Music Streaming Industry Is Growing With Apple Music Leading The Way
The Recording Industry Association of America has had a year of substantial improvement for the music business in the year 2016. The overall retail returns increased by 11.4 percent which amounts to revenues of more than $7.7 billion. The majority of industry revenues was generated by streaming which surpassed all other formats for the first time. Music streaming numbers reached an all-time high of over 20 million subscriptions.
The data confirmed that the streaming music services from YouTube, Spotify, Apple Music, and Pandora made up over 51.4% of the total revenue during 2016. This is the very first instance in which streaming services have been the majority contributor to the industry income.
The streaming services brought in over $3 billion in revenue, which is a 68% increase from last year. This is the biggest upsurge in revenue since 1998 when the primary source of income were CDs.
This growth in the music business is fantastic news. It implies that all the years that went into the patient development of a promising streaming market has started paying off. Having said that, this increase does not wipe away close to 15 years of stagnation or the ongoing insecurity about the future. Moreover, the revenues from the traditional unit-based sales of digital downloads and physical products continue on its downward spiral.
The story of the music business scene is one of vast improvement, relentless commitment to music, hard work and a significant investment in artists. Take note all around you, music surrounds and uplifts us as well as narrates our life’s major instants.
All this does not occur by coincidence. It is partially due to an active community of labels who put in passion and conviction to the importance of music and in the artists who create it. The digital transition is indeed being led by no other than the same dedicated music industry.
But looking at the overall structure of things, the music industry is still considerably smaller than it was formerly. It is depressing to note that revenues are almost half of what they once were in the course of the CD era in 1999.
Although we should be very excited about the impressive growth in 2016, the industry is still wading through upheavals. CDs and downloads that are part and parcel of the pillars in the music business are swiftly declining. Let’s hope that the increase in the streaming market will offset the losses.
There is indeed positive contribution by Apple Music with regards to the payouts to music creators. Apple pays between $12 and $15 for 1000 streams, while for the same number of streams, Spotify pays $7, and YouTube pays $1. Part of the issues hindering the music business is the low payouts from services such as YouTube, which utilise some “legal loopholes” to justify their rates.
The unfortunate reality is that it is in spite, and not because of, the recent copyright laws and music licensing, that this success has been recorded. This legal loopholes have been exploited by some digital services in order to pay less than the rates demanded for the real value of the music. For instance, music creations making just $1 on YouTube, need thousands of streams of a song, while services like Spotify and Apple pay creators more for the same number of streams. It is the same song that is requested for by the user, with the same device and yet the payouts differ immensely due to old and unfair legal creations.
Also, Apple Music has the largest user base due to the company offering a three-month free trial. Currently, it seems that Apple Music is the top preference for creators of music content.
A new report citing that laws like the DMCA (Digital Millennium Copyright Act) cause artists and music creators to lose from approximately “$650 million to over one billion dollars a year” due to exploitations and distortions in licensing negotiations.
Only the large and powerful embedded services like YouTube benefit from these government loopholes and distorted rules which suppress the potential for additional choices and services.
There is still an urgent need for policymakers to correct a whole lot of issues and ensure that fair distribution of royalty like Apple Music is doing, is appreciated and promoted.
Varun is the Editor-in-Chief & Digital Strategist at Applesutra. When he isn’t busy devouring Apple blogs & podcasts, Varun spends his time following tennis (Vamos Rafa!), watching movies (superhero or super scary) or reading books (Audible/Kindle/old school).