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Music Streaming Revenue Continues to Soar

Ross Kelly


Music Streaming Revenue

Many of us remember buying our first CD – whether it was Linkin Park (or whatever tickled your youthful fancy) – it was a truly wonderful feeling. Generations to come may not experience this euphoria, however, as revenues from music streaming have eclipsed physical music sales for the first time.

Music streaming revenue surpassed sales of CDs for the first time ever last year, according to the 2018 IFPI Global Music Report. The popularity of streaming services such as Spotify and Apple Music appear to be bringing the era of the CD to a heartbreaking end.

Revenue for streaming services such as Spotify, Apple Music and Amazon Music rose more than 40% last year to a whopping $6.6 billion, which equates to around 38% of the $17.3 billion global music market. Sales of CDs last year saw a 5.4% drop to $5.2 billion. This means that CD sales now account for 30% of the global market; marking a downward trend that could soon have CDs becoming a fond memory.

Out With the Old…

Although CD sales are falling it’s not all bad news for the music industry, far from it. The music industry is finally booming. Global music revenues have enjoyed three straight years of growth from 2014 to 2017, up by 8.1% to $17.3 billion.

Recent growth has been impressive and could mark a recovery for the music industry, however to put this recover into context, the total industry revenues for 2017 were still only 68.4% of the market’s peak in 1999 – The music industry is far from the dizzying heights of the 1990’s, but it’s making ground once again.

Frances Moore, Chief Executive at IFPI says: “the industry is on a positive path of recovery but it’s very clear that the race is far from won.”

Moore continued, stating: “Record companies are continuing in their efforts to put the industry back onto a stable path and, to that end, we are continuing to fix the value gap.”

A point worth noting is that CD sales have made up a staple part of the music industry since the 1980’s, and many musicians and record labels are hesitant of the whirlwind changes being witnessed across the industry – Changes that appear to be detrimental to artists. Music executives have been vocal in their criticism of social media platforms such as Youtube for its apparent exploitation of musicians on the site.

According to industry executives, Youtube has not been paying their fair share of royalties to labels and artists. Where artists previously made money hand over fist through the sale of CDs, through streaming sites they don’t benefit nearly as much.

According to statistics, Youtube – which has over 1.3 billion users – paid only $856 million in royalties to music companies last year. This equates to a measly annual payment of 67 cents per user. Compare this to income from ad-supported streaming services such as Spotify and the numbers are damning for Youtube.

Revenue generated by the 270+ million music fans who use platforms such as these stands at just over $5.5 billion – That’s a significant annual boost of $19.33 more per user.

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Tiny Gains

Although revenues from physical formats declined throughout the majority of markets, vinyl appears to be making a comeback, albeit slowly. Are music lovers flocking back to what they knew and loved before the advent of CDs? Or it could simply be a new generation of listeners looking for that new track on a glorious piece of vinyl?

According to the report, global revenues from vinyl sales grew by 22.3% in 2017 which is a remarkable rise. However, vinyl still only accounts for 3.7% of the total recorded music market. Nonetheless, these numbers – and those over the last ten years – will please many in an increasingly digitised world; especially artists.

In the UK alone, record labels and artists earned more than double the royalties from the sale of just over 4 million vinyl records than they did from the 25 billion music videos viewed on Youtube last year.

Regional Growth

Europe, Asia, Australasia and the Americas all saw growth in the music industry last year, however growth in Europe was the slowest at 4.3%. In fact, Europe grew at a slower rate than in 2017 which saw 9.3%.

This doesn’t mean the digital revenue isn’t booming, however, as it continued to perform strongly – Growing 17.5% and accounting for 43% of the market. Total streaming was up 30.3% with revenues from paid subscription services accounting for 70% of digital revenues.

Europe’s largest markets, Germany, the United Kingdom and France all saw growth in streaming services (46.2%, 41.1% and 24.1% respectively). The European market reflected the global trend toward physical revenues, particular CD’s with a 7.4% decline.

Ross Kelly

Staff Writer

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