Music sings the download blues

Thank goodness for the revival in the vinyl records, which jumped nearly 50 per cent to $US315 million in 2014, or we could all be singing the end of music industry as we know it.

According to the Financial Times all physical music sales together – including CDs, vinyl and music videos – slipped below a third of the industry’s total revenues for the first time, falling from 35 per cent to 32 per cent.

Figures released for the US music industry show retail revenues were flat for the fifth year in succession at $US6.97 billion.

And digital downloads of music which have been the US industry’s largest source of digital revenue for a decade peaked in 2012 and have been in decline ever since. In 2014 download revenues fell 8.7 per cent to $US2.58 billion, equivalent to 37 per cent of total industry revenues.

So where has all the music gone? It’s streaming to the ears of music lovers everywhere through such services as Spotify which is fast closing on digital downloads as the largest source of revenue in the music industry’s biggest market, according to new sales data for the Recording Industry Association of America.

US revenues from subscription streaming brands such as Spotify and Rhapsody plus streaming radio services hit $US1.87 billion in the US in 2014, a 29 per cent increase on 2013 and equivalent to 27 per cent of total music industry revenues.

Record companies are now earning more than two-thirds of their revenues from a variety of digital formats. But the growth of streaming is setting the stage for the next music battleground with music companies and artists themselves saying streaming services are giving away too much free content. This was what sparked the recent confrontation between star performer Taylor Swift and Spotify.

Music labels such as Universal Music Group are also pushing for Spotify to cut back on its generous free tier offering because the coversion rate is too low. Income from advertising-supported free streaming grew slightly in 2014 to $US295 million in the US and continues to represent a relatively small proportion of industry revenues, compared with downloads. However, revenues from streaming radio services, such as Pandora grew from $US590 million to $US773 million.

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