Credit: Jason Persse

Is streaming good for the music industry?

Revenue from streaming music has overtaken digital downloads in the US for the first time.

by Rebecca Smith
Last Updated: 24 May 2016

Jay Z’s Tidal might be struggling to crack the streaming market, but its wider popularity is showing no sign of abating. In fact, according to the Recording Industry Association of America, streaming music services have displaced digital downloads as the largest source of revenue in the music industry’s biggest market.

US revenues from the likes of Spotify, Apple Music and Pandora grew 29% in 2015 to $2.41bn (£1.7bn), accounting for 34.3% of total industry revenues. It was the first time total streaming revenues passed $2bn as every segment of the market grew.  It was also good news for the music industry as a whole – after declining in 2014, it grew again last year, selling $7bn worth of music (inching up 0.9% from the year before).

Paid subscription services are the largest and fastest-growing part of the market; the number of paying subscribers to streaming services rose 40% to 10.8m last year. The most popular artists on Spotify were Drake, The Weeknd, Kanye West, Ed Sheeran and Eminem.

While some might be concerned that the declines in digital downloads and physical sales (both dropped 10% to $2.3bn and $2bn) are signalling a turbulent time for the music industry, it could be more accurate to view it as part of a wider change.

Take the sharing economy. The now familiar names of Airbnb and Uber have transformed how we view accommodation and transportation – it’s not a stretch to predict that the future of consumption could well be all about renting and transience, rather than buying and more permanent decisions. Choice for consumers has always been important, but we’re seeing more emphasis placed on how and when these choices are made too – the rise of on-demand TV is a prime example of that.

Fundamentally, Spotify and other streaming services have taken off so rapidly because there's consumer appetite for them. So they're popular with the people, but as with Uber and co, not everyone's happy with the rise of streaming. Notably some artists who dislike the fact that revenues for those creating the music aren't increasing in line with the rising consumption of music.

Tidal has been trying to tweak this, to cater for streaming fans while evening up what artists make from the arrangement. It's looking likely though that we're in the midst of a change that even the mighty Jay Z will find tricky to stop.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

A mini case study in horizon scanning

Swissgrid has instituted smart risk management systems for spotting things that could go wrong before...

Interview ghosting: Stop treating job seekers like bad dates

Don’t underestimate the business impact of a simple rejection letter.

5 avoidable corporate disasters

And the lessons to learn from them.

Dressing to impress: One for the dustbin of history?

Opinion: Businesswomen are embracing comfort without sacrificing impact. Returning to the office shouldn't change that....

How to motivate people from a distance

Recognising success in a remote or hybrid environment requires a little creativity, says Insight SVP...

What pushy fish can teach you about influence at work

Research into marine power struggles casts light on the role of influence and dominant bosses...