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Music industry soars into year 3 of recovery thanks to Spotify
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This file photo taken on December 11, 2013 shows a Spotify logo in New York, Music streaming leader Spotify has agreed to set up a $43.45 million fund to settle a potentially costly pair of US copyright lawsuits from artists, lawyers said May 29. The move marks the latest effort by the Swedish company to turn the page on messy disputes as it considers a public listing amid the soaring growth of streaming. (AFP/Emmanuel Dunand)
T
he music business is booming again after nearly two decades of decline, thanks to paid streaming services Spotify and Apple Music, according to a report from the Recording Industry Association of America.
US spending on music surged 17 percent to almost $4 billion in the first half of 2017, the RIAA said Wednesday. Streaming grew 48 percent, more than offsetting steep declines in online sales and more moderate decline in CD purchases, with consumers snapping up new works from Kendrick Lamar and Ed Sheeran, the two top artists of the first half.
The US music industry -- led by label owners including Sony Corp., Vivendi SA’s Universal Music and Warner Music Group -- is poised to deliver its third straight year of growth, a first since the 1990s. That’s boosted the value of record labels and music publishers, convinced the world’s largest technology companies to invest more in music and led to a flurry of transactions for financiers eager to take part in the boom.
Record industry executives have cautioned against celebrating prematurely since sales are still a fraction of what they were at the peak of CD sales. Revenue from advertising-supported streaming on YouTube and Spotify is still minuscule, which the RIAA deems the “value gap.” While sales from paid subscriptions increased by at least $650 million, total revenue from ad-supported streaming amounted to just a fraction of that gain.
“Primarily owing to growth in paid subscriptions, the industry continued to recover, though at levels still far below the peak of the late 1990s,” Josh Friedlander, the RIAA’s senior vice president of strategic data analysis, said in the report.
Spotify and Apple Music have converted millions of people who bought singles and listened for free into paying subscribers. More than 30 million people in the US paid for a music subscription, more than triple the sum in 2015.
Streaming accounted for 62 percent of total industry sales in the first half, which gives the dominant players, Spotify, Apple and YouTube, tremendous leverage with their label partners.
