Streaming Helps Drive 8.1 Percent Growth in Revenue for U.S. Recording Industry
What labels hoped would happen seems to be happening.
The U.S. music industry experienced an 8.1 percent growth in overall revenue during the first half of this year, the Recording Industry Assn. of America (RIAA) has reported today (Sep. 20). The overall market is estimated to be worth $3.43 billion, up from $3.17 billion in the first half of 2015.
Digital revenue overall, including still-dwindling download sales and the inexorably rising streaming segment, totaled $2.66 billion, or 77.5 percent of total revenue, up from 72.1 percent over the same period in 2015. Physical sales generated $671.9 million, or 19.6 percent of the total, down noticeably from 24.7 percent last year. Synchronization revenue stood at $100.3 million, 2.9 percent of the total.
Streaming revenue has exploded, growing 57.4 percent overall to total $1.61 billion, up from $1.02 billion in the first half of 2015. The biggest growth, which will no doubt receive cheers from labels, was in paid subscriptions which saw the overall subscriber count rise to 18.3 million — double the 9.1 million subscribers counted in the middle of 2015. Looking at subscription services by revenue, the segment more than doubled their value as well, generating $1.013 billion from 2015’s $478.6 million.
Ad-supported streaming revenue also saw a sharp increase, rising 23.6 percent to $195.4 million. SoundExchange distributions for performance royalties from digital radio broadcasters — paid to labels and artists for master recording plays — grew slightly, by 4.2 percent, to $403.4 million.
Some more good news for labels and artists: per-stream rates for streaming services are rising. When we take RIAA’s half-year revenue numbers for on-demand streams with Nielsen Music’s on-demand streaming count (which saw total audio and video streams grow to 208.86 billion, up significantly from 2015’s half-year total of 131.61 billion streams), the average blended, per-stream, on-demand rate (whether the stream is audio or video, or on an ad-supported or paid subscription service) has risen to $0.005786 per stream in the first half of 2016, up from from $0.004838 in the first half of 2015. (Note: This doesn’t include publishing royalties.)
Within digital download sales, album and single sales both fell with digital album downloads totaling $500.1 million from 48.2 million albums, while track sales totaled $519.5 million from 432 million track downloads. That totals $1.012 billion, which is down 17.1 percent from the prior year total of $1.23 billion, when 56.4 million copies of albums generated $564.7 million and 554.5 million track downloads garnered $665.2 million. That means that as album download sales fell, the labels have been raising list prices, with the average list price coming in at $10.38 for a download album versus an average list price of $10.01 in the first half of last year. Download single tracks held stead at a $1.20 list price. More niche digital download configurations, like ringtones and kiosks, saw revenues fall to $27.2 million from $34.9 million.
Physical revenue totaled $671.9 million, down 14.3 percent from the $783.9 million that retailers — both brick-and-mortar and online — generated in the first half of 2015. CD album sales fell to 38.9 million units, accounting for $443.9 million ($11.41 average list price), down from 43.8 million and $531 million ($12.12 average list price).
Vinyl, the darling of indie retailers and indie labels, might finally be peaking. While Nielsen Music data — which measures scans at the cash register for sales to consumers – shows vinyl album units up this year, the RIAA’s count — which tracks album shipments to retailers — sees the format backsliding, to 8.4 million units from 9.2 million in the prior year. (Vinyl’s $207.1 million in revenue is still more than the $195.4 million in revenue generated by ad-supported on-demand streaming.)