Digital sales are declining but streaming is growing. Consumers pay $10 monthly for a streaming service but they are not too inclined to buy a digital copy. In fact, digital downloads from iTunes and other online stores have experienced 17% decline for the first half of the year. Paid subscriptions are now making as much money as the digital downloads.
Based on new data that was released by the Recording Industry Association of America, during the first half of the year, the music industry of the United States generated more than a billion dollars with paid streaming. The data also revealed that paid streaming growth reached 112% year-over-year and it now accounts for 30% of the revenue of the music industry.
It is without doubt that Apple Music, Spotify and other small competitors have grown in the streaming space. This has reversed the two decade trend of declining revenues for the music industry. The revenue of recorded music retail has increased by 8.1% year -over-year. Streaming accounts for at least 50% of the total revenue of the music industry. The forms of streaming that have grown significantly include ad-supported listening through platforms like YouTube and Vevo and satellite radio.
The growth in streaming is largely due to a small number of services. Recently, Spotify has announced that it generated 40 million paying users all over the world. This is followed by Apple Music that has 17 million paid subscriptions. Paid streaming is certainly playing a big role in the music industry because in one or another, it has offset the dwindling sales of albums. However, in spite of the massive demand for music, the reality is that music is fundamentally undervalued. Streaming services rake in billions of dollars in revenue particularly when certain music is popular but artists and labels are only paid in pennies.
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