In late March every year music revenue figures are released to the public showing what the previous year looked like in terms of revenue. According to 2017’s close to two-thirds of the music industry’s revenue is made up of streaming. This shows that the music industry has undergone yet another transition, and we have now officially entered the era of streaming. What’s more, the industry’s economic growth has also reached new heights. Accelerating up from 9% to a strong 17% over the course of a year, streaming has now officially grown into a US$8.8 billion industry.
Through the Years
Music’s previous era was file downloads. Peaking in around 2012 downloads, mostly from iTunes, surpassed revenue earned from CDs. This amounted to over 40% of the industry revenue which came to roughly US$3 billion. At this point, CDs had dropped by almost 80%! This was around the time that Spotify celebrated its first year in the United States and also when digital radio started getting overtaken by on-demand streaming.
On-Demand Streaming Full Speed Ahead
Despite its sudden massive popularity, music downloads started declining around 2012 as CDs fell even further into obscurity. On-demand streaming started picking up momentum. As always, Apple was ahead of the pack with its launch of the Apple on-demand streaming service in 2015. By this time revenue earned from streaming was equal to that earned from downloads, a statistic that soon leapt to surpass downloads. In 2016 streaming became the number one revenue generator in the music industry and the following year on-demand streaming reached the top of the list with streaming platforms like Apple Music, Google Play and Spotify as the main earners. By pulling in a whopping US$4.8 billion which amounts to 55% of the music industry’s total revenue, on-demand streaming got to the very top of the game in 2017.
What the Future Holds
It’s clear that digital music platforms and services come and go. While we have no way of knowing whether on-demand streaming is facing imminent doom like its predecessors, the platform is at least helping to resolve the issue of revenue lost because of illegal file downloads. This, of course, does not include ad-supported on-demand streaming platforms like YouTube. Although it is by far the most popular streaming service, only around 14% of last year’s music revenue was generated by it. Then there is also the ‘human factor’ to consider. While the popularity of digital radio is drastically dropping, good old broadcast radio has been holding steady over the past few years. Vinyl records have made a massive comeback, and although it started declining several years ago, CDs are still bringing in at least US$1 a year – clearly people still like digital products they can hold in their hands. Who knows what this means for the future of music?