Understanding: The Impact of Streaming versus the Music Industry

Pictures taken from the IFPI GMR of 2017, page 11

Market Figures Analysis

In order to be accurate please keep in mind that the IFPI hasn’t adjusted its figures to account for inflation. Also, early figures were the direct gross of physical units sold, without factoring in performance rights. In the late 90s / early 00s, the figure to keep in mind is a market of roughly $38 billion in today’s dollar value.

I have often praised streaming and said the market has a chance of returning to its all-time peak worth of $38 billion by 2025. The figure above suggests the market remained around $15 billion, give or take a billion, every year from 2009 to 2016. Should we expect it to remain this way? Absolutely not. While the figures seem flat, the market is fundamentally different now from the one in 2014.

How so? Back in 2014, the evolutions were the same as today. The physical market was tumbling, downloads had started their free fall and streams were booming. The difference is that streams accounted for less than 15% of the total business by 2014, so even 50% increases from that sector weren’t enough to afford for 20% losses on avenues that represented 70% of the market. By 2016, streams were already up to 29,5% of the global market and growing faster than ever posting a tremendous 60,4% increase. Since its share is much bigger now its growth impacts far more on the overall total, which resulted in a 5,9% increase in 2016.

But this trend is far from being over. The more it continues, the more streaming’s share of the pie will be large, and the more its increase will fuel the overall total. The below table lists all five fragments of the music industry revenues in billions of dollars as well as their percentage of change in 2016.

What happens when we apply the same percentage of evolution for each avenue in the upcoming years?

You can now understand why artists no longer whine anymore about streaming and why no insider is worried about Spotify running at a loss for now. While the creation of iTunes was like opening a Pandora’s box, streaming is the Ali Baba’s cave of the  music industry.

Obviously, one may wonder if streaming will really continue booming like this. I always insist that every figure has a meaning. You can’t just expect a market to keep growing incredibly well over your previous performances for no reason. Downloads too were increasing like crazy at first and we know what happened there. Will it be a déjà vu moment or a real success story?

31 thoughts on “Understanding: The Impact of Streaming versus the Music Industry”

  1. China market have music store like QQ Music, someone famous singer can sold millions copies of digital record in their release day due to stan fans.
    Besides, I want to know who’s the next artist, and Barbra popularity analysis please, too! There’s so many discussion about you SCPS artist list in many music sitesor forms, and question where Barbra will rank, her real us and worldwide sales is one of the m ost mysterious in divas

    1. Hi Karalady!

      Claimed sales figures coming from platforms like QQ Music are absolutely false. If you check IFPI annual Top 50 lists, you will notice that no Chinese artist has made it in recent years with 600,000 units being enough to feature on it nowadays. All similar claims about Katy Perry or Taylor Swift are just as wrong too.

      The next CSPC artist is a male act from the past. Barbra isn’t planned over the next few ones to come soon.

      1. I see, I know ur busy in many artist SCPS, I just want to know the total physical records Barbra sold. I read your album sales figure in french form and Fan of music site, but there’s no single sales and the data was out of time, could you give us an approximately estimate of Barbra’s singles and album us&worldwide ? I know you had done some researchs and analysis for barbra before.

          1. MJD, I know ur busy in many artist SCPS, I just want to know the total physical records Barbra sold. I read your album sales figure in french form and Fan of music site, but there’s no single sales and the data was out of time, could you give us an approximately estimate of Barbra’s singles and album us&worldwide ? I know you had done some researchs and analysis for barbra before.

          2. Hi Karalady,

            I won’t commit on a figure before studying her case carefully, especially since I never studied in full her singles sales so far. After the few ones already scheduled, she will be added to the pipe for sure as she is the biggest female artist missing at the moment.

      2. That’s because they are single sales though not album sales. You download a track from the album and store it on QQ.

        They seem quite similiar to korean digital sales in that way (pre 2013 reform)

        1. Sorry I don’t know how to edit a comment 🙁
          It costs 15 yuan to store about 10 tracks (for ANTI) so it’s about 30 cents per track. Not all western albums have been released to the site though. Maybe it’s because of me being nationalistic but I don’t see what’s the difference between this and korean music platforms.
          Really hope you might reconsider and possibly take them into account in future?

          1. Hi Jack!

            I have no issue at all with counting Chinese figures. For now, I’m still pending additional information. They lack transparency, we just don’t know which song is selling what. They assign the numbers to the album, but we don’t know to which song it relates, nor we know how is it calculated, if it includes streaming units or not. At the moment, it’s sadly impossible to exploit those numbers.

          2. I used a VPN and apparently it’s like 1-2 Yuan depending on the track, but it’s not an individual track purchase. Like the number will say 10 million, but it’s 1 million people that have chosen to store the album just 10 million tracks that have been stored. Also it has real time updates so it’s pretty transparent. There’s also Netease Cloud Music and others as well. All 5 of these streaming services have more monthly users than spotify.

            The only disadvantages is the number of western albums available for purchase because they only blew up in like 2015. Like Rihanna has ANTI but nothing else, Taylor has 1989 and reputation, witness is also a big seller. And the price is cheaper.

            I think it’d be an interesting study to add on. If there’s anything chinese you need help translating i’m sure your dozens of loyal fans would help haha.

  2. In your introduction, you mention how it will change the music we listen to with our mothers listening to our music and you earlier mentionned the surprising success of “Despacito” as an example of Latin acts taking over with the booming of streaming. How does that happen ? What does it have to do with streaming ?

  3. Thanks, I’ve been looking forward to this. I know that artist CSPC articles are what *most* people come here for, but I wish we could also have more articles like this – your skills as a music business analytic are pretty much unparalleled IMO (speaking as a finance analytic myself, haha). Great job!

  4. I dont think streaming should count really,you have fanatics that will stream their favourite artists non stop that can get software like auto clicker that fakes youtube views.Plus i think everytime a song gets played on radio it should count also if these streaming sites count.What about when warner music took of loads of videos when they had a disagreement with youtube(https://www.cnet.com/news/talks-break-down-warner-music-pulls-videos-from-youtube/).what happens to the loss of streams for those artists.30 seconds to count as one stream is ridiculous it should be the full length of the song.Anyway thank you for your research and sharing your figures.

    1. Hi Me,

      Not counting streaming would be an outrageous nonsense, that’s the #1 revenue segment of the industry already. Figures of streams are gigantic, so big that the impact of a bunch of fanatics is absolutely irrelevant. In the past, you had fanatics collecting all versions of one album, here it is no different. Artists with no videos on YouTube perform better at Spotify, it is a mere transition of format so there is no loss for them, they may pretty well be winning in reality as audio streams are more profitable than video streams at the moment.

      BTW, the whole “physical sales are more valid” is utterly fake too, there was way, way more “fake” sales during years of physicals as the upcoming articles will highlight.

    1. Hi Harry,

      That’s a wrong perception. Drake’s first 3 albums sold a combined 1,737,000 units in their debut week in the US alone. All of them released in 2010 or later so those are definitely truly impressive figures. He was massive from day 1. They all sold more than Views in the US. Streaming barely made it more visible.

  5. Hi MJD,

    This article was so interesting! To be honest I thought that streaming was killing music industry because of the low pure sales that it generates.
    But your article starts to change my mind, I think your CSPC will become the basic way to count the popularity of an artist.

    I have a question, I know you’re not a medium, but do you think, in the future, we will speak about « equivalent sales » (like in the UK) or we will speak about « equivalent stream » (like in France)? Because of the streams increases, speaking of an 10 billions streams album seems to be more strangeful than a 10 million saller album.

    (I hope you can understand my « English ») 😂

    1. Hi Gonzalex!

      There is also a few more countries adopting the equivalent stream view like Denmark. It does make sense since sales will soon become irrelevant. Habits are often stronger than relevance, so we may keep talking about equivalent sales for long. Jornalists are too used to that to completely change their view right now. In many years, when most people would have live only with streaming, it may change.

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