US recorded music market goes up…
Pushed by a surge in streaming revenues, the US recorded music market was up 0.9% to $7.0bn at estimated retail value in 2015. At wholesale value, the market was up 0.8% to $4.95 billion, posting growth for the for the fifth consecutive year, according to statistics released today by the Recorded Industry Association of America (RIAA).
Digital accounted for 70% of the overall market by value, compared with 67% in 2014 (excluding synchronisation). “The music industry is now a digital business, deriving more than 70% of its revenues from a wide array of digital platforms and formats. The share of revenues from those digital formats surpasses that of any other creative industry,” commented RIAA’s Chairman & CEO Cary Sherman.
“The US recorded music industry continued its transition to more digital and more diverse revenue streams in 2015,” added Josh Friedlander, RIAA’s SVP, Strategic Data Analysis. “The continued growth of revenues from streaming services offset declines in sales of digital downloads and physical product.”
Streaming revenues account for 34.3% of total revenues (against 27% in 2014 and 7% in 2010), exceeding $2bn for the first time, followed by digital downloads (34%), physical sales (28.8%) and synchs (2.9%). For Friedlander, 2015 was “a milestone year for streaming music” as for the first time, streaming was the largest component of industry revenues. He added that “all parts of the streaming music market grew in 2015.” Combining all categories of streaming music — subscription, ad-supported on-demand, and SoundExchange distributions) — revenues grew 29% to $2.4bn.
Pushed by the launch in 2015 of new services such as Apple Music and Tidal, paid subscription services were the biggest – and fastest growing – portion of the streaming market. In 2015, revenues from paid subscriptions grew 52% to $1.2 billion. At the same time, the number of paid subscriptions grew 40% to an average of 10.8 million for the full year, against 7.7m in 2014.
Distributions by neighbouring rights society SoundExchange, which collects performance rights for the use of sound recordings by non-interactive services such as Pandora and Sirius/XM, grew 4% to $803m, and on-demand ad-supported streaming grew 31% year-on-year to $385m.
Digital download revenues (for tracks and albums) declined 10% to $2.3bn. Total value of shipments in physical formats was $2.0bn, down 10% compared to 2015. Vinyl albums continued their ongoing growth with a 32% rise by value at $416m (the highest level since 1988). Synchronization royalties were $203m, up 7% versus the prior year.
“While today’s data is encouraging,” said Sherman, “the challenges facing us are significant. The consumption of music is skyrocketing, but revenues for creators have not kept pace. In 2015, fans listened to hundreds of billions of audio and video music streams through on-demand ad-supported digital services like YouTube, but revenues from such services have been meager?— ?far less than other kinds of music services. And the problem is getting worse.”
Sherman warned about to what he perceives as an increasing value gap, or “value grab”, as he puts it, between the volume consume digitally and the revenues coming from the same source. For Sherman, “some companies take advantage of outdated, market-distorting government rules and regulations to either pay below fair-market rates, or avoid paying for that music altogether.”
He pointed the finger at AM/FM radio stations that do not pay performance rights for the use of sound recordings, satellite radio platforms that pay rights holders “unfair and inexplicable below market rate standard,” and an outdated “notice and takedown” legislation making it almost impossible to police content placed on digital services.
Sherman concluded, “I’m confident that music’s future is bright. The popularity of music is greater than ever. Like never before, it drives our culture and commerce. It is the throbbing heartbeat of social media and it is a must-have ingredient of any major technology platform. But reforms are necessary to level the playing field and ensure that the entire music community derives the full and fair value of our work.”
Source: Music Week
