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Music Streaming Profits Edged Out Digital Downloads For The First Time Ever in 2015

Streaming is here to stay.

Streaming is here to stay.

If you need any more proof that streaming music is here to stay, the RIAA released its annual report about the music industry and for the first time ever, profits from streaming exceeded those of digital downloads from services like iTunes? Simply put, people are spending less on actually owning music and putting it towards streaming services that let them listen to whatever they want. Makes sense right?

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According to the report:

All parts of the streaming music market grew in 2015, and total streaming revenues exceeded $2 billion for the first time ever. Combining all categories of streaming music (subscription, ad-supported on-demand, and SoundExchange distributions), revenues grew 29% to $2.4 billion.

Revenues for paid subscriptions were up significantly:

Paid subscription services were the biggest – and fastest growing – portion of the streaming market. The launch of new services like TIDAL and Apple Music made this one of the most watched and talked about spaces in the industry. In 2015, revenues from paid subscriptions grew 52% to $1.2 billion. At the same time, the number of paid subscriptions grew 40% to an average of 10.8
million for the full year.

Streaming music was also responsible for the industry growing 0.9% from 2014 (when growth was actually down) with $7 billion dollars of music sold. But the music industry heads are still not happy, namely with ad-supported streaming from services like Youtube and Spotify's free tier. Here's RIAA CEO Cary Sherman to explain:

"The consumption of music is skyrocketing but revenues for creators have not kept pace. In 2015, fans listened to hundreds of billions of audio and video music streams through on-demand ad-supported digital services like YouTube, but revenues from such services have been meager  —  far less than other kinds of music services."

The Verge succinctly explains the arguement from the music industry:

The RIAA and the labels' argument is this; streams of ad-supported music are rapidly increasing but the revenue isn't matching the growth. Ad supported streaming brought in $385 million in revenue in 2015 from billions of streams, which is a nice chunk of change. But vinyl sales — which have dramatically increased over the past few years thanks to a resurgence of the physical format — brought in $416 million in revenue in 2015.

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A Google spokesperson noted to The Verge that Youtube paid out $3 billion dollars in royalties last year, matching Spotify in amount paid and growing. Youtube contends it also provides unparalleled promotional value for other revenue sources, and that a video service costs much more to maintain than an audio-only service.  The Verge also notes that Spotify has a 25% conversion rate from free to premium users, which is sure to keep labels happy.

So, streaming is definitely here, and it's going to be making money. What streaming service do you use?

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