Streaming music services have displaced digital downloads as the largest source of revenue in the music industry’s biggest market, according to data from the Recording Industry Association of America.
That ended the decade-long reign of digital downloads, which have been in decline for several years. In 2015, download revenues fell 10 per cent to $2.3bn, equivalent to 34 per cent of industry sales.US revenues from streaming providers such as Spotify, Apple Music and Pandora grew 29 per cent in 2015 to $2.41bn, accounting for 34.3 per cent of total industry revenues. It was the first time total streaming revenues passed $2bn as every segment of the market grew.
Sales of physical formats also slipped 10 per cent to $2bn, making up 28.8 per cent of total revenue. Another strong year for vinyl LP sales — up 32 per cent to $416m, the highest level since 1988 — could not offset a 17 per cent drop in sales of CDs.
Across the US music industry, retail sales rose 0.9 per cent to $7bn.
“The music industry is now a digital business, deriving more than 70 per cent of its revenues from a wide array of digital platforms and formats. The share of revenues from those digital formats surpasses that of any other creative industry,” said Cary Sherman, chairman and chief executive of RIAA.
As streaming becomes the dominant form of digital music consumption, paid subscription services are the largest and fastest-growing part of the market, with an extra boost last year from new services including Apple Music and Tidal, the artist-owned service led by hip hop artist Jay Z.
The number of paying subscribers to streaming services jumped 40 per cent to 10.8m last year, generating more than $1bn in revenue for the first time, the RIAA said. The top five most popular artists on Spotify last year were Drake, The Weeknd, Kanye West, Ed Sheeran and Eminem.
Spotify, one of the leading streaming music companies, hit 28m paying global subscribers in 2015 and is closing in on 30m. Apple Music passed 10m subscribers in the six months since its June launch.
But the shift to streaming has also stoked tension between artists and music companies, with big stars including Taylor Swift and Adele withholding their work from some services.
“The consumption of music is skyrocketing, but revenues for creators have not kept pace,” Mr Sherman said.
He noted that on-demand ad-supported services such as YouTube saw streams more than double in 2015 from the year before — but the revenue they generated grew just 31 per cent.
“This is why we, and so many of our music community brethren, feel that some technology giants have been enriching themselves at the expense of the people who actually create the music,” Mr Sherman said
“Reforms are necessary to level the playing field and ensure that the entire music community derives the full and fair value of our work.”