Streaming Music Revenue Up 40%, Now Earning $1 Billion Globally

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Streaming Music Revenue Up 40%, Now Earning $1 Billion Globally

According to the latest reports from BBC Newsstreaming services like Spotify, Deezer, Rdio and Mog (have you found the one that suits you yet?) will generate approximately  $AU 1 billion for the global music industry in 2012, with research demonstrating a rise of 40% worldwide.

These figures make on-demand services and digital music streaming the fastest-growing sector of the industry, outstripping downloads’ steady incline over a ten year period.

Sales of physical mediums like CDs and the continuing survival of vinyl may still dominate the industry, accounting for 61% of all music sold globally, but it’s still continuing to drop overall – by as much as 12% worldwide this year.

Industry stat-trackers, Strategy Analytics, provided the revealing research and additionally found some interesting patterns in their native UK market, with the overall spending on music falling by £190 million (approx $AU 285m), or 16%,compared to a 2.6% drop globally.

Strategy Analytics’ diretor of digital media, Ed Barton, said “the extent of the decline took [his company] by surprise,” but emphasised that it could be due to a light release schedule from some of music’s biggest names, saying a lack of new material could be responsible for the drop-off.

“The quality of the release slate was simply not desirable enough to drive the levels of spending we’ve seen in previous years,” Barton told BBC News. ”Maybe something will come along – even one of the compilations of songs from the Olympics ceremonies – which will give us something to shout about going forward.”

Strategy Analytics also forecasts that the sales of digital music – including downloads and streaming services – would overtake physical sales by 2015. Which corroborates UK’s BPI June report that showed that digital revenue outsold physical sales for the first time ever.

It’s not just the UK though, Strategy Analysts predicts that it’s a trend we’ll see worldwide in the next 3-4 years.

The June figures from BPI, who represents record labels in the United Kingdom, also demonstrated that subscription-based music services were worth approx. £9m, a 93% increase year-on-year. A staggering result considering that the free model of Spotify, Deezer, Rdio etc. all use advertising to generate revenue.

In fact, in Spotify’s native Sweden, the recording industry body GLF said streaming music generated 252.7 million krona (approx. $AU 36m) in the first half of 2012, representing a 79% increase from 2011′s figures.

Some artists have complained that they’re not seeing the streaming service boom reflected in their paycheques, considering that every time a song is streamed on Spotify (for instance) the artist receives an averave royalty of 0.29 of a cent.

It may not seem like much, but as we wrote in our defence of streaming music services, something is better than nothing in today’s music industry landscape.

Spotify also reports that it paid $US 180m in royalties to musicians last year alone and is on track to deliver $US 360m this year with its ever-growing library, now heaving with over 16 million songs in its library.

Chairman of the UK-based Beggars Group, and founder of XL Records, Martin Mills has also defended the streaming service boom, telling the Daily Telegraph that some of the acts on his label now earn “more than half” of their income from on-demand services. “If we didn’t have digital,” says Mills, “we wouldn’t have a business.”

The business side of the streaming music boom even extends beyond those who make the music, to those who ordain how its played.

Niv Novak, Managing Director for SONOS – a popular company that develops affordable, high-end wireless speakers – has unequivocally said that his company “believe all audio content is going to be streamed in the future,” and are embracing the digital revolution wholeheartedly.

It seems that both culturally and business-wise, streaming service is the future of music, a fact that ARIA CEO Dan Rosen discussed frankly in our interview about the future of the Australian Recording Industry Association.

If streaming and digital consumption is indeed the future of music, then “ARIA will still be as relevant then, as it is now,” vows Rosen. “Streaming is merely the latest evolution in how people consume recorded music – from the phonograph, to vinyl, cassettes, CDs, through to digital downloads and now streaming.”


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