For the first time, the paid subscription model is finally working for the US music industry. However, there are still things that could be improved.
According to data recently released by the Recording Industry Association of America (RIIA), in 2016 music streaming services contributed the largest chunk of all music revenue in the US for the first time. The report states that retail revenue generated by the US music industry grew by 11.4 percent in 2016 – bringing the figure to $7.7 billion. Streaming accounted for 51 percent of that figure.
According to the report, “the primary driver of that growth was a doubling of paid streaming music subscriptions, which helped the American music business experience its biggest gain since 1998.”
Some of the most successful music streaming platforms include Apple Music, Spotify Premium, Pandora, SiriusXM, and ad-supported services such as YouTube. The 3.9 billion these services generated in 2016 amount to a year-on-year increase of 68 percent. Considering that, in 2011, streaming services accounted for just 9 percent of all music revenue in the US, the rate of this growth is incredible.
The streaming category which saw the biggest growth was the paid subscription model, which more than doubled from £1.1 billion in 2015 to a whopping $2.4 billion in 2016 – that’s 114 percent growth year-on-year. In other words, paid subscription now makes up one-third of all US music industry revenue.
Apple Music currently has more than 20 million subscribers, and Spotify Premium has 50 million. Figures such as these prove the streaming models viability in the music industry. The obvious success of the paid subscription model has led Pandora to launch their own on-demand music streaming service, Pandora Premium, last month. Though the company currently has only 4 million paid subscribers, we can be sure that they will be aggressively pursuing more over the next few years.
All of this bodes well for the music industry and the music fan. Competition is fierce which means consumers can expect to see new innovations and cost-effective solutions, and the industry’s leaders have plenty to play for. However, there are still some significant hurdles. For example, though the music industry is growing, it’s still only half of what it was in 1999. Though the paid subscription model is increasingly promising, investors and companies are still worried about a lack of certainty that the music industry will ever be what it was.
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