RIAA: Recorded Music Sales Up 13% to $11.1 Billion in 2019

When streaming is your friend, the fiscal outlook never looked better. The Recording Industry Association of America (RIAA) disclosed that sales of recorded music in the United States grew 13% to $11.1 billion.

About 80% of that revenue came from subscription streaming services such as Spotify, Amazon Music, YouTube Music and Apple Music, among others. Indeed, the RIAA said streaming revenue alone ($8.8 billion) topped the entire U.S. recorded-music market from just two years ago. Music consumers streamed more than 1.5 trillion songs in 2019.

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Meanwhile, vinyl records continue their comeback, generating a 19% increase in sales — the largest revenue for the format since 1988 Overall, packaged music sales dipped 1% to $1.15 billion — largely due to a 12% decline in music CD sales.

Notably, digital music download sales dropped 18% to $856 million, marking the first time since 2006 that revenue fell below $1 billion.

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“Music is by far the biggest draw to tech platforms, gaining views and listens that generate enormous revenues for distributors,” Mitch Glazier, CEO of RIAA, said in a statement. Music companies have driven a fourth consecutive year of double digit growth and continued to build a digital-driven industry with a focus on the future.”

 

Trump Signs ‘Music Modernization Act’, Easing Legal Requirements for Streaming Services

Lost in the haze of President Trump’s Oct. 11 bizarre news conference with rapper Kanye West, was the president signing into law the Music Modernization Act, passed unanimously by Congress in September.

Officially known as the “Orrin G. Hatch – Bob Goodlatte Music Modernization Act of 2018,” the legislation simplifies the “mechanical license” required for “musical composition” (music and lyrics) and sound recordings from record labels played on subscription music streaming services such as Spotify, Apple Music, Pandora and Amazon Prime Music, among others.

Before passage of the law, streaming music services were required to complete license forms for each song placed on their platforms – upwards of 10,000 titles per day.

Now, a new licensing agency will be established within the U.S. Copyright Office offering music services a blanket mechanical license to stream content. The agency will keep track of music streams and in turn pay royalties to rights holders.

The bill also allows for royalties to artists and songwriters for songs written prior to 1972. It also, for the first time, will afford compensation for a song’s producer played on satellite radio and online music service.

“There’s a lot more that needs to be done here,” said Kid Rock, who attended the bill’s signing. “We need to go after the record labels next, and things like free goods. But this is a great start to protect songwriters, producers, engineers — the unsung heroes behind many of these songs that go out there. People like [me], who are maybe more at the top of the food chain, it really doesn’t affect as much. But I know many people it does affect.”

RIAA: Physical Record Sales Topped Digital Downloads in 2017

In a twist, sales of old-school music records in 2017 bested digital downloads for the first time since 2011, according to year-end data released March 22 by the Recording Industry Association of America (RIAA).

Shipments of physical product decreased 4% to $1.5 billion compared to 2016 – a lower rate of decline than in recent years. Sales digital downloads fell 25% to $1.3 billion.

Vinyl continues to be a bright spot among physical formats, with sales up 10% to $395 million. Shipments of music CDs continued to decline, falling 6% to $1.1 billion. Revenue from shipments of physical product made up 17% of the industry total. Sales of track downloads fell 25%, and digital album sales decreased 24% versus 2016.

The aforementioned stats – however appealing to traditionalists – pales in comparison to the industry’s 800 lb. gorilla: subscription streaming.

More than 80% of total music revenue in 2017 was generated by digital platforms and services.

Streaming music services generated $5.7 billion in revenue. Paid music subscriptions drove the bulk of that — exceeding $4 billion for the first time — and now represent the largest recorded music format by value.

“More than any other creative industry, music companies successfully transformed themselves ahead of the transition to streaming, all while forging stronger relationships with their most important partner: the artist,” RIAA CEO Cary Sherman said in a statement.

Sherman cautioned that growth in music sales has only returned the industry to 60% of its peak 18 years ago. At the same time, he said the burgeoning streaming business inadequately compensates artists.

 “We continue to operate in a distorted marketplace, replete with indefensible gaps in core rights, inhibiting investment in music and depriving recording artists and songwriters of the royalties they deserve,” Sherman said.

The executive said Congress appears ready to pass updated reforms – dubbed “Classics Act” – aimed at better compensating artists at a market-based standard rate. Under current law, legacy artists who recorded music prior to 1972 are not guaranteed royalties when their music is played on digital radio.

“The proposed legislation would ensure that all recordings are treated the same,” Sherman said.

 

Apple Music Tops 36 Million Subscribers

Apple Music streaming service has more than 36 million subscribers, up 6 million from the 30 million Apple officially announced last September. Launched in 2015, Apple Music has been growing subs nearly 5% monthly, and began offering video content in 2016, according to The Wall Street Journal.

Industry leader Spotify has 70 million subs, which the Journal contends Apple beats when factoring in its three-month trial subs. The gap could widen with the release of Apple’s HomePod voice-activated home speaker system.

“The fact that Apple has been able, in just 2-3 years, to create a business that is anywhere between 50% and 70% the size of Spotify should mitigate the risk that Spotify overly [dominates’ and dictate very difficult ‘monopolistic’ terms to the music industry,” investment bank Exane BNPP wrote in a research note.

The report said the music industry is more consolidated and less exclusive, making it harder for over-the-top music platforms to dominate content providers.

Indeed, in the first half of 2017, growth in revenue from music subscription streaming services continued to offset declines in traditional packaged media sales.

Estimated retail revenue from recorded music in the United States grew 17% in the first half of 2017 to $4 billion. At wholesale value, the industry was up 14.6% to $2.7 billion. This growth reflected a continuation of the trends from 2016, but overall market revenue is still significantly below 1999 levels, according to the Recording Industry Association of America.