Despite raising more money than CDs or downloads, streaming has yet to offset fallings sales of either.
Streaming has become for the first time the top moneymaker for the U.S. recorded music business, but it has struggled to offset falling CD sales and downloads, industry data showed Tuesday.
Releasing its 2015 figures, the Recording Industry Association of America said that streaming grossed more than $2 billion led by rising subscriptions for services such as Spotify. Amid the emergence last year of new players such as Apple Music and Tidal, revenue from paid subscriptions to streaming services—which offer unlimited, on-demand listening—grew by more than 50 percent.
Streaming accounted for 34.3 percent of overall revenue in the world’s largest music market, narrowly edging out permanent digital downloads on platforms such as iTunes. But despite streaming’s rapid growth, the industry’s overall revenue last year went up a mere 0.9 percent to $7 billion.
CD sales and digital downloads slipped with revenue from albums on CD, long a staple of the industry, down 17 percent in revenue.
The recording association hailed the growth of streaming in a statement that said 2015 saw “the most balanced revenue mix in recent history,” with streaming, downloads and physical sales each making up roughly one third of sales. But it also warned that the revenue setup from streaming was not keeping pace.
The industry group, without explicitly condemning companies, clearly was pointing the finger at YouTube and the free tier of Spotify, which make money through advertising. “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,” association president Cary Sherman said in an essay on the annual figures.
“We call this the ‘value grab’—because some companies take advantage of outdated, market-distorting government rules and regulations to either pay below fair-market rates, or avoid paying for that music altogether,” he said, also renewing longtime criticism of U.S. rules under which radio stations do not need to pay artists.
One major bright spot was vinyl, whose sales went up by nearly a third amid a resurgence of interest by hardcore collectors, reaching a level last seen in 1988 before the rise of CDs. While vinyl remains relatively niche, the format has been picking up and was worth more than a quarter of the value of CD albums last year. The $416 million generated by vinyl accounted for more than all the revenue brought in by billions of advertisement-supported free streams.
The popularity of vinyl has been visible through the growth each year of Record Store Day, an annual celebration of independent retailers, with the latest edition on April 16 to feature hundreds of special releases around the world. The music industry has not yet released global figures for 2015.
Streaming has risen at different paces around the world, making rapid strides in Nordic countries, while Japan and Germany—the world’s second and third largest music markets—remain strongholds of CDs.
Spotify, the largest streaming company, announced Monday that it had reached 30 million paying subscribers across 58 countries. With the recording association estimating 10.8 million paid subscriptions across platforms in the United States, streaming has plenty of room to grow further.