Driven by streaming, the global music industry grew for the second year running in 2016.

 
Driven by streaming, the global music industry grew for the second year running in 2016. The Experience Factor by Geoff Luck.

Driven by streaming, the global music industry grew for the second year running in 2016. The Experience Factor by Geoff Luck.

 

Streaming-driven growth

For the second year running, the music industry has actually grown, turning around a 15-year decline in revenues. In fact, global industry revenues grew by almost 6%, hitting $16B, in 2016. For an industry that's seen 40% of its value wiped out over the past decade and a half, that's encouraging news to say the least.

But what's driven this growth? In a word, streaming. With 112 million people now paying for a streaming subscription, revenue from this source went up by more than 60% last year. Indeed, Spotify alone contributed $3.9B of that, despite making a loss of almost $200M.

Clearly, despite the promising growth, there's still room for improvement in terms of the business models employed by streaming services. Or perhaps they just need more paying users.

Labels too

And it's not only overall industry revenues that have seen dramatic growth. Under the leadership of Sir Lucian Grainge, Universal Music Group has actually trebled in value over the past four years, partially driven by a 56% growth in streaming revenues in 2016.

Tellingly, Universal became the first major music company to ink a new long-term licensing deal with Spotify. Part of the deal included the windowing of new album releases on the Spotify's premium tier for two-week spells, in addition to what's described as ‘unprecedented access to data’.

Streaming versus sales

However, while streaming is seen as the major driving force behind the new invigorated industry, different artists continue to perform better on different distribution platforms.

Drake was the big streaming news of last year, with the Canadian rapper dominating streaming charts around the world. Yet Beyoncé actually sold 200k more albums during the same period. And sales continue to drive revenue in three of the world's six largest music markets, Germany, France and Japan.

Nonetheless, with news of the second year of streaming-driven growth, it seems only a matter of time before streaming becomes the dominant format worldwide. And that's a good thing

To learn more about how to survive in the streaming era, read The Experience Factor.

Geoff Luck1 Comment