Streaming Music will Save the Music Industry, say Streaming Music Fans

The RIAA just announced that, yes; from 2010 to 2011 people did in fact pay for streaming music subscriptions and that even services like Pandora contribute to creating revenue for the music industry. Naturally the Internet is buzzing with advocates from both sides of the issue pointing out numbers that support their cause: The pro-streaming camp touts the fact that there was increased revenue from streaming services while industry growth as a whole stayed mostly stagnant, opponents are quick to point out that only labels and publishing houses make money and only very little trickles down to the artists themselves. While the debate rages on, one thing seems apparent; more data is needed before a definitive conclusion can be reached.

Some digital music industry insiders do not believe that streaming music services will become lucrative; the services use channels that are not theirs to distribute content they don’t own, which separates them from platforms like iTunes and Amazon. But for the sake of argument, let’s assume that Spotify and similar ‘apps’ like Rdio and Rhapsody have a viable business model when it comes to making money off the whole internet-music thing. The fact remains that Spotify has been available in the US for barely a year and that is only a short time for analysis if the decline in revenue for the music industry has been going on for a decade plus.

According to the RIAA, subscription music services saw an increase of 13.5% in revenue from 2010 to 2011 (Chart here: http://news.cnet.com/8301-31001_3-57405252-261/riaa-consumers-are-shelling-out-for-subscription-music). This sounds good but works out to be an increase of around $29 million, which while not a paltry sum, does not compare in the big scheme of things where artists like U2 pull down almost 7 times as much ($195 million) in one year alone.

Furthermore, the number of subscriptions rose from 1.5 million to 1.8 million in 2011. An increase of 300,000 seems small, considering Spotify alone had 10 million registered users in November 2011 (albeit it world wide). Time will tell if subscriptions increase or if these 300,000 people are outliers like music nerds or tech evangelists.

So where does that leave us? While certainly encouraging, these numbers warrant spending more time on analysis. There are many things to pay attention to in the future. Among them, the fact that smartphone users are increasing exponentially, even in “fly over” country where country music has been profitable despite set backs in other sectors of the industry. Additionally, in recent years the industry has been following Europe’s example, focusing more on singles releases, which, of course, lend themselves perfectly for playlist creation. As Spotify commercials are eager to point out, creating playlists is a highlight of the program. But again, no one knows yet if streaming music isn’t fundamentally flawed to begin with. There are many factors that come into play, so jumping to a conclusion based on the first available numbers will not give a clear result.

Categories: Industry Ramblings, Music
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