As music streaming revenues skyrocket, RIAA accuses tech giants of not sharing

23 Mar 2016

If streaming is now the dominant revenue generator for music in the US, why is it artists get less share from it than old-fashioned vinyl?

Streaming is now the dominant way for people to access music in the US, with its share of users rising from 27pc in 2014 to 34pc in 2015, according to the RIAA. However, the tech industry has been accused of distorting revenues and not sharing the spoils with artists.

Overall music revenues in the US were $7bn in 2015, out of which $4.95bn went back to rights holders.

Streaming revenues were up 29pc to $2.4bn while download sales fell 9.6pc from $2.58bn to $2.33bn in 2015.

‘Some technology giants have been enriching themselves at the expense of the people who actually create the music’

Physical music sales – including CDs and vinyl – fell by 10.1pc to $1.9bn in 2015.

Revenues from streaming subscriptions rose 52pc from $800m to $1.22bn in 2015.

The music business is a digital business


“The numbers and data reflect a business that continues to undergo considerable changes in consumer behaviour and business models,” explained RIAA chief Cary Sherman.

“The music labels we represent have embraced that change, working tirelessly to find and nurture great artists, bring their music to billions of fans, and work with today’s digital distribution platforms to offer music in new ways.

“The music industry is now a digital business, deriving more than 70pc of its revenues from a wide array of digital platforms and formats. The share of revenues from those digital formats surpasses that of any other creative industry.”

But Sherman warned that while music consumption is at an all-time high, revenues for artists aren’t keeping pace.

“In 2015, digital music subscription services reached new all-time highs, generating more than $1bn in revenues for the first time, and averaging nearly 11m paid subscriptions for the year. Heading into 2016, the number of subscriptions swelled even higher — more than 13m by the end of December — holding great promise for this year.

“But, at its core, music is about artists and their art.

“While today’s data is encouraging, the challenges facing us are significant. The consumption of music is skyrocketing, but revenues for creators have not kept pace.

“In 2015, fans listened to hundreds of billions of audio and video music streams through on-demand ad-supported digital services like YouTube, but revenues from such services have been meagre — far less than other kinds of music services. And the problem is getting worse.”

Value grab by tech giants is killing artists


Sherman didn’t hold back in saying that he believes the tech industry – which two decades ago didn’t have any foothold in music – is now swabbing up vast revenues from artists’ work and failing to share this with artists.

He said that tech giants don’t pay the same fees that radio broadcasters pay when playing artists’ and labels’ music and are raking in billions on the back of outmoded “notice and takedown” provisions of the DMCA.

“We, and so many of our music community brethren, feel that some technology giants have been enriching themselves at the expense of the people who actually create the music.

“We call this the ‘value grab’ — because some companies take advantage of outdated, market-distorting government rules and regulations to either pay below fair-market rates, or avoid paying for that music altogether.

To support his argument about distortion in the new digital landscape for music, he pointed out that vinyl revenues are still worth more than billions of ad-supported streams from services like YouTube.

“Last year, 17 million vinyl albums, a legacy format enjoying a bit of a resurgence, generated more revenues than billions and billions of on-demand free streams: $416m compared to $385m for on-demand free streams.”

Sherman concluded that the skyrocketing popularity of music overall should carry the day and said he was hopeful that the situation would be put right if vital reforms are made.

“The popularity of music is greater than ever. Like never before, it drives our culture and commerce. It is the throbbing heartbeat of social media and it is a must-have ingredient of any major technology platform.

“But reforms are necessary to level the playing field and ensure that the entire music community derives the full and fair value of our work.”

Music lover image via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years