A study published Thursday by the Recording Industry Association of America found that streaming has provided more than a lifeboat to the music industry — it’s driving the entire ship.
Total revenue for the industry grew 11 percent in 2016 to $7.9 billion, with $3.9 billion — or 51 percent — of that coming from streaming services. That was the biggest jump in revenue since 1998, but the music industry’s take is only about half of what it was in 1999, when people actually bought physical copies of albums.
Streaming, which made up just 9 percent of the music industry’s revenue in 2011 — and a modest 34 percent in 2015 — now contributes the majority of revenue to a pot that finally grew after years of decline.
Paid subscription services, such as Apple Music and Spotify Premium led the way, more than doubling their users to 22.6 million and increasing their revenue by 114 percent from 2015, accounting for $2.5 billion in total.
The raw number of music consumers who can now connect to artists they never would have discovered via the internet is almost certainly more than ever, but the industry still remains well below its peak size.
In an accompanying Medium post by the RIAA said the burgeoning streaming market “must fairly recognize the enormous value of music,” and took aim at an “unfair and out-of-date legal regime” for contributing to a system in which artists earn $7 or more per 1,000 streams on Apple Music or Spotify, but just $1 on YouTube, one of the most popular online homes for music.
The streaming video site hired veteran label executive Lyor Cohen as its Global Head of Music last year, and YouTube paid $1 billion in ad revenue to the industry in 2016.
The study found significant declines in both the purchase of CDs and digital downloads, showing a larger movement in consumer behavior from owning to essentially renting a library of songs. Digital downloads — once thought of as the future — declined faster in 2016 than in any previous year.