Streaming revenue boom

LOS ANGELES • Streaming generated US$2.4 billion (S$3.3 billion) in United States music sales last year, surpassing digital downloads as the recording industry's single biggest source of revenue and propelling the business to its first year of growth since 2011.

The listening format contributed 34.3 per cent of sales, edging past digital downloads (34 per cent), according to a report by the Recording Industry Association of America released on Tuesday. Overall sales climbed 0.9 per cent to US$7 billion.

The growth will fuel the music industry's claim that streaming services such as Spotify will reverse decades of contraction and overtake digital stores such as Apple's iTunes. Revenue from digital albums declined 5.2 per cent last year.

Paid streaming services accounted for half of overall streaming sales, as the number of paid music subscriptions grew to 13 million by the end of December, the association said. The rest of the streaming revenue is from online radio services owned by Pandora Media and Sirius XM Holdings, as well as ad-supported streaming services offered by the likes of Google's YouTube and Spotify.

Usage of ad-supported streaming is growing faster than sales from those services, the association said, repeating the record labels' push for Spotify and YouTube to convert more free users to paying subscribers.

Spotify is the largest paid music service in the world with more than 30 million subscribers, but many still listen for free. YouTube, the world's most popular music service, introduced a new paid service last year.

"We... feel some technology giants have been enriching themselves at the expense of the people who create the music," Mr Cary Sherman, chief executive officer of the association, wrote in a blog post, adding that "some companies take advantage of outdated... rules and regulations to pay below fair market rates or avoid paying for that music altogether."

Spotify must negotiate new long-term deals with all three major record labels. Its agreements with two of them - Vivendi's Universal Music Group and Access Industries Holdings' Warner Music Group - have expired.

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A version of this article appeared in the print edition of The Straits Times on March 24, 2016, with the headline 'Streaming revenue boom'. Print Edition | Subscribe