Streaming now makes up most US music industry revenue

Shaun TANDON
 

Streaming for the first time accounted for most recorded music revenue in the United States last year, bringing the industry its fastest growth in nearly 20 years, figures showed Thursday.

While the breakneck expansion is welcome news for a long-beleaguered music industry, overall revenue is still half the level from the late 1990s before the revolution in online music.

The Recording Industry Association of America said that overall revenue soared by 11.4 percent in 2016 from the prior year to $7.7 billion, the heftiest annual gain since 1998.

The money from paid subscriptions to streaming services such as Spotify, Apple Music and Tidal more than doubled in the last year alone, the industry body said.

With (Other OTC: WWTH - news) the growth, streaming accounted for 51 percent of the music industry's revenue in 2016, up from just nine percent in 2011, it said.

Streaming options have been rising for consumers, with Apple (NasdaqGS: AAPL - news) entering the market in 2015 and online retail giant Amazon recently launching a service.

The trends in the United States, the world's largest music market, show a sharp escalation of global trends in recent years.

The International Federation of the Phonographic Industry, the London-based global body, similarly reported historic growth in 2015. It is set to release 2016 global figures in the coming weeks.

But streaming -- which allows users to select any song on-demand online -- has led to casualties among other formats, which have historically been bigger money-makers for artists.

US revenue from digital downloads on platforms such as iTunes plummeted 22 percent last year and CD sales fell by a similar 21 percent.

One exception was vinyl, which has experienced a rebirth thanks to interest among serious collectors. But vinyl was up only by four percent, still growing but at a more modest pace.

- Calls for legal changes -

Major record labels have hailed streaming as a new way to boost the industry after years of struggles starting with the craze of illegal downloading in the 1990s.

But some artists complain that they earn little from the boom in streaming, with a sliver of the revenue heading back to musicians even if they now enjoy a welcome new outlet for exposure.

Cary Sherman, chairman and chief executive of the US recording association, hailed the 2016 growth but cautioned about the future, noting that the expansion came after years of decline.

"As excited as we are about our growth in 2016, our recovery is fragile and fraught with risk," he wrote in a blog post.

"The marketplace is still evolving, and we've experienced unexpected turns too many times before."

With CDs and downloads in free fall, "much rides on a streaming market that must fairly recognize the enormous value of music," he wrote.

The music business has ramped up its campaign to reform the Digital Millennium Copyright Act, the 1998 US law that generally exempts internet providers for content on their sites.

The recording industry argues that the law, whose principles are largely applied in Europe as well, needs to be stronger to force online behemoth YouTube and its parent Google to take more aggressive action to bring down unauthorized music.

Ironically, while music stars are overwhelmingly critical of US President Donald Trump, some industry players believe there is a greater chance of reform friendly to copyright holders with the Republican Party in control of the White House and Congress.

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