Spotify, Apple Music responsible for both rebound of music industry and dying physical med...
Recorded music revenue jumped by double digits last year, thanks to revenue growth from Apple, Spotify and other streaming services, according to a new report from the Recording Industry Association of America (RIAA), the music industry's lobbying group
In 2017, U.S. music industry revenues jumped 16.5 percent in retail value and 12.6 percent in wholesale value, to $8.7 billion and $5.9 billion, respectively -- growth that's attributed nearly entirely by RIAA to growth in paid subscriptions to streaming services. Streaming music revenues reached $5.7 billion in 2017, compared with $4 billion in 2016 and $2.3 billion in 2015, the year Apple Music launched.
Streaming services crossed 50 percent of the industry's revenue for the first time last year.
According to the RIAA, streaming comprised of nearly two-thirds of the industry's revenue in 2017, compared with physical (17 percent) and digital downloads (15 percent.) As streaming grew, digital downloads fell 25 percent in 2017. And while physical media revenue is far off its peak, it fell just four percent last year, to $1.5 billion.
This continues a renaissance in revenue for the industry, which was battered for years by the collapse of its traditional model. In fact, 2017 marked the first time since 1999 in which U.S. music revenues grew for two years in a row.
The RIAA release did not split out the revenues or market share numbers for the different streaming services. As of earlier this month, Apple Music had reached 38 million subscribers, and the service is expected to overtake Spotify, at least in the U.S., as soon as this summer.
"Our story continues to be one of great promise, but our footing is fragile, and a sustained, durable recovery is jeopardized by a fundamentally uneven playing field," RIAA chairman and CEO Cary Sherman wrote in a Medium blog post this week, geared to the release of the numbers. He added, though, that the industry has not yet found a model for making sure artists are fairly compensated, especially in regards to the small amount of revenue that accrues to artists when their music is streamed on YouTube.
"To the fan, there is often little difference between the multitudes of services available," wrote Sherman. "Yet the payouts to creators are very different and vastly impacted by outdated or abused laws and regulations."
In 2017, U.S. music industry revenues jumped 16.5 percent in retail value and 12.6 percent in wholesale value, to $8.7 billion and $5.9 billion, respectively -- growth that's attributed nearly entirely by RIAA to growth in paid subscriptions to streaming services. Streaming music revenues reached $5.7 billion in 2017, compared with $4 billion in 2016 and $2.3 billion in 2015, the year Apple Music launched.
Streaming services crossed 50 percent of the industry's revenue for the first time last year.
According to the RIAA, streaming comprised of nearly two-thirds of the industry's revenue in 2017, compared with physical (17 percent) and digital downloads (15 percent.) As streaming grew, digital downloads fell 25 percent in 2017. And while physical media revenue is far off its peak, it fell just four percent last year, to $1.5 billion.
This continues a renaissance in revenue for the industry, which was battered for years by the collapse of its traditional model. In fact, 2017 marked the first time since 1999 in which U.S. music revenues grew for two years in a row.
The RIAA release did not split out the revenues or market share numbers for the different streaming services. As of earlier this month, Apple Music had reached 38 million subscribers, and the service is expected to overtake Spotify, at least in the U.S., as soon as this summer.
"Our story continues to be one of great promise, but our footing is fragile, and a sustained, durable recovery is jeopardized by a fundamentally uneven playing field," RIAA chairman and CEO Cary Sherman wrote in a Medium blog post this week, geared to the release of the numbers. He added, though, that the industry has not yet found a model for making sure artists are fairly compensated, especially in regards to the small amount of revenue that accrues to artists when their music is streamed on YouTube.
"To the fan, there is often little difference between the multitudes of services available," wrote Sherman. "Yet the payouts to creators are very different and vastly impacted by outdated or abused laws and regulations."
Comments
How can you say that? There has always been creativity and independent artists in the music industry. You can even have talent and creativity in a cover song. Not liking a particular, popular genre has no bearing on anything else going on with all the other music in the world. Outside of languages and tech, music might be the only other human creation that evolves constantly.
But in both cases, I purposely stream their music from Apple Music when in my car or elsewhere so that they not only got the boost from an album purchase, but the ongoing revenue from streaming. Everyone else, I just stream if I'm interested.
The market is shifting into two forms:
a) The STREAMING market for those who value CONVENIENCE over quality. This is wiping out the download market. Apple doesn't even sell iPods anymore.
b) The PHYSICAL market for those who want ownership, COLLECT, and value QUALITY (CD resolution or hi-res (e.g. SACD), and vinyl)
While there are hi-res download formats, their sales are a trifle, they cost more than SACDs, and while it may become possible to stream in CD quality or better as a default (without requiring specialist providers), the fact is that 99% of streamed data is low-res lossy data at about 1/8th the data throughput of CD, because most of the streaming market simply does not care: the model is all about convenience.
1.a. There may soon be a market for uncompressed streaming audio. The technology and bandwidth are currently available, and unlike the various physical media markets, deployment could be quick and easy. Apple Music could charge an extra $5 per month for access to lossless and even surround sound mixes of whatever is out there. Existing Apple TVs connected to home Audio can deliver it. Lots of people have ATVs connected to home theater equipment that already deliver high bandwidth audio attached to video content. Such a business model wouldn’t be hobbled by the high costs and inconvenience of re-purchasing content on SACD, Blu Ray Audio, etc. These formats continually fail because they’re too niche, and too expensive. People will re-buy a few favorites in those formats, but not their whole catalog, and so sales don’t warrant continued production. Apple already delivers 4K video content without requiring that consumers re-purchasing everything. They can likewise make best available audio content an option by putting it on their servers once and flipping the switch on for consumers.
2. Apple still sells iPods.