Streaming overtakes downloads and physical sales for first time ever in bumper year for music industry
Streaming accounted for 51% of all US music industry revenue in 2016.
Streaming revenue overtook music downloads and physical sales for the first time in 2016, according to a report from the Recording Industry Association of America (RIAA).
Streaming accounted for 51% of all US music industry revenue last year, with digital downloads and ringtones taking up 24.1% and physical sales 21.8%. Revenue from synch deals made up 2.7%.
The growth in the streaming market was responsible for an overall rise in revenues of 11.4% – the best rate of growth for the music industry since 1998, the year before filesharing services such as Napster started eating into profits.
In 2015, streaming accounted for just 34.4% of US music revenue, with digital downloads more or less the same at 34% and physical sales at 28.8%.
Despite the increasing popularity of streaming platforms like Spotify and Apple Music, RIAA chairman Cary Sherman was cautious about the figures.
“As excited as we are about our growth in 2016, our recovery is fragile and fraught with risk,” Sherman said in a blog post.
“The marketplace is still evolving, and we’ve experienced unexpected turns too many times before. Moreover, two of the three pillars of the business — CDs and downloads — are declining rapidly. It remains to be seen whether growth of the remaining pillar will be sufficient to offset the losses from the other two. Much rides on a streaming market that must fairly recognize the enormous value of music.”
Sherman also criticised YouTube for paying lower royalties to artists , accusing the company of “exploting legal loopholes” to pay them less than other platforms.
“It makes no sense that it takes a thousand on-demand streams of a song for creators to earn $1 on YouTube, while services like Apple and Spotify pay creators $7 or more for those same streams,” he said.
“It may be the same song requested by the user, on the same device, but the payouts differ enormously because of an unfair and out-of-date legal regime.”
Sherman concluded by noting that the US music industry is still half the size it was at its peak in 1998.
“A year of growth in the U.S. music business is welcome news. It suggests that years of patiently nurturing a nascent streaming marketplace has begun to pay off. But it does not erase 15 years of declines, or continuing uncertainty about the future.”