The Strategist

Music-Streaming Services Were the Best Money-Makers in 2015

03/23/2016 - 13:35

Streaming services like Spotify and YouTube in 2015 brought to record labels and musicians more profits than services for downloading music, such as iTunes. However, observers note that the revenue from playing music on such services is growing slower compared to musical traffic on the same websites. This fact questions fairness of copyright royalties that the services pay to musicians.
Yesterday, the Recording Industry Association of America (RIAA) has published its data on the music sales market at the end of 2015. The report says that 2015 was a milestone for the streaming services: they have become the largest source of revenue for record labels and musicians for the first time in the history. By streaming services, RIAA means those which have paid subscription, such as Spotify, TIDAL, Apple Music, as well as services like Pandora, SiriusXM, and other Internet radio stations. The report also includes free on-demand services where users choose their desired music, but often are forced to watch commercials (YouTube, Vevo etc.).

In 2015, the share of revenues, which the streaming services brought to the music industry, was 34.3% of the total. Meanwhile, music download services similar to iTunes brought 34%. Sales of physical media (discs, records, tapes, etc.) attracted 28.8% of revenues, and 2.9% of revenue came from use of music and musical pieces in movies, advertising and other types of media.

RIAA says that 2015 as a whole was positive for the US recording industry: total revenue increased by 0.9% and reached $ 7 billion. The growth in revenue from streaming services offset the decline in revenue from charging services and physical media sales, ensuring overall growth by the end of the year. The report states that the revenue growth was recorded in all segments of the streaming services: the most popular are paid services, which in 2015 brought $ 1.22 billion in revenue (34% more than a year ago). Internet radio stations brought $ 800 million (an increase of 4%), on-demand services - $ 380 million (23% growth). Revenue from services for downloading music in 2015 decreased by 10% - to $ 2.3 billion. Sales of music on physical media showed the same reduction by 10% ($ 2 billion). The researchers noted the continued growth of interest in vinyl, which began a few years ago: record sales in the United States increased by 32% and reached $ 416 million in 2015, which was the highest level since 1988.

According to Head of the RIAA Cary Sherman, the results for 2015 indicate that the music business is actively adapting to changing consumer tastes. At the same time, Mr. Sherman said that "as the music consumption is growing, revenue growth for its creators are increasing not so fast. In 2015, music fans listened to hundreds of billions of audio and video tracks on services such as YouTube. However, revenue from playing music there was much more modest - far less than the revenue when playing on other services." In this regard, Head of the RIAA believes that the American music industry is ready for reforms, "which are necessary to ensure that all music community receive fair compensation for their work."