US music streaming sales grow by 68 percent, reach historic high
NASHVILLE - The U.S. music industry, which was beguiled two decades ago when online music service Napster invaded college campuses, for the first time boasts streaming as generating most of its revenue, according to sales figures released Thursday by the Recording Industry Association of America.
Overall music streaming saw 68 percent growth in 2016 compared with the year before, and the numbers were even more encouraging for subscription-based services from Spotify, Apple Music and Amazon. Subscription services enjoyed a spectacular 114 percent increase last year, rising to $2.5 billion. That’s a crucial number to the U.S. music industry, which remains at least somewhat resistant to free streaming, with some artists still withholding their music from services like Spotify’s free offering.
In short, the primary way people listen to music shifted dramatically in 2016. Streaming, and not downloads or physical album sales, is now king, and subscription services are the industry’s top growth area.
Spotify has most recently reported 50 million global subscribers, and Apple Music, which completed its first full year in 2016, has reported 20 million. Amazon does not disclose its subscriber numbers. And Pandora, which built its company on an online radio model, rolled out its on-demand streaming service, Pandora Premium, late last year.
Total U.S. retail sales reached $7.7 billion. That represented 11.4 percent year-over-year growth, which was the largest single year gain for the music industry since 1998.
“I think we’re seeing what people predicted several years ago, it’s starting to come to fruition,” said Paul Roper, president at Dualtone Records, the label home to charttopping Americana band The Lumineers. “(The numbers in the RIAA report are) probably on par with what we’re seeing from a growth standpoint. It’s harder to isolate for us because it’s so release driven. So if we have a release from The Lumineers, obviously we’re going to see big growth.
“But, as a whole comparing 2015 Nielsen data released in January breaks down the top 10 most-streamed songs of last year: 1. “One Dance,” Drake featuring WizKid & Kyla, 527.4 million 2. “Work,” Rihanna featuring Drake, 346.9 million 3. “Closer,” Chainsmokers featuring Halsey, 340.9 million 4. “Needed Me,” Rihanna, 322.1 million 5. “Panda,” Desiigner, 320.8 million to ’16, our Spotify numbers have doubled.”
The rise of streaming has been stark. In 2011, total revenues from streaming platforms accounted for 9 percent of the market compared with 51 percent last year.
Centricity Music, a Tennesseebased Christian music company, has seen strong Spotify streaming numbers with its star artist Lauren Daigle. Two years after her last album release, Daigle’s Spotify numbers average over 730,000 monthly listeners.
“It can’t be a knee-jerk reaction because we’ve seen the growth the last four or five years,” said Steve Ford, general manager at Centricity Music. “You’ve seen it grow and grow and then it has just exploded as we’ve reached a tipping point of acceptance of streaming.”
With streaming emerging as the primary consumption method for music fans, record labels have had to shift their strategies. They can now expect a popular release to have a longer sales life compared to when CDs and digital downloads ruled and an album would see its sales taper off after a relatively short period of time.
Chance the Rapper showed the potential of leveraging social media marketing and streaming success to generate a successful album release. Chance didn’t work directly with a label last year to release “Coloring Book,” which streamed long before physical albums were available at retailers.
2017 has already seen Drake set the record for top-streaming debut with his new release, “More Life,” eclipsing 245 million streams its first week. 6. “Don’t Let Me Down,” Chainsmokers featuring Daya, 310.6 million 7. “Too Good,” Drake featuring Rihanna, 275.8 million 8. “Broccoli,” D.R.A.M. featuring Lil Yachty, 268.8 million 9. “Controlla,” Drake featuring Popcaan, 267.6 million 10. “Me, Myself & I,” G-Eazy x Bebe Rexha, 252.2 million
The 2016 sales report from RIAA wasn’t all good news. RIAA Chairman and CEO Cary Sherman pointed out in a companion note to the sales report that overall revenues are only now rising after about 15 years of steady decline from the late 1990s. Total sales revenue in 1999 approached $15 billion.
While overall sales were up, CD sales dropped by 21percent, continuing their plummet, and digital downloads went down 21.6 percent. Vinyl music has been booming over the last decade, enjoying over 30 percent growth each of the past several years. Vinyl sales, however, saw modest 3.7 percent growth in 2016 with 17.2 million units sold.
Music industry stakeholders say copyright laws need to be overhauled to improve digital payouts to creators and copyright holders. That push has been ongoing in Congress for years.
“A year of growth in the U.S. music business is welcome news,” Sherman said. “It suggests that years of patiently nurturing a nascent streaming marketplace has begun to pay off. But it does not erase 15 years of declines or continuing uncertainty about the future. Nor does it absolve the urgent need for policymakers to right a host of wrongs, or to ensure that music’s outsized contribution is fairly valued. On that front, there’s still a lot of work that needs to be done.”
USA Today reporter Maeve McDermott contributed to this report
Reach Nate Rau at nrau@tennessean.com, 615-259-8094 and on Twitter @tnnaterau.