U.S. Music Industry Sees First Double Digit Growth in Almost 20 Years as Streaming Takes Over
U.S. Music Industry Sees First Double Digit Growth in
Almost 20 Years as Streaming Takes Over
3/30/2017 by Ed Christman
Streaming overtakes sales for the first time as the
leading driver of revenue for the U.S. recorded music business.
It looks like happy days are here again: U.S. recorded
music sales were up 11.4 percent in 2016. The industry brought in $7.65 billion
in revenue, according to the RIAA, up from $6.87 million in 2015. Although the
music business showed signs of a recovery at the half-year mark, the 2016
year-end results show more significant growth, led by streaming revenue.
This is the first time since 1998 that the U.S. industry
has experienced a double digit increase in overall revenue. Back then, the
industry enjoyed revenue of $13.7 billion.
Unsurprisingly, streaming is pulling the business back to
health, as revenue grew 68.5 percent to $3.93 billion, up from $2.33 billion in
2015. In fact, streaming grew so much last year, that it now accounts for more
revenue than downloads, CDs and vinyl combined. Together, these formats brought
in $3.51 billion. Paid music subscriptions doubled in the U.S., according to
the RIAA -- up to 22.6 million, from 10.8 million in 2015.
Even with this robust growth, recorded music brings in
just over half the $14.6 billion it generated at its 1999 peak.
There is more good news, though. When you subtract out
the year’s $883.9 in royalties collected by SoundExchange, and divide revenue
by the 431.74 billion streams counted by Nielsen Music, the average per-stream
rate is $0.0072. Last year, that number, which includes video and audio
on-demand streams, was $0.00517. In 2014, it was $0.00666.
However, 2016's number is somewhat misleading, as YouTube
no longer reports all of its streams to Nielsen Music. Sometime last year, it
began only reports streaming data on artists whose music stream over 1,000
views a day. Consequently some undetermined amount of on-demand streams go
unreported, and if they were included, it would result in a lower per-stream
rate.
So even though on-demand, ad-supported revenue, like that
from Spotify’s free tier and YouTube, grew 25.9 percent to $469 million,
payments from paid subscription services are growing three times as fast. Paid
subscriptions generated $2.26 billion for the industry industry, up 94.9
percent from $1.16 billion in 2015.
On the sales side, digital downloads accounted for $1.84
billion while physical sales totaled $1.67 billion. In revenue, the decline was
measured at 24.1% to $9.06.8 $906.8 million, down from $1.195 billion.
Digital album sales declined 21.3 percent to 86 million
units from 109.3 million units in 2015; they generated nearly $876 million, a
decline of 19.6 percent from $1.09 billion in 2015.
On a per unit basis, the average list price for
downloaded songs increased slightly to $1.21 from $1.20, while the average list
price of albums also increased slightly, to $10.18 from $9.97 in 2015.
Physical sales remain important to the industry,
accounting for 21.8 percent of revenue, though they generated 15.7 percent less
revenue in 2016. And since unit sales were only down by 15.7 percent, average
prices are falling as well.
CD sales fell 20.9 percent to $1.17 billion. The average
list price of CDs was $11.80, down from $12.36 in 2015.
The vinyl revival is losing some steam, although the
format remains a bright spot. Unit sales grew 1.8 percent to 17.2 million,
while revenue rose 3.5 percent, to nearly $430 million. (This year, revenue
from ad-supported streaming surpassed than of vinyl -- it rose to $469
million.) Since vinyl growth averaged 38 percent a year from 2012 through 2015,
according to Nielsen Music numbers, some wonder if the format’s resurgence has
peaked.
Revenue from synchronization licensing -- $204.3 million
-- was essentially flat, while revenue from ringtones and ring-backs fell 26.5
percent to $40.1 million.
For the first time, the RIAA broke out revenue generated
by limited-tier subscriptions -- those that restrict the availability of songs,
the devices they can be heard on, or other features. That category brought in
$220.3 million in revenue. In another first, the RIAA reported $101.2 million
in revenue from ad-supported streaming services that operate without a
statutory license (and license music directly from labels).
Comments
Post a Comment