Is recorded music going to be a big moneymaker again?
The Music Industry Blog reports that music streaming subscriptions hit the 100 million mark for the first time on Dec. 31st – nurturing hopes that the recording industry may finally be finding its footing in the digital era.
Looking deeper into the grooves of music data, blogger Mark Mulligan says there’s other evidence that “the recorded music business looks like it might finally be starting the long, slow recovery from its generation-long recession.”
- Streaming subscriptions worldwide grew by 53.3% during 2016 – from 65.5 million to 100.4 million.
- Major record labels enjoyed a 52% increase in streaming revenue in the second quarter of 2016.
- Spotify, which has the most subscribers with 43% of the streaming market, is expected to make its initial public stock offering this year, heralding “a level of interest in the music business from financial institutions not seen in over a decade.”
- Amazon Music has a 21% market share; others are playing catch-up. Tidal, led by rap superstar Jay Z, has just 1% of the world’s music-streaming subscribers.
- Not all the signs are good: overall, major label revenues grew just 10% despite that 52% boost in streaming income. That’s because with paid streaming subscriptions on the rise, purchases of individual songs and albums through downloads “are in freefall.”
- Also, there’s not much room for price-driven growth beyond the standard subscription fee of $9.99 a month. “At some stage, perhaps in 2017, we will see streaming in many markets hit the glass ceiling of demand that exists for the $9.99 price point.” If true, revenue growth might depend on finding ways to sell lower-priced streaming options without cannibalizing higher-priced subscriptions.
Clearly this high-profile entertainment sector remains in flux, making it crucial for all industry stakeholders to obtain sound insights to guide their business moves. That includes not only the labels and artists who are trying to establish a livable economic equilibrium in this deeply disrupted industry, but radio programmers and brands who need to know which tracks will drive listenership or advertising lift.
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