On-Demand Music Content Now Stands At The Center Of US Recording Industry

While some artists see streaming as a thorn in the marketing side of music business, the recording industry itself can look at it as its future and saving grace.

Indeed, according to the Recording Industry Association of America (RIAA), the country’s recording industry made more money last year at $7.026 billion from just $6.951 billion in 2014. The 0.09 percent increase was brought about mostly by sales coming from music streaming across various platforms such as Spotify, Tidal, Pandora, and iTunes.

Streaming accounted for 34.3 percent of the entire music revenue in 2015. Thirty percent of the revenue came from download sales, or music purchase via a dedicated website, while 24.8 percent came from physical sales, and 2.9 from synch. Paid subscription was also the highest gainer last year, as it rose to 52.3 percent at $1.22 billion. Ad-supporting revenue, however, improved by 30.6 percent at $385.1 million.

The numbers show that more consumers are now embracing online streaming, as on-demand platforms revenue constantly grows. It is also proven by the sharp decline of consumers purchasing music at brick-and-mortar record stores.

“The [streaming] model is undoubtedly the future of music, and its services are finally showing a glimpse of their potential. There shouldn’t be any expectations of reaching anything like 100 million subscriptions in the U.S. any time soon. Or ever. But, between strong subscription growth and increased brand awareness, streaming is now an opportunity, not (just) a problem,” wrote Glenn Peoples of Billboard.

Total retail value of physical records such as CD, vinyl and DVD waned by 10.1 percent to $1.9 billion. CD album sales fell to $1.521 billion from $1.83 billion in 2014. Unit counts also plummeted to almost 123 million from 143 million over the same period. The physical album is saved nonetheless by vinyl, as over $423 million album sales (16.9 units) were sold in 2015, up by 31.8 percent from 2014.

Streaming’s growth can also be attributed to the country’s decent internet speeds, which is now on the 19th spot on global speed rankings. Compared to other countries with slow internet speeds, US consumers don’t have to deal with connection-related problems that make their streaming experience less enjoyable.

Last year, content streaming leader Netflix has released a report on how slow Internet connection played a significant role in providing streaming quality. Australia, which ranked 45th in global broadband speed rankings in 2015, had less enjoyable streaming experience than the UK, France, and Germany, countries with faster internet connection.

The likes of 5BARz International, on the other hand, is helping countries with long-standing network infrastructure problem through its plug-and-play device. In 2015, the company signed partnership deals with giant telcos in India. This could not only help streaming companies in the country to offer better services but also potentially obtain significant revenue increase in the months to come.  

Nonetheless, not only music producers gained revenue increase last year. Online radio content producers, which also covers podcast and digital radio content, are also gaining more audience as consumers realize the value of the relatively smaller niche.

According to the latest study by Edison Research and Triton Digital, podcast listening in the US is up by 17 to 21 percent on a monthly basis and 10 to 13 percent on a weekly basis. Podcast listeners who access streaming content on a weekly basis listen to five podcast shows every week. And although Pandora remains the most known audio brand at 82 percent awareness, Spotify is still the most used streaming brand, accounting for 48 percent of the entire US streaming brand, leaving the other slice to Pandora, iTunes, Tidal, and others.

“Media consumption is showing signs of being dramatically changed by both technology and by new paradigms. Mobile’s increasing utility as ‘the first screen,’ as well as the rise of alternative content forms, such as podcasts and ‘bingeable’ content from on-demand video services is subverting the myth that our attention spans are shorter,”  said Tom Webster, Edison’s Vice President of Strategy.

Now, the ball is in the content producers’ hand. Its either they ignore the value and size of the streaming market or they just stick to their old ways. It’s up to them. The good news is that, whether digital, streamed, or physical, and despite a few losses, the music industry is far from demise. Americans still listen to music—a sobering fact and reminder to producers, but most especially to artists.

On-Demand Music Content Now Stands At The Center Of US Recording Industry