The Recording Industry Association of America, better known by their RIAA acronym, has published their much anticipated 2018 Shipment & Revenue Statistics. The main conclusion? Streaming is no longer a utopia but instead a true game changing actor. In fact, the US music industry, despite the collapse of sales formats, exploded by over 40% since 2015 to reach revenues of $9.8 billion.
What a time to be alive
There is several indicators which show how wonderful the impact of streaming is. The market boomed by more than 40% in 3 years. Annual revenues of the US music industry increased by $3 billion since 2015. The 2018 year has been the best by far since 2007. At the current rate, the market will be at its all-time peak by 2022. Maybe the most impressive way to read the last yearly results: streaming alone made more money in 2018 than all sales formats combined in each of the last 10 years. You have read it well, even if sales of CDs, LPs, and downloads are erased to null tomorrow, the market would still be healthier than during the dark era of iTunes.
Streams 7-2 Sales
There is no match. Streams are still booming with a year on year increase of 30.1%, from $5.66 billion to $7.37 billion. Both sales formats, downloads and physicals, are going down sharply. The former drops by 26% to $1.04 billion while the latter tumbles 22.8% to $1.16 billion. Physical sales actually go down by 33.3% in terms of units, but the fall is limited gross-wise thanks to pricy vinyl reissues.
It seems inevitable that downloads will disappear as even their biggest providers are moving away from them, switching to the streaming market. Their gross is slicing by $400 million per year so with only $1 billion remaining, providers like iTunes and Amazon should shut downloads down in 2020 at the latest.
CDs are just as dead still. They have been struggling for so long that it seems they will remain forever around, but the format is now truly in cardiac support phase. Numbers don’t lie: 52 million CDs have been sold in the US in 2018. This competes against 942.5 million in 2000. In short, for every CD sold in 2018, 18 were purchased in 2000. Last year alone, this format dropped by an insane 40.7%, the trademark of a medium that is moving away.
Sales of music videos are just as dreadful. They dropped from 33.8 million in 2005, the year preceding the arrival of YouTube, to barely 1.4 million in 2018, a score 24 times lower.
As for LPs, that some thought could recover their past brightness, they are stalling. Of course, they are still going up with a 7.2% increase in units, but this climb rate is under 10% for the third year in a row. It’s now clear that vinyls are limited to a specific consumer base.
Numbers don’t lie: 50.2 million Americans now own a streaming paid subscription. The figure is up 14.9 million, quite simply the highest annual increase since the implementation of this service. The boom in units (42.4%) is stronger than the increase in revenue (33.0%), mostly a consequence of family offers, which shows the format is actually crossing over various generations.
There is more to come
After 2 months of sales in 2019 data is confirming every trend that has been verified during 2018. Soundscan figures show that sales are down by 23%, but a 42% streaming raise concludes on a market increase of nearly 21% so far. Early months are more favorable to streams since they don’t compete against the holidays sales boost, but a fourth consecutive year of double digits growth is highly likely at this stage.
Of course, all these facts relate only to US results. The good news is that this scenario is happening virtually everywhere. Just last week, Spotify was deployed in India, hitting one million users after 5 days only, a highly promising performance.
The rich gets richer, so with these huge improvements in revenue the music industry has more and more money to promote their artists and sign new acts, two indicators that are also dark green at the moment. the big 3 record labels saw their revenues from streaming double in the last pair of years, with nearly 17% of their money going to R&D. Independent record labels are also enjoying a dramatic growth, now representing nearly 40% of the global music industry.
After 15 years of depressing environment, the next decade is going to be amazing. Do you feel this excitement rise?