaurant dishes that get a single order from lots of people, but where few people actually like them enough to order them again.

    i could repeat the above with respect to movies - how many times have you gone to watch a movie and thought “...what a waste of my time and money”
  • Reply 10 of 10
    1983 said:
    How long now before Apple discontinues it’s own paid downloads. I’m not looking forward to that day as I still prefer to pay a one time fee for tracks/albums and own them rather than renting them from a streaming service!
    I don't see any reason why Apple would stop offering paid downloads, even if sales plummeted. That 12 percent of revenue from paid downloads still represents a few billion dollars a year, you know.

    Since the infrastructure is already there, it (now) doesn't cost Apple much of anything to keep offering paid downloads nearly indefinitely, so just as there's no reason not to offer a song that sells maybe five copies a year, there's no reason not to offer paid downloads to people who want them, even if that number is small.

    It's the lossless physical media I worry about: that costs a great deal of money to produce and distribute, and while I get why people don't buy CDs as much (particularly at current retail prices), it would be a tragedy if consumers were ever unable to get a lossless, pristine, permanent copy of the music they invest in and/or collect.
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