Streaming services like Apple Music poised to control music revenue in 2019
Streaming services like Spotify and Apple Music accounted for 47 percent of all recorded music revenue in 2018, making it likely they'll cross the 50 percent mark this year, according to official industry data.
Streaming income jumped 34 percent last year to $8.93 billion, pushing overall industry revenue up 9.7 percent to $19.1 billion, said the International Federation of the Phonographic Industry. The group specifically pointed to paid subscriptions, which claimed 32.9 percent of industry revenue.
The recording industry has been growing for four straight years, but in effect is actually recovering from a "decade-plus of decline," the IFPI noted. Labels and publishers were slow to adapt to the arrival of digital music, which resulted in piracy becoming commonplace even after the arrival of legal storefronts like iTunes and radio services like Pandora.
On-demand streaming may have finally cracked the value proposition needed to reach the masses. While buying a single album on iTunes typically costs at least $9.99, that same money grants access to tens of thousands of albums on Apple Music, if only for a month at a time. The convenience has apparently proven worth it for many people, even if some artists and labels are still holdouts, preferring to steer customers to shops like Bandcamp.
That option can make strong economic sense. Many artists have complained about earning poor revenues from on-demand services, and in fact pop superstar Taylor Swift initially refused to allow her music on Apple Music until Apple promised to pay musicians for streams during listeners' three-month trials. It's common for artists to depend on concerts and merchandise to actually sustain themselves.
Apple has since tried to position itself as more artist-friendly. Recently, for example, it declined to appeal royalty increases for songwriters.
Streaming income jumped 34 percent last year to $8.93 billion, pushing overall industry revenue up 9.7 percent to $19.1 billion, said the International Federation of the Phonographic Industry. The group specifically pointed to paid subscriptions, which claimed 32.9 percent of industry revenue.
The recording industry has been growing for four straight years, but in effect is actually recovering from a "decade-plus of decline," the IFPI noted. Labels and publishers were slow to adapt to the arrival of digital music, which resulted in piracy becoming commonplace even after the arrival of legal storefronts like iTunes and radio services like Pandora.
On-demand streaming may have finally cracked the value proposition needed to reach the masses. While buying a single album on iTunes typically costs at least $9.99, that same money grants access to tens of thousands of albums on Apple Music, if only for a month at a time. The convenience has apparently proven worth it for many people, even if some artists and labels are still holdouts, preferring to steer customers to shops like Bandcamp.
That option can make strong economic sense. Many artists have complained about earning poor revenues from on-demand services, and in fact pop superstar Taylor Swift initially refused to allow her music on Apple Music until Apple promised to pay musicians for streams during listeners' three-month trials. It's common for artists to depend on concerts and merchandise to actually sustain themselves.
Apple has since tried to position itself as more artist-friendly. Recently, for example, it declined to appeal royalty increases for songwriters.
Comments
the problem between the streaming companies and the music industry has always been the amount paid per song. The label doesn’t always get the biggest share. But the real problem is that we now know that ,people simply won’t pay more the]an $9.95 per month for music. There are other services, such as Tidal and QoBuz (which I subscribe to) that offer uncompressed streaming for more per month. But the equation is the same. Few people subscribe to these higher end services.
so the problem is that a streaming company can’t make money at $9.95 a month. Their payout of royalties and that of running the business is higher than that. It’s why Spotify and Pandora relied on a constantly renewing stream of outside investment to keep going. Most all streaming services over the years have gone out of business. A few have been bought out, and THEN gone out of business. Even Sony failed at this.
pandora is in a lot of financial trouble now. Spotify which went public last year, is having financial problems. I believe that, in the end, those left standing will be those that are owned by much larger companies who are using them to entice people to their ecosystems. Companies like Apple, Amazon, Google, Microsoft and possibly a very few others. They can offer this as a service, and not worry about being profitable as long as they feel they’re gaining more than they’re losing by having more customers overall.
so what does this mean to those who spend a lot of money producing this music? It means that they have to hope that they get so many streams, on average for their offerings, that the very small amount they get for one stream isn’t that important. This is working for digital books, where Amazon and others offer free books, and amazon offers a service for $9.95 a month (which I belong to) that allows you to read any book or series that’s available to it. Not all books, but a very large, and growing percentage. Authors say they prefer it even though they get very little per read, because people are more likely to read when it’s as thought it’s for free, and unlimited. It’s good because people will read all 10 books in a series when it doesn’t cost more than that $9.95 a month for that and everything else. Authors therefor get readers who wouldn’t otherwise buy all 10 books. Do that a few times a month, and you save big.
same idea with music. Is it working? Many artists are happy. Some are not. That’s nothing new.
All these "service" models where you never actually get to own anything but keep shelling out money don't work for me.
Same is happening with TV.. cutting the cord and going with Netflix and Amazon Prime was a benefit.. but then Disney and HBO, etc start to do their own thing and you have to pay another $10 for each of those if you want them... it is going to end up worse than cable was.
Here is a tweet from Peter Frampton:
“For 55 million streams of, ‘Baby I Love Your Way’, I got $1,700. I went to Washington with ASCAP last year to talk to law makers about this. Their jaws dropped and they asked me to repeat that for them.“
https://mobile.twitter.com/peterframpton/status/1025584924609400832?lang=en
Do you think Hollywood would take $1700 for 55 million tickets to a movie?
But here a breakdown of the numbers comparing Streaming to Downloaded Sales. If an artist manages to have their Album of 10 songs saved and have the entire album streamed by 50,000 fans 100 times each beginning to end on Spotify, total revenue would be $20,000. This is based on 5,000,000 streams by SpotOn Subscribers at their rate of $.004/ stream and assuming you don’t have a significant number of free users.
Keep in in mind this is the total revenue paid to the record company and is divided amongst the artists producers after recouping expenses based on contracts. If the artist is fortunate to be independent this would go to the artist. Chances are good that they have more than this invested in recording and promotion of the project.
On the the other hand had those same 50,000 fans purchased a download or physical copy of that same CD at $12.99, the total revenue for those sales would be $649,500.
This means the project earns only 3% of its previous value assuming each fan plays the Album 100 times. How likely is that?
Apple Music has been a life changer for me. I used to spend thousands a year on music. People like yourself are not the target market.
Are you actually trying comparing the number of streams of a three minute song to ticket sales of a hollywood movie?
I don't need to "own" something to enjoy or value it.
It's an odd month when I download fewer than five or six albums, old and new, in addition to checking out some curated playlists of singles. $10/month is well worth it.
I agree I'm not the target market.
There is no way I would be able to find $1000 of music in a year that doesn't make me want to cover my ears and run away screaming... Even when I find a song I like, it is rare for me to like the whole album. I might look for a greatest hits album and only get the songs that worked. The best thing iTunes did was let me buy only the good songs.
Apple Music is 2 to 5 times more expensive than I would be willing to pay.
Now if Apple would consolidate things so iCloud (2TB) + Apple Music + Apple TV+ + the new Gaming service were available in a bundle... if I could get all that together for a reasonable price (less than $15/month) that would be something.