Streams shot the US music industry to nearly $10 billion
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?
streaming revenues rates are criminal numbers for the artists but extremely juicy for corporations. This has to change.
Hi dvb! I don’t think we can summarize it that way. A few artists have been complaining about their streaming revenues, but it was mostly because: 1) they were used to get “large” payments per consumer, when they saw 1 million streams they though that was an awful lot and that royalties weren’t enough. That was 5 years ago, now that they understand how streaming work and how many millions of streams you can get every month, they definitely don’t complain anymore 2) they had no updated contract to factor in this format. So they were often getting 10/12% rates… Read more »
Posted this on another forum the other day that was talking about : https://www.musicbusinessworldwide.com/spotify-and-amazon-sue-songwriters-in-appeal-against-royalty-rise-in-the-united-states/?fbclid=IwAR1GhX6aJS0IGxKiuseKe2N3oAlrd7CDG5-TuGnyZWNuTpy8QYJoUpzVsIU This will get ugly: https://www.billboard.com/articles/business/8491190/lobbying-spots-music-modernization-act-licensing-collective-heats-up They took mechanicals for streaming and turned them into a system similar to performance royalties that the PRO (Performing Rights Orgs – stuff like ASCAP, BMI, SESAC) use. BTW – do you know where the term “mechanicals” came from? Player Piano rolls – the first recorded music format… . Guess what also came from player piano rolls? Spread Spectrum Radio – ya know the modulation scheme that runs all the man-bun, java-jockey wireless stuff… the actress Hedy Lamarr and her musician… Read more »
nope sorry, no excitement. Streaming is only for certain music styles. many bands are disappearing because of streaming. This is impossible for them to produce an album. music companies are not investing on the long term anymore and are more short term focus. quite boring actually.
Hi John! I’m sorry but your comment is stritly and completely false. The “streaming is for certain music styles” is fundamentally wrong. Some people fail to accept that hip hop music is organically the most successful genre of our age, just like by late 60s charts were flooded with rock, or in early 90s by euro pop / techno. Trends evolve and have absolutely nothing to do with the format. Had streaming platforms not been set up, Drake would be selling way more CDs than anyone else right now, it’s as simple as that. He was already outselling rock bands… Read more »
I am not really making reference to tier 1 artists. I am not worrying for them. but was more thinking about all these people that were able to make a reasonable salary by selling some CDs (tens of 000’s, hundreds of 000’s) . no one can demonstrate there was an equal/similar transfer of revenue from cds to streaming. Look at the french top album, it is all about urban, R&B, Rap.
Hi John! Rap is the new Rock, it’s normal to see their artists at the top of charts. Check 60s rankings and you will see rock only, that’s no different story! About the money, there is definitely way more artists making money right now than ever before. In the past only the ones part of big labels’ rosters were making money, and these rosters were often limited to 20/25 artists. Then, artists in their first contract were often paid very, very poorly. Now everyone can upload a mixtape on Spotify and make money. The 90s was clearly the worst period… Read more »
John I totally agree with you. It’s not about any particular genre, it’s about quality. Streaming does not promote quality music. You listen to music via streaming and it misses many parts of the song. If you look at different artists, their steaming numbers alternate according to the demographic. Rock artists generally have lower streams because their listeners go to work, streaming figures are more solid throughout the week as kids listen to their phones all day. There will always be good musicians but in the mainstream I fear not. The talent has been driven underground.
If album sales are still the main format. What makes u think that Rock can sell large amount of CD’s today? Rock has been dead for a long time. The last band that really made it big over the last 20 years are Linkin Park. No other band made it big. And prior to them I could only think of Nirvana who was massive. Rock has already been dead for a long time. Even before the existence of streaming and downloads they were already dying. I really dont think streamings has anyhing to do with it. Plus, if streamings really… Read more »
I’m predicting the cassettes will make a comeback in 2047!
I believe that labels will find a way to make CD’s cheaper. And that CD sales will rebound again. As per what MJD said. Big labels are spending big on R&D again. Its just a wild guess. 😀
Great article, thanks. I’m pleased that the industry is doing well again however mainstream music, at least what exists in the charts is certainly not generic and predictable. Music seems to be written and produced for the streaming market. Why are there not more artists like Adele? Few artists sell large amounts anymore, that’s because people don’t want to pay to buy music. I think if people love an artist, they will pay. Rock music has been destroyed, why is that? People still love it but the industry doesn’t like to sign up new rock musicians. Bizarre since most of… Read more »
My mistake, it is generic and predictable. The problem is that there are not enough creative people running the industry. It’s mostly corporate types, with commitments to shareholders. The industry has become risk averse, just like Hollywood. Hopefully independent labels will find the next global star and let them flourish for who they really are rather than moulding them into something bland.
I cant wait to see another artist being promoted like Adelle and Sheeran. Its been a while since we have an artist that was big enough to produce massive hypes that artists in the 90s and early 00s enjoyed.
Oh and I have a question for u guys. Around how many percent of record labels revenue came for touring?
Hi Michael! Record labels sell records, they ain’t supposed to earn money from tours at all! This is the area of the artist / his manager / booking companies. In recent years since sales dropped so much labels started to offer 360 deals to encapsulate everything on it, most notably to earn some money off touring, but this isn’t the standard approach and isn’t how they made money through the years. One thing to keep in mind still is that when an artist sign a label “worth xx million dollars” it should be seen as a loan from the label… Read more »
Wow. No wonder artists make so much monetyfrom touring. I always thought it was split in half, but then again I always wonder. If it is split into half, its impossible for artists to make so much from the tour. 😁. Now I know why.
Ah that’s great to know, thanks for the info. I always wonder why labels are ready to spend so much in newer, unestablished artists like Camila Cabello or Cardi B. I guess the artists must’ve signed 360 deals with their labels? Also what happens to labels with established artists (who dont do 360 deals) – how do they make money if sales are dead/ money’s made from streaming? A label like BMG releasing albums for Kylie Minogue, Avril Lavigne, Dido etc I’m also curious about marketing spending: how do the labels allocate money spent on artists’ campaign? what is the… Read more »
Hi Rey! If you have $1 million to promote a roster of artists, who do you invest on: 1) a newcomer, good looking pop music maker with a potentiel to hit 100% of regular music consumers 2) Madonna, who has a fan base that will purchase no matter what, and most of the rest of music consumers who are already safely highly unlikely to purchase new music from her In case 1, you can hit 100% of buyers, in case 2, there is maybe 5% of them that are still undecided. You are clearly going to promote the newcomer. It’s… Read more »
Now that u mentioned Diana Ross. Will she ever be studied? Im always so curious about big she was. My parents say that she was bigger than Streisand at her peak. By I doubted this bcoz her sales doesnt look that massive the way that Streisand did.
Hi Michael!
To be honest she isn’t in the pipeline for the near future. Her sales are relatively weak in comparison to her discography size, so that’s a lot of work for not-that-good numbers. It’s only when we add in the Supremes that combined she does become one of the (if not the) biggest female artists pre-Madonna era.
Will you ever do one on Ciara?
Hi Cherrelle!
There is a thread dedicated to requests! To answer you still and being honest, Ciara is unlikely to ever be compiled. There is hundreds and hundreds of artists who sold more than her and she hasn’t got a Top 10 hit in a decade, so she isn’t expected to add much in the future.
Now with more of the worldwide population getting involved with streaming I have a few questions.. 1. Will the formula change on the (1,500 streams = 1 album) (what if the industry pays less per stream(now that there’s more subscribers), or this format grows HUGE?) 2. If advertising, media, and such focus more on streaming (hence, getting better rates of revenue {smaller revenue for artists}), will that affect the formula 3.With less physical formats being sold (even Download) does this change the way of thinking on artists strategy (especially bands like Pink Floyd, {and I’m sure there’s current artists like… Read more »
Hi Nathan! All convertions are set in order to keep everything fair, not necessarily equal through distinct periods. If the market gets bigger than in the past, it’s fair to see new artists top numbers of former ones, simply because they do are more popular than in the past. The 90s stars for example sold very well in a short time, but a lot of people was listening to music, paying for it,it had became the entertainment of everyone, unlike during the 60s when it wasn’t affordable for all and the population was also lower. Thus, no matter how much… Read more »
So excited to see what is coming with the rise of streaming and the numbers that are coming for artists !
The “streaming masters” will be your more important articles to study the future artists!