Report: Streaming overtakes downloads in music business sales

The music industry’s transition from digital downloads to streaming services hit an important milestone last year, according to a new research report from the business’ trade group.

For the first time revenue from streaming services taken collectively outpaced that from digital downloads in the United States to become the largest source of industry sales, the Recording Industry Association of America reported Tuesday. Taken together, subscription music services like Spotify, Internet radio stations like Pandora, and ad-supported on-demand services like YouTube brought in $2.4 billion in revenue, which was up 29 percent from the previous year. By contrast, sales of downloadable digital songs, albums, ringtones and the like accounted for $2.3 billion in sales, down 10 percent from 2014.

Subscription music accounted for the largest and fastest-growing share of the streaming music pie, according to the RIAA, thanks in part to the launch of Apple Music and re-launch of Tidal last year. Revenue from subscription services grew 52 percent last year from the year before to $1.21 billion, while the number of paid subscriptions jumped 40 percent over the same time period to 10.8 million.

By itself subscription music now accounts for nearly as much revenue as sales of downloadable songs. Consumers spent $1.22 billion purchasing individual digital songs in 2015, down almost 13 percent from the year before.

Revenue from ad-supported on-demand streaming services also grew quickly last year. Sales from such outlets, which include Vevo and the free, advertising-based version of Spotify, were up 31 percent to $385 million.

The only portion of the streaming business that didn’t grow rapidly last year was the Internet radio business. Revenue from that portion, which comes in the form of royalties paid to SoundExchange, the industry’s revenue collection service,  was up just 3.8 percent to $803 million.

The Internet radio stations and the major labels have been in a long-running dispute over the royalty rates paid by the former to the latter. In December the Copyright Royalty Board, which is a division of the Library of Congress, set new rates, raising them for some services and lowering them for others.

Photo: Spotify CEO Daniel Ek at a media event in May in New York. (Photo by Andrew Burton/Getty Images)


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