The Recording Industry Association of America has revealed that streaming music sales surpassed digital downloads as the recording industry’s single biggest source of revenue last year. According to a report from the association, streaming generated $2.4 billion in 2015 and contributed 34.3% of overall sales.
One of the key factors behind this growth is the increased integration of streaming applications with social media platforms such as Facebook. For instance, the collaboration between Spotify and Facebook allows new Spotify users to access the application via Facebook and share custom playlists with their friends. A report on the global music streaming service projected the market to continue growing at a rate of 12.57% until 2019.
Streaming services are overtaking digital stores like Apple’s iTunes. Revenue from digital albums declined 5.2% in 2015, while sales of singles declined 12.8%. The digital music market had been expected to benefit from the rising penetration of mobile devices, but this hasn’t been the case. Instead, streaming music services have become a global phenomenon in recent years. Many service providers offer online radio streaming services. The user can also download music and playlists directly to their devices for offline listening on the go without using the Internet. The mobile music streaming market is expected to grow 28.07% by 2019.
The RIAA say record labels are pushing streaming services to convert more free users to paid subscribers. Paid streaming services accounted for half of overall streaming sales, as the number of paid music subscriptions grew to 13 million by the end of 2015. A large proportion of Spotify users are still using the free service.
Source: Research and Markets
MacDailyNews Take: Hence Apple Music.
SEE ALSO:
Apple Music adds another million subscribers in 1 month, surpasses 11 million paying members – February 12, 2016
Apple Music subscribers could hit 100 million users in 6 years – January 11, 2016
Apple Music nabs 10 million subscribers in 6 months, which took Spotify 6 years – January 10, 2016
Uh-oh, Spotify: People are paying up for Apple Music – November 5, 2015
Why Apple Music will win in streaming music – October 27, 2015
Apple Music takes a huge bite out of Pandora – October 23, 2015
Taylor Swift calls Spotify a ‘start-up with no cash flow’ – August 4, 2015
Oh ok, Spotify listeners are upgrading to Apple Music – July 19, 2015
Apple Music could kill more than just Spotify, it could kill music labels, too – June 25, 2015
Why Apple Music will gut and publicly execute Spotify – June 10, 2015
Spotify CEO claims to be ‘ok’ with Apple Music – June 9, 2015
Jimmy Iovine and Eddy Cue: Apple Music gunning for Spotify, YouTube, and terrestrial radio – June 9, 2015
Apple Music’s huge advantage over Spotify – June 9, 2015
Apple’s revolutionary Apple Music just might prove its skeptics wrong – June 8, 2015
Apple unveils revolutionary Apple Music service – June 8, 2015
“…projected the market to continue growing at a rate of 12.57%…”
That’s a pretty damn specific number given that, in reality, it is just a wild ass guess. That looks very much like sarcasm.
I’m a big fan of Apple Music but my understanding is that streaming does make much money for the artist compared to an iTunes or actual CD/Vinyl purchase. Shouldn’t the rate and percentage be renegotiated?
sure, then apple music, pandora spotify will be $30 per month
Oops….correction:
I’m a big fan of Apple Music but my understanding is that streaming does NOT make much money for the artist compared to an iTunes or actual CD/Vinyl purchase. Shouldn’t the rate and percentage be renegotiated?
Streaming has its place but I’d rather own my music. Couldn’t streaming just be a temporary thing? Maybe not because nearly everyone is connected to the internet in some way or another so, if anything, streaming usage can still grow. I guess only artists could put a stop to it by not allowing their music to be legally streamed. Apple is going to have to make an effort to get more paid streaming subscribers. Apple should give a free streaming trial period to anyone who buys a new Apple product. That might hook quite a few people into using their service.
I do both. I use Apple Music streaming to find new music or listen to music I would normally not buy. And I buy music I really like.
My problem is with Apple Music’s interface. I can’t create custom radio stations like I can in Pandora or Spotify. There are a lot of features that Pandora and Spotify has that I wish Apple Music would incorporate.
For the longest time, I was firmly convinced that subscription services, as they used to be called (Rhapsody, Napster…) had no chance. The logic was, you rent movies, which you watch once, or twice, or five times, but you own music, which you listen to for years and years. And for a long while, iTunes validated that concept: subscriptions were marginal in the digital music market.
Then came Spotify, and mobile broadband, and smartphones (= iPhone). And slowly, but surely, the picture changed.
I am now a paying subscriber to Apple Music (family plan). I now understand how incredibly convenient it is to have the world’s entire music catalogue at your disposal at any time. Practically any recorded piece of music, from almost everywhere in the world, can be found on Apple Music. The old justification is simply no longer that convincing. If I live to be a 100, I will have spent less than $6,000 on Apple Music subscription, which is equivalent of max. 600 albums. There is no doubt in my mind that before I kick the bucket, I will have listened to much more than just 600 albums (or 6,000 individual tracks).
Financially, renting music, when the catalogue is so vast, does make sense, and the ability to download your choices of the day eliminates the common streaming challenges (lack of reliable network connection). For most of us in the developed world, and many in the transitioning countries, Apple Music is an excellent solution.
The biggest issue here is proper compensation of artists from this subscription model. When someone spends $1 for a song on iTunes, I knew that the independent, self-publishing artist received at least $.80 from that sale. I have no clue what happens when the song is streamed/downloaded through Apple Music.
I used to think the same way about subscription music. I would always buy my music. In the same vein, many others never thought digital music was worth anything. Real collectors would always buy physical CDs they would proudly proclaim. (Cue roll eyes.)
Me? I love high fidelity. But I haven’t listened to a physical CD in years. (I have over 600 boxed up in a closet. Any buyers?) Unless you have a multi thousand $$$ speaker system and a room insulated from outside noises, the slight extra quality in sound in CDs is imperceptible. Do I need it in a car? No. Do I need it with earbuds? No.
Now I have Apple Music (also family plan) and I realize just how completely wrong those perceptions were that I and many others had. I say to myself now, what the hell was I thinking??!
The copyright owner gets 1/5 of a cent
Forgive me for asking but is that number from a reliable source, or are you pulling it out of thin air (or some other place…)?
And if it is 1/5 of a cent (in other words, $0.002), is it per each stream, or per each user / per track?
Users can stream live or download and play offline. Does Apple Music (and Spotify, and others) keep track of that offline playback count, and then upload that playback count back to the server once user re-connects? Do we know how this works?
So, if my math is correct, for the artist / copyright owner to get the same revenue from streaming/subscription as they get from direct sales, the person streaming the song has to stream it 400 times. Once per day, every day, for 13 months.
I think the key reasons that subscriptions are working now are:
1. The catalog is now huge
2. You can download and listen offline
3. The price is reasonable especially the family plan
For Apple, their revenue is probably pretty good for subscriptions. If a song costs a cent to play (license and distribution costs), then Apple’s revenue is 80% if the average subscriber listens to 100 songs a month.
Also remember that whilst they may be getting less revenue from sales, they are more than making it up on subscriptions.
Actually, the ability to listen offline wasn’t the catalyst; I would argue, the opposite is true. Subscription services that relied on Microsoft’s DRM (WMA, followed by PlayForSure) only worked with offline playback, since no mobile carrier at the time provided enough bandwidth for audio streaming, and desktop streaming was rather marginal. Most users simply download their music to their desktop, then synchronised it to their portable playback devices (iPods and equivalent at first, then phones). Subscription services were offering unlimited access, but you had to re-connect your portable device every month in order to re-confirm your status.
Spotify and other subscription/streaming services took off when it became feasible and easy to stream music without having to download. Of course, the huge catalogue and the low price helped very much to speed up the adoption.
As for the cost to play, if Jim Swan above is correct, the song costs much less than one cent to play.
When it comes to revenue from Apple Music, compared to iTunes Store, it is most likely a wash; as you suggest, losses in sales are likely offset by the growing subscription base. And more importantly, subscription model is a bean counter’s wet dream: you have a steady recurring revenue stream that has no expiration date.
What if people are streaming more than they’re downloading because they hear less and less that they’d care to own? Are they finding that on average, new popular music these days has a dispiriting sameness, and a tunelessness, compared to the inventive and melodic records of years past? IOW maybe it’s the music, not just the distribution models, that are responsible for the shift.
if artists want to make money , hit the road and earn it. let your music stream to the masses, and when you come to town they will fill your venue. maybe even buy t shirt or poster, which usually sell for more than a CD
Streaming: Short term thinking, long term empty music collection, unless you keep on paying and paying and paying…
I’d like a comparison of the finances involved in both strategies.
Another click-bait headline…
Apple’s iTunes store is much more than music sales, and the other parts (apps, movies, TV shows, books, podcasts, etc.) are not being impacted by streaming music.
Its sad that people worry about paying the artists. If artists just want money, then they are just opportunists. Real artists want to make music, not just money.
My 15-track album was streamed once last year in the US Apple Music site, for which I earned 3 cents. My one Japanese listener skipped Track #15, but somehow the ¥ $ exchange rate worked in my favor: I got 4 cents from that one. Most of my 72-cent income last year (a record high BTW) came from Spotify and several other streaming sites, which pays less than Apple Music does. Meanwhile, it costs $49.95 per year to have the aggregator Tunecore keep my album loaded on all those sites. The aggregator CD Baby doesn’t charge a flat fee per year, but takes a percentage of the earnings, like an old-fashioned agent would. Expensive hobby! The “mainstream” hot performers who get millions of listens are the only ones earning any significant income from streaming.
My album title says it all: “None-Too-Great Hits”
Well, it’s my fault, really, I didn’t have the money to record the songs professionally, so my album is of only DEMO quality. It’s been on ITunes for nearly ten years now, and so far has sold only two downloads, both to local friends of mine who never spoke to me again.