Music Industry Sees First Big Gains in 20 Years Thanks to Streaming Services

Thanks to subscription-based music streaming services, the music industry is seeing a significant growth for the first time in nearly two decades. According to International Federation of the Phonographic Industry (IFPI), an industry trade group, the global music sales rose 3.2 percent last year, also surpassing those from all physical music formats. The important tipping point in 2015 saw digital services account for 45 percent of recorded music revenue. According to the report, Spotify, Apple Music and other music streaming services brought in about $2.9 billion in revenue. The findings are in line with Recording Industry Association of America (RIAA)'s estimates from last month. IFPI also noted that music on free streaming services such as YouTube has also grown quickly, creating a panic among record labels and artists alike. Billboard elaborates that aspect: In criticizing ad-supported services, the IFPI joined a growing list of trade bodies and music company executives to criticize YouTube for paying royalties that are relatively low when considering its popularity. The report argues YouTube distorts its negotiations with labels by hiding behind the DMCA "safe harbor" rules that limit the liability of online intermediaries from the infringing actions of their users. The result, the IFPI argues, is YouTube can use an "act first, negotiate later" that "fundamentally distort[s] the negotiation process."

Comments

Re:Steve Jobs

[Viol8]

You think selling music online was his idea do you? It wasn't even Apples idea. Fanboy, much?

I'm no fan of the music labels

[Viol8]

But if youtube send us those damn ads we have to sit through until "skip" comes up, or worse the ones where you have to wait for the whole thing to finish, the least they can do is cough up the money to the labels or individual musicians if self published.

And no streaming service is making money yet...

[Rinikusu]

Right now, the industry is being subsidized heavily by VC money.

Re: Steve Jobs

[slazzy]

Spotify seemed to make it popular.

Napster was a visionary leader

[jfdavis668]

Too bad the music industry fought like hell to stop the very thing that would eventually make them rich, again.

Re:Napster was a visionary leader

[careysub]

There has been a long tradition of the music industry (even before it was the recording industry) of fighting any technological innovation since it would disrupt their current business model. Industries that make money by controlling access to other people's creativity are like that.

The music industry convinced itself that its CD era peak revenue period from 1994 to 2000, when a few generations of music lovers were rebuying their entire music collection in the superior CD format, was their "natural revenue level" and any decrease from the anomalous high point was due to "Piracy! Piracy I say!" rather than the inevitable technology-driven business cycle, seen several times before. They then spent the next decade feverishly fighting digital music, the upcoming format that would replace CDs, rather than working on consumer-friendly ways to exploit it, driving their own revenues into a ditch by pissing off the next generation of music consumers with lawsuits and DRM.

Re:Napster was a visionary leader

[Anonymous Coward]

I used Napster back before they were sued. Downloading music sucked up so much of my time in finding songs I wanted, downloading them, then checking it was actually music I had downloaded, was the song I wanted, was the full length version (and not some hacked-up version missing the last third of the song), and wasn't a live version that I told my wife flat-out that I wish the music labels would just open up their catalogs online and let me buy the songs I want for one dollar. I figured that even though a complete album would sell for less than the cost of a CD, the label was still making more money than they otherwise would have since there was no packaging to create, shipping to pay for, or middlemen who had to get their cut. Years later, along comes Steve Jobs and Apple with iTunes selling songs for .... one dollar. And the labels spent all the those intervening years fighting against exactly that when they could instead have been making money hand over fist just by making their catalogs available online and charging a reasonable price.

And no, my conscience never bothered me about downloading music off Napster. The music I wanted wasn't for sale in the store and I'd already purchased all that music three times in my life at that point anyway: once when I was a teenager with nothing else to spend money on, and then again when my house was robbed and my music collection stolen (yes, happened twice). So, I figured they'd already made enough money off me and they weren't willing to sell it to me, anyway.

Re:Napster was a visionary leader

[spire3661]

Napster broke the monopoly on music. Up until then you had to buy a whole album for one song. Napster was the market correcting itself. The industry brought it upon themselves. If a kid in a dorm can obsolete your business model in a 3-day coding spree, your business is not viable.

A suggestion

[Ol Olsoc]

Now they might try putting out music that didn't suck. Seriously, today's twerk-a-licious and computer generated, autotuned stuff makes 1960's bubblegum music and disco look good.

Re:A suggestion

[stealth_finger]

Now they might try putting out music that didn't suck. Seriously, today's twerk-a-licious and computer generated, autotuned stuff makes 1960's bubblegum music and disco look good.

Nah that would require some effort, better to just reuse the same old crap that just keeps on selling. There's always a fresh new batch of thirteen year olds every year.

Re:A suggestion

[bluefoxlucid]

The amount of double-think is astounding. They're selling precisely what brings in the most money, continuously, in a constant and reliable model, and you're criticizing the model and saying it's going to destroy them.

Re:A suggestion

[Megol]

LOL! Try to realize that people once complained about Mozart creating crap music and then realize whatever kind of music _you_ prefer actually is still created! In essence you think you are the arbitrator of what suck and not, just as every generation have thought the "new" kind of music worse/more immoral than the thing they grew up with.

Re:A suggestion

[AmiMoJo]

You didn't understand what I wrote, did you?

Read it again. Note how I'm talking about their efforts to get YouTube to pay more. If they force YouTube to pay more, YouTube won't be able to offer the music for free (ad supported). Web ads don't bring in much money. Certainly not as much as the subscriptions.

Note how I also mentioned that association with other media is what sells these days. So trying to shut down that association but being asshats with copyright and preventing use on the most popular platforms is stupid. We have already seen just how stupid they can be by splitting their catalogues between multiple streaming services. They are still trying hard to drive people away and towards piracy or ad-supported platforms where they get less money.

I'll even give you an example. A few years back my toilet was blocked. The usual methods didn't work so I googled. A YouTube video came up suggesting hot water and dishwasher tablets. Works a treat. The video used Queen's "We are the Champions" to celebrate the unblocking, and it reminded me of the song so I went and listened to it and the label and Queen got paid. Since then the video has been taken down on copyright grounds, so if I were searching today they would get nothing.

Just like MTV, just like Napster, just like iTunes and Amazon, just like Spotify they are trying their best to fail. The only reason they are making more money now is that they are at the upward part of the cycle where they come to accept the new technology, before the next thing comes along and they fight it for a few years before giving in and accepting a new revenue stream.

Re:A suggestion

[dave420]

You are making sweeping generalisations of an entire generation of artists. Think back to any time in history - was there a time when all musicians produced similar music? When they all thought alike? When they all shared a precise level of skill? Of course not. Your argument makes no sense, and appears precisely like the argument of someone feeling incredibly lost in a once-familiar territory. The problem might not be with the musicians (who apparently all started to become identical), but with you.

Older people have been complaining about the music of younger generations since music began.

Youtube hiding from RIAA behind the DMCA

[BarbaraHudson]

So, the music industry, which until now absolutely loved the DMCA because they could hide behind the "good-faith" clause, is now upset that someone else is doing the same thing? Go cry me a river, then look up "Law of unintended consequences."

There is only one group missing out on royalties

[fustakrakich]

The artists who create the material. Like most people who have to actually work for a living, they are too submissive in negotiations, especially now that self publishing is comparatively trivial to past times when physical media was required.

Just in time to screw it up

[ilsaloving]

So streaming has caught on and people are liking it. It's making money. That means it's now the perfect time to start balkanizing the industry with exclusives to specific services, raise prices, and strangle it before it gets any bigger.

I mean, if the music industry is doing well, they won't be able to bitch and moan and lobby gov't to impose more and more draconic legislation to combat piracy.

Divide and conquer

[Second_Derivative]

Now they'll make sure that their catalogs are spread evenly across five or six different streaming services and keep them all fighting against each other. They don't want a unified front of streaming providers pushing back and demanding a bigger slice of the pie.

The media industry learned its lesson back when Steve Jobs dunked on them with the negotiations for the iTunes Music Store. The fragmentation happened to Netflix, it will happen to Spotify and co.

Two questions:

[kheldan]

1. Are the artists actually being compensated properly now?
2. Assuming the answer to #1 is 'yes', is the music industry going to stop whining now?

Re:Steve Jobs

[U2xhc2hkb3QgU3Vja3M]

As opposed to the drivel that's come in the the past 2+ decades, which is largely disposable at best...so, sure people would rather stream, listing to something a month, then forget about it.

So most new listeners are Italian?