After so many dismal years, the music industry clings to any good news like a life preserver. So even though today’s Recording Industry Assn. of America (RIAA) report shows virtual no growth, the fact that the ship seems to be at least steadied and is no longer sinking like a stone is enough reason for some to pop champagne corks.
The bigger question, of course, is how will the music industry start to experience growth again or are those days simply gone forever? For decades, the introduction of a new format, such as the CD, would often usher in increased numbers, but digital sales never brought the boom the music industry hoped for (or certainly not enough to offset the decline in physical sales) and, as the report indicate, streaming continues to pick up steam at a time when the music industry remains truly baffled at to how to turn streaming into a significant money maker for other than the top-selling artists and songwriters.
*I n 2014, wholesale revenues for the U.S. recorded music industry rose 2% to $4.86 billion. This marked the fourth year of modest growth. Estimated retail value dropped .5 percent to $6.97 billion, which is pretty much where retail value has hung out for the past four years. Imagine if Taylor Swift hadn’t released an album in 2014 and the Frozen soundtrack hadn’t continue to sell like crazy? Just to put a little perspective on things, 15 years ago the music industry was a $13 billion dollar business.
*Paid streaming now accounts for 27% —or $1.87 billion— of U.S. music industry revenues. The adoption rate is still slow, especially given that many on-demand music services such as Spotify, still offer freemium listening, but there is growth. In 2014, the number of paid subscriptions rose to 7.7 million, up 26% from 2013’s 6.2 million. That’s a much slower rate of growth than from 2012 to 2013, when the number nearly doubled from 3.4 million paid subscribers to 6.2 million subscribers.
*Pundits started writing about the demise of the CD the moment iTunes launched its download store in 2003, but the CD just keeps hanging on and on and on. In 2014, physical sales accounted for 32% of US music industry revenues. Guess what? That’s only 5% less than digital download’s 37%. Those stats show that lots of folks still want to own a physical CD, especially buyers in an older demographic. Vinyl continued to be a ray of sunshine, increasing a whopping 49% over 2013 to $315 million. They now account for 14% of the physical market, making it the first time since 1987 that they commanded a double digit percentage.
* While still the largest piece of the pie at 37%, digital download revenues were down 3% from 2013, the same percentage as CD sales. The last few years have made it increasingly clear that the digital download revolution, instead of saving the music industry, will ultimately be remembered as a gateway to get people to the next digital thing. As people migrate to streaming (paid or otherwise), digital album sales dropped 6.6% in 2014 from 2013, and digital track sales fell 10.1%
