Streaming Powers Record Revenue

Last Thursday, the Recording Industry Association of America (RIAA), reported that music sales in the United States generated $7.7 billion in retail revenue in 2016, up 11.4 percent from the year before. That is the industry’s highest sales figure since 2009 and its best percentage gain since 1998. As the New York Times reports, that increase is largely the result of online streaming, which is rapidly eclipsing all other forms of consumption. Streaming contributed $3.9 billion in 2016, up 69 percent from the year before, and now makes up 51 percent of the business — that’s the first time it has had a majority of sales in the United States. Overall retail revenues grew 11.4%.

The largest and fastest-growing chunk of the streaming business is in paid subscriptions to services like Spotify and Apple Music. In the United States, services like these attracted an average of 22.6 million subscribers and generated $2.3 billion, nearly doubling their total from the year before. Spotify has said that it has 50 million global subscribers, and Apple Music has more than 20 million. This year, the RIAA also attributed $220 million to a new category, “limited paid-tier subscription,” which includes plans like Amazon Prime that lets paying customers select from a smaller pool of songs.

Even with this latest positive growth news, the Times piece reminds us that music sales revenue in the U.S. is still about half what the industry enjoyed during its peak in 1999, thanks to its formerly most profitable product, the CD. Remember them? Last year, only 99.4 million full-length CDs were sold in the United States, worth $1.2 billion; the first time since 1986 that fewer than 100 million were sold, and downloads were down 22 percent last year to $1.8 billion.