The U.S. music industry is the No.1 recorded music market in the world. Music consumption is directly proportional to convenience, thereby making it dependent on how we consume music. The RIAA report is out, and here is what Loudest.in has analyzed.
According to a half-yearly report released by the Recording Industry Association of America (RIAA), revenues from streaming music grew 26% to $4.3 billion for the first half of 2019. This broad category includes revenues from subscription services (such as paid versions of Spotify, TIDAL, Apple Music, Amazon, and others), digital and customized radio services including those revenues distributed by SoundExchange (like Pandora, SiriusXM, and other Internet radio), and ad-supported on-demand streaming services (such as YouTube, Vevo, and ad-supported Spotify). Total revenues grew 18% to $5.4 billion at retail in the first half of 2019. Streaming music accounted for 80% of industry revenues. At wholesale value, revenues rose 16% to $3.5 billion.
Paid subscriptions continued to be the most significant source of revenue for recorded music. Year-over-year growth of 31% brought total subscription revenues to $3.3 billion.
This category also includes $482 million in revenues from “Limited Tier” paid subscriptions (for services limited by factors such as mobile access, catalogue availability, on-demand limitations, or device restrictions). Services like Amazon Prime, Pandora Plus, and other subscriptions are included in this category. This category grew slightly as a percentage of subscription revenues and was up 39% versus the prior year.
The continued immediate increase in the number of paid subscriptions was the most prominent driver of growth. For the first half of 2019, the number of paid subscriptions to full on-demand streaming services grew 30% to 61.1 million. That represents an average of more than 1 million new subscriptions per month over the last 12 months (which doesn’t include the ‘limited tier’ subscriptions).
Also, the revenue coupled with “lean back” radio royalties and ad-supported on-demand offerings from apps like Spotify, added to the total U.S. streaming revenue to $4.21 billion for this same period.
Revenues from digital and customized radio services were $552 million in 1H 2019, up 5% versus the first half of the prior year. This category includes SoundExchange distributions for revenues from services like SiriusXM and internet radio stations, as well as payments directly paid by services, included in this report as “other ad-supported streaming.”
While streaming revenues continued to increase, revenue gains were partially offset by declines in sales of digital units. Revenues from digital downloads fell 18% in 1H 2019 to $462 million. Individual track sales revenues were down 16% year-over-year, and digital album revenues declined 23%. The category accounted for just 8.6% of total industry revenues in 1H 2019, a smaller percentage than physical formats.
Net revenues from physical products bucked the recent trend in unit sales and grew 5% to $485 million in 1H 2019; however, this growth was the result of a reduction in physical product returns, and on a gross basis the revenues from the physical product would have been down for the period. Vinyl albums grew 13% to $224 million, but still only accounted for 4% of total revenues in 1H 2019 (let’s not forget that Vinyl sales overtook CD sales for the first time since 1986). Revenues from shipments of physical products made up 9% of the industry total for the period.
Emphasizing the statistics in the RIAA report project that the U.S. recorded music market generated $ 5.39 billion across all formats during the first half of 2019. However, Neilsen music’s mid-year report 2019, states that audio streaming fell by 5% during the same period. Also, the U.S. market saw 333.5 billion total on-demand audio streams.
While Nielsen reports imply that 261 billion streams were counted in the first half of 2018, an increase of 76.6 billion from the first half of 2017 (184.4 billion), H1/2019 tells a different story.
The 261 billion audio streams from H1/ 2018 was an increase of 76.6 billion, on H1 ‘2017’s equivalent haul (184.4bn). The total streams in H1/2019 as compared to H1/2018 was 4 billion streams lesser than the equivalent growth in H1/2018 as compared to H1/2017.
Overall, the on-demand streams on audio and video were up in 31.6% year-over-year in H1/2019 accounting to 507.7 billion compared to the 35.4% year-over-year in H1/2018 accounting to 385.7 billion, according to the Nielsen Report.
The U.S. has had a tough time facing piracy, but music is still the highest consumed item on the internet. Musicians’ popularity and their huge fandom have an unsurmountable power to make the country’s music industry secure.