If 2016 continues as expected, revenue from music streaming subscriptions like Apple Music or Spotify will surpass $2 billion. Streaming offers were already responsible for half of all sales in the music industry in the first half of the year. Just a few years ago things were very different. Industry representatives celebrate the result. The music market has been going downhill for almost 20 years and is now expected to grow again in the USA for the second year in a row.
“It feels like the market is slowly recovering after years of crisis and contraction,” said Zach Katz of BMG. Despite the positive developments, a degree of caution is still appropriate. For example, sales of ad-supported services such as Spotify Free rose to $195 million, but the Music Industry Association of America (RIAA) criticizes that these services do not do enough to convince users to pay for a subscription and they generally do not do enough earn from the free users.
“Many services rake in billions of dollars on the back of the music’s popularity, but pay relatively pennies to artists and record companies,” said RIAA Chairman Cary Sherman. He cites Spotify and YouTube as examples, which offer free streaming in addition to paid subscriptions. The large differences in the royalties payments of these two offers is “inexcusable”.
Nevertheless, the streaming market still has further growth potential. Although some providers are now courting – Amazon is said to follow later this year – with music subscriptions for customers’ money, they only seem to get in each other’s way to a limited extent. Despite the launch of Apple Music last year, Spotify has continued to grow and now boasts over 40 million paying customers.
But Apple Music is also thriving. Apple recently confirmed that 17 million customers now have a paid Apple Music subscription. According to representatives of record companies, these should primarily be new streaming customers and not former Spotify customers. “We no longer see on-demand streaming as something that’s primarily used by college hipsters and young people,” said industry insider Larry Miller.
Via Bloomberg