Music Industry Recovery Continues, Powered by a Surge in Subscriptions

Music Industry Recovery Continues, Powered by a Surge in Subscriptions”

The music industry is still a long way from its late "90s heyday, but the Recording Industry Association of America " s midyear report shows the growth of streaming continues apace, with retail revenues up to $4 billion, 17% more than a year ago, while wholesale is up 14.6% to $2.7 billion. The average number of paid subscribers to services like Spotify, Apple Music and Tidal over the period ballooned to 30.4 million, up 50 percent from the 20.2 million in the first half of 2016. The latest report from Goldman Sachs expects the music industry to reach $41 billion in revenue by 2030.

The main driver of this jump was full paid subscription, which jumped 49.5% year-on-year in retail sales terms, hitting $1.49bn in the first half of this year.

"Limited" (ie. not fully on-demand) paid services generating $224.7m in the six months - up by a whopping 224.7% year-on-year. (As an extra-pointed dig, Sherman also said that it takes 58 hours of watching a music video on YouTube for creators to get paid $1, though this is based on worldwide data from MiDia Research and Manatt, Phelps and Phillips rather than the RIAA's own US findings.) "That's why a united music community continues to be incredibly animated about music's "value gap" and calls upon policymakers - and our business partners - across the globe to do better and address these inequities".

Elsewhere in the streaming sphere, SoundExchange distributions fell 15.8% year-on-year in H1 2017 - no doubt largely due to direct deals struck between the labels and services such as Pandora.

On-demand ad-funded streaming services were up 37.1% to $273.2m.

Revenue from paid streaming has also grown substantially in 2017, reaching $1.49 billion compared to $995 million this time past year. That represents nearly one million new subscriptions each.

We may be seeing the bottom on physical sales, as the total value of shipments of physical products decreased just 1% to $632 million.

Barring any dramatic changes before the end of the year, 2017 is on pace to continue the music industry's revenue growth. Revenues from shipments of CDs were down 3% to $431 million, while vinyl albums were up 3% to $182 million.

Physical sales contributed 16% of the total pie, with sync on 3%. Digital downloads, the largest format by revenue in 2015, only accounted for 19% of total industry revenues in H1 2017.

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