Streaming drives US music sales to highest growth in 20 years

The US recorded music industry is buoyed by data that its fortunes have definitely done a turn-around in the past 12 months.

The Recording Industry Association of America revealed that revenue had an 11.4% rise from the year before to US$7.7 billion from $6.87 million.

This is the first double-digit rise in almost 20 years, the industry’s highest sales figure since 2009, and its best percentage gain since 1998. 

It was fuelled by a 69% leap in music streaming revenue to $3.9 billion – much of this from paid subscriptions, which was up an astounding 94.9% in 12 months to $2.26 billion.

Revenue from ad-supported free tiers, like that of Spotify’s and YouTube, only rose 25.9% to $469 million.

2016 also marked the first year for the United States music industry where streaming has become the predominant (51%) format – something that Australia has already achieved, ARIA revealed this week.

Revenues from streaming are set to rise even further as the biz offers more alternatives to consumers.

The RIAA noted that a growth sector within streaming is the “limited paid-tier subscription” (like Amazon’s Prime) where less music-obsessed consumers sign up for a lower fee for lesser song choice which generated $220 million.

But RIAA CEO Cary Sherman warned that, despite sales growth, “As excited as we are about our growth in 2016, our recovery is fragile and fraught with risk.”

He was referring specifically to the likes of YouTube which the industry is battling to increase its royalty payment rate. 

"It makes no sense that it takes a thousand on-demand streams of a song for creators to earn $1 on YouTube, while services like Apple and Spotify pay creators $7 or more for those same streams," Sherman emphasised. 

"A platform like YouTube wrongly exploits legal loopholes to pay creators at rates well below the true value of music."

In addition, CD sales were down by 20.9% to 99.4 million units generating $1.2 billion. It was the first time since 1986 that American CD sales dipped below 100 million units.

The rise of vinyl sales has slowed down. It was up 1.8% to 17.2 million units while the monies it generated were up 3.5% to nearly $430 million. In comparison, for each year between 2012 to 2015, it was up 38% a year.

The industry will look closely at this in the future, to assess if the vinyl revolution has plateaued.

CD and vinyl together still account for 21.8% of revenue, although their joint revenue fell by 157% as prices fell.

Downloads too proved to be less relevant to modern day consumers, down 22% to $1.8 billion.

Even with this strong growth, recorded music is generating just over half of the $14.6 billion it was at its 1999 peak.