The RIAA’s 2019 report has revealed that 80% of all revenue generated by from recorded music has come from streaming, totalling $8.8 billion – more money than all recorded music made in 2017.
Many streaming services offer a free version of their app or website, in addition to a premium subscription. But the majority of streaming revenue is coming from users who pay the monthly fee, accounting for $6.8 billion of the $11.1 total revenue. Another shocking statistic is that streaming subscriptions saw a massive increase of 25% in 2019, which when broken down monthly, suggests that there were one million new consumers each month switching to a paid streaming plan. This huge spike means that about 60 million Americans now pay for a streaming service, an impressive feat for the music industry after recovering from the era of piracy giants like Napster – and the number of people switching to paid plans continues to soar.
As for the other $2.3 billion of music revenue, that comes from digital downloads, physical sales, and sync licensing. For the first time since 2006, around the height of iTunes, digital download sales dropped under $1 billion, down 12% from 2018. In total, digital downloads accounted for $856 million of music sales. However, the vinyl platform continues its comeback, rising for the 14th year in a row. Now seen as more than just a retro product, vinyl sales have reached $504 million, firmly establishing it’s dominance as the most popular physical medium in music sales.
“Physical products, like CDs and vinyl, were down slightly (0.6%) in 2019 to $1.15 billion. Vinyl actually had its biggest year ever since 1988, to reach $504 million. However, the physical products category only accounted for 4.5% of total music revenues.”TechCrunch
It is important to note that the RIAA does not include money collected from Performing Rights Organizations such as ASCAP and BMI, which not only see the profits of live performances of the music, but also include live broadcasts in their services. This means that the total number reported by the RIAA doesn’t account for AM/FM radio, nor online stations such as Pandora, which is often associated with streaming.
The three giants of the music industry – Universal, Sony and Warner – are undoubtedly reaping the benefits of this business model, together making about $1.03 million every hour from streaming. As we enter a new decade, only time will tell how these perpetually shifting business models continue to transform in response to consumer demand and technological change.