Washington, DC (April 4, 2017)—The RIAA’s annual report on the U.S. recorded music retail business paints a generally rosy picture—11.4% growth to $7.7 billion—but industry revenues are still only about half of what they were in 1999.
Streaming music accounted for the lion’s share of the industry’s total revenues in 2016 for the first time ever. The segment has grown quickly. In 2011, streaming accounted for less than 10% of the market; in 2016 it jumped to 51% from 34% in 2015. Total revenues from streaming platforms—paid subscription, streaming radio and ad-supported services—increased 68% to $3.9B.
Streaming revenues were driven by a doubling of paid subscriptions to 22.6M, up from 10.8M in 2015. At $2.48B, paid subscriptions alone accounted for about one-third of total U.S. recorded music industry revenues in 2016.
Meanwhile, the other two legs of the industry’s three-legged stool, digital downloads and physical products, continued to decline significantly. Overall, digital downloads were down by 21.6% from 2015, with digital singles declining the most, by 24.1%. Digital album revenues slipped a little less precipitously; down by 19.6%, they now account for their highest share ever of the download total: 49%.
Vinyl continued to prop up physical product revenues, yet overall the category slid by 16% to contribute just $1.7B to the industry’s total, a market share of 22% compared to 29% in 2015. In 2015, vinyl album revenues increased 34%, but the format’s comeback is now showing signs of a slowdown. In 2016, vinyl sales were up just under 4%, contributing $430M to the industry’s total.
A 21% decrease in CD revenues, which accounted for 70% of the physical market in 2016, easily offset vinyl’s gains. But as CD numbers have continued to drop, vinyl revenues have now claimed their largest share of the market—26% of total physical shipment revenues at retail value—since 1985.
The streaming revenue numbers are inflated very slightly by the first-time inclusion by the RIAA of “other ad-supported platforms” that are not included in the on-demand category and represent direct payments rather than disbursements via SoundExchange. The newly included category added $101M to the streaming total.
SoundExchange distributed $884M in 2016, an increase of 10% over 2015. An analysis of statistics from the RIAA and Nielsen Music in Billboard suggests that the average per-stream royalty rose to $0.0072 in 2016. In 2015 that metric decreased, from $0.00666 to $0.00517, according to Billboard.
To coincide with the release of the report, Cary Sherman, chairman and CEO of the RIAA, took to medium.com to comment that, while revenues are enjoying their first double-digit growth since 1998, “[W]e have achieved this modest success in spite of our current music licensing and copyright laws, not because of them.”
Sherman points his finger at one platform in particular: “It makes no sense that it takes a thousand on-demand streams of a song for creators to earn $1 on YouTube, while services like Apple and Spotify pay creators $7 or more for those same streams. Why does this happen? Because a platform like YouTube wrongly exploits legal loopholes to pay creators at rates well below the true value of music while other digital services—including many new and small innovators—cannot. It may be the same song requested by the user, on the same device, but the payouts differ enormously because of an unfair and out-of-date legal regime.”
To advocate for change, Sherman writes, “Sixteen music organizations (A2IM, AFM, AMA, CMPA, CMTA, GMR, Living Legends Foundation, MMF-US, NMPA, NSAI, Recording Academy, R&B Foundation, RIAA, SAG-AFTRA, SESAC, SoundExchange) representing artists, songwriters, record labels, publishers and more today launched www.ValueTheMusic.com, a new website to inform policymakers and fans throughout the world about laws enacted in the dial-up era that undermine the modern Internet music marketplace.”
On March 30, 2017, a bipartisan group in Congress introduced The Fair Play Fair Pay Act, designed to help fairly compensate music creators when their music is played across platforms including AM/FM radio, SiriusXM and elsewhere. Sherman commented, “By doing away with Big Radio’s subsidy that rips off artists and labels, helping streamline producer payments, fixing the pre-’72 loophole to help legacy artists get paid, and finally bringing SiriusXM’s antiquated rate paid to music creators into alignment with its competitors, this bill is much-needed legislation made to fit today’s modern music industry.”
Recording Industry Association of America