Traditional music industry giants will have to catch up with technology if they want to protect their profits. A recent report showed a remarkable increase in the popularity of streaming music services, which might become the obvious choice for worldwide artists in the near future.
According to the report, published by the Recording Industry Association of America, revenues generated form CD sales $1.85 billion in 2014 were marginally surpassed by streaming music services, who generated sales of $1.87 billion last year.
Although the difference in numbers does not seem too significant, the relative gain for the streaming platforms is somewhat alarming for the companies who rely on physical records sales. While CD revenues dropped by 12.7 percent, the increasingly popular music streaming services registered an increase of 29 percent in their 2014 sales.
The report’s analysis brings nothing but good news for relatively new music industry players, like Apple and Spotify. Online radio companies, like Pandora Media and Sirius XM also had a big contribution to the streaming services revenue increase, while ad-supported free-of-charge platforms like YouTube and Vevo helped increase streaming popularity.
According to data from the same report, the Recording Industry Association of America says the number of subscribers paying for online music services has increased more than three times since 2011. Last year, paid-subscriptions reached 7.7 million, generating a revenue increase of 6 percent for streaming platforms.
If we add together the market shares of streaming services and digital downloads, the resulting 64 percent figure means the two amount to almost two-thirds of the total music industry revenues. This leaves physical record sales at only 32 percent, showing that CDs are no longer popular among music listeners.
By comparing the 2014 report with earlier ones, it is still difficult to determine the direction the music industry is heading to. Digital downloads were still the biggest contributor to overall sales, same as last year, but the $2.58 billion revenue was 8.7 percent lower, while their share decreased by 3 points to 37 percent. Digital purchases have constantly been declining since 2012, but they are still leading in the sales.
Cary Sherman, chief researcher at the Recording Industry Association of America, hesitates about the future of the industry. “The music business continues to undergo a staggering transformation,” she said. “Record companies are now digital music firms, earning more than two-thirds of their revenues from a variety of digital formats.”
Things aren’t all rosy however for digital music companies. Many artists contracted by them complain their revenues have been dropping with the increasing popularity of streaming services – and in Taylor Swift’s case, she left Spotify altogether.
Apple has announced it has a new subscription-based music service in preparation, and it is expected that the iPhone’s giant commitment to the digital downloads music industry will benefit it greatly. Others, however, are willing to bet their money on streaming platforms. One way or the other, CDs seem history.
Image Source: Tech Frag
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