Streaming Vs. Downloading

Income from online streaming music is up, but not enough to offset the lost revenue from download and CD sales that continue dropping like a rock, worrying some in the music business.

Streaming services like Spotify, Pandora and YouTube are racing along, generating more revenue for artists and labels. But the Recording Industry Association of America reports less than $3.2 billion in music sales were generated in the first half of 2014, according to the New York Times. That’s down 4.9 percent from the same period in 2013.

The industry knows that the numbers are changing, but what may be of greater interest is how they are changing. In the first half of 2014, downloads and streaming combined accounted for $2.2 billion – “virtually unchanged” from the 2013 period, the Times reports.

But the proportions that make up that total have changed. Revenue from downloads was about 69 percent of this category last year with the rest made up by streaming; this year, downloads were only 60 percent, according to the Times.

Digital sales now make up about 68 percent of total sales revenue for the recorded music industry. Streaming services like Spotify, Rhapsody and Google Play; Internet radio like Pandora and iHeartRadio; and even video services that use music now account for 27 percent of the whole.

According to the RIAA report, 7.8 million people in the United States paid for subscriptions to digital service (up from 6.1 million at the end of 2013). Download sales through Apple’s iTunes have reportedly tanked in 2013 after 10 years of rapid growth, with subscription streaming services gaining ground.

Moody’s issued a report about streaming music services in the wake of deals like Apple’s purchase of Beats, Google’s acquisition of playlist service Songza and Amazon’s Prime Music streaming service, and says there’s good news out there for record labels. The ratings agency said the market for streaming services, while overcrowded, is creating healthy competition – a good thing for record companies that charge substantial licensing fees for their songs.

“Technology companies’ deep pockets and intensified rivalry to attract and retain paying users within the respective ecosystems,” the report said, “is a credit positive for the content owners, providing a better return on their music catalogs,” according the Times.