U.S. music industry postures to make over $10 billion in revenue in 2019

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U.S. music industry postures to make over $10 billion in revenue in 2019Music Industry Modernization Act Passes

This year the music industry is expected to breach $10 billion for the first time since 2007, according to a mid-year revenue report from the RIAA.  

The revenue increase is largely fueled by the streaming market’s swell— everything from Spotify and Apple Music to Youtube and Pandora, which grew by 26% as of the first half of 2019. Paid subscriptions lead the way, accounting for nearly 15 million new subscribers since 2018’s mid-year report. In total, the streaming side of the industry accounts for 80% of the mid-year report’s $5.4 billion in revenue.

Vinyl sales continue to rise as well, with an expectation that they’ll outsell CDs come year’s end, though the format still only makes up 4% of the industry’s revenue. In total, however, revenues from shipments of physical products make up 9% of the industry total for the period.

“Our mid-year report tells a great story and highlights how the music industry’s embrace of new platforms and technologies has fueled a huge amount of growth and excitement—and a gusher of great new options for fans everywhere.” says Mitch Glazier, RIAA Chairman and CEO.

The music industry supports over 157,000 music-related businesses and nearly 2 million jobs.

VIa: RIAA

Streaming services now account for 75% of music industry revenue

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Streaming services now account for 75% of music industry revenueStreaming Services

The music industry has been dancing on the precipice of a sweeping streaming takeover for years. According to a recent report from the Record Industry Association of America (RIAA), that transition was solidified with a reported music streaming growth of 30% in 2018 alone.

The $7.4 billion in categorical revenue came from predicted streaming mammoths like Spotify and YouTube, as well as digital radio hubs like Pandora and SiriusXM. The music business at large was heftily bolstered by paid subscriptions to these streaming domains, accounting for over half the industry’s yearly takeaway for the first time ever.

While digital downloads in recent years accounted for nearly half of industry sales, it spent 2018 continuing its swift decline, finishing with approximately $1 billion in total revenue, dropping a sizable 25% from 2017, and garnering just 11% of the industry pie. Mirroring downloads is physical sales, down 23% in 2018 alone, with $1.15 billion in sales.

A bright spot for the latter sector, however, came in the form of a firm incline in vinyl sales, which saw its most profitable year ($419 million) since 1988, which should come as no surprise to those who’ve been tuning in to industry trends of the past decade or so.

The 2018 report in full can be found here.

Photo Credit: Bloomberg/Getty Images

The music industry made $43 billion in 2017, but artists only took away 12% of it

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The music industry made $43 billion in 2017, but artists only took away 12% of itDJ SNAKE Photo By Eva Blue 07

Musicians’ struggles in today’s industry are well-documented. Royalties have plummeted as a result of downloading or streaming, with extended touring taking place of beatmaking as the prime form of income. On top of all this, the teams behind these artists also have to make a living, cutting profits further.

It comes as no surprise, then, that Citigroup’s latest report on the music industry economy asserts that musicians only took home 12% of the $43 billion in revenue generated industry-wide in 2017. The cycle is a cruel one — creators often rely on publishers, tech companies, and other team members to help get their message out and allow them to make a living through their craft in the first place. However, the cost of this success is that these outside parties suck up greater amounts of income in return.

Citigroup didn’t paint an overly grim picture with its reporting. In fact, it posed potential paths of redistributing some of the revenue to the musicians that helped generate it in the first place. It foresaw two potential vertical integration models, with one pointing to promoters and platforms like Spotify merging together. Or, Spotify and its ilk will cross into the label space as another form of vertical integration that would benefit artists. Finally, Citigroup also posed a horizontal model where different distribution platforms merge with one another.

Also, the fact that artists are taking a 12% stake in the industry is good news in itself — in 2000, that number was at 7%. The report attests this to the increase of royalties via streaming subscriptions, and also growth within the concert business. Only time will tell how the industry evolves to tip the financial scales back in the artists’ favors.

 

H/T: Pitchfork

Photo credit: Eva Blu

 

Spotify now boasts 83 million subscribers, reports second quarter loss

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Spotify now boasts 83 million subscribers, reports second quarter lossGettyimages 474099442

At the end of 2018’s second fiscal quarter, Swedish streaming giant Spotify has shared new reports on the company’s performance since their debut on the New York Stock Exchange earlier this year. Boasting 83 million premium subscribers and 180 million monthly active users, Spotify will be looking to hold onto and expand their share of the market, though Apple Music has been providing some stiff competition in the US market this year.

Though the impressive 83 million paid subscribers is an increase of ten percent since last quarter and, at $1.49 billion, revenue is at an all time high, the company posted a loss of $461 million, over twice as much as their loss at this time last year. To Spotify’s credit, they claim that over $30 million of that loss came from the price of going public back in April. Even with these losses, Spotify’s stock price is steadily rising, likely thanks to the vast amounts of revenue, investment, and cash flow at the company’s fingertips. With online streaming platforms are consistently securing more listeners and paid subscribers, the DSP arms race remains a fascinating industry to watch unfold.

H/T: Billboard