It has been many years always listening to the same song from the music industry, reading complaints from record companies, artists and distributors about how the internet was destroying the music business, the dangers of not stopping streaming, and seeing how great artists and companies resisted (and still resist) entering music streaming. However, time always gives and takes reasons, and now streaming music has accounted for 51% of revenues in the best year in the industry of the last two decades.
According to information from Bloomberg, the music industry in the United States enjoyed the highest growth of the last two decades last year, with an increase in revenue of up to 11%, reaching 7.700 billion dollars. Similar figures have not been seen since 1998, and in which year six times more CDs were sold than in 2016. Where did this income come from then? Music streaming services like Apple Music, Spotify, Pandora and Youtube are responsible for 51% of total revenue, the first time they get that figure.
A new protagonist is here to stay
It is true that the figures are still far from the splendor of yesteryear, and despite this growth, sales still represent half of what they were in 1999. But the reality is that a new source of income has arrived and it seems that it will not be something temporary, because the growth figures of streaming are really surprising in recent years, especially this past 2016.
The paid streaming services, with Spotify and Apple Music as the main protagonists, have been responsible for this spectacular growth. More than 23 million users pay to listen to music in streaming in the United States, contributing to the income of the music industry with 2.500 billion dollars. Spotify with 50 million users worldwide is the absolute leader, followed by Apple Music with more than 20 million according to the latest official figures. It has been hard work but after years of blaming the internet for the hardships of the music industry, it seems that their relationship is finally coming to fruition.
And it is that the sales figures for CDs and even digital sales in stores like iTunes continue to plummet, with 20% less during 2016. In addition to these data, we have to add that subscribers spend more money per year than an average user usually spends on CDs., since the annual average of each subscriber is about € 120, and some of them even continue to buy CDs, so the business seems more than clear.
The almost anecdotal free services
Another important piece of information that can be taken from this report is that the services that offer free accounts in exchange for advertising seem to have their days numbered. If we take into account that the vast majority of Spotify users have this type of account, and that YouTube is another of the great free services with more than 1000 billion monthly users, it would be expected that they were responsible for a large part of the income from the streaming. The reality is that no, since they only contribute 469 million dollars, less than a fifth of what the payment services contribute with far fewer users.
The graph is quite illustrative: despite the fact that Apple Music has fewer users than Spotify or YouTube itself, the income they obtain from this service is, in proportion, much higher than those obtained from Spotify or YouTube. No wonder the industry is pressuring Spotify to negotiate other deals., including the possibility (already in reality) that some albums are only available on paid accounts. And it is that many of those users who have free accounts, which we have already seen that hardly contribute income, would go to payment accounts if that option did not exist.
