Music Streaming Earnings Overtake CD Sales

As tech continues to change the face of business across different sectors, the entertainment industry has been one of the major field that have experience rapid change in the last decade. Just at a time when Compact Disk (CD) seems to be a game changer for marketers, music streaming revolutionized the industry and lifestyle of audience especially millennials. Gradually, online streaming services are taking over the music industry as they now have the single biggest earning source, overtaking physical sales and digital downloads for the first time.

In the last few years this has led to a recovery in the fortunes of the global recorded music industry, which enjoyed its third year of positive revenue growth, according to a report by industry trade group The International Federation of the Phonographic Industry (IFPI).

As at 2014, music sales had fallen by 40 percent to $14.3 billion in the 15 years since 1999, when the rise of music file-sharing service Napster ravaged sales of CDs and the development of download services like Apple iTunes failed to offset declines.

Last year, subscription-based streaming revenue accounted for 38 percent of all recorded music, up from 29 percent the year before, IFPI said.

Figures released in IFPI’s Global Music Report 2018 show total revenues for 2017 were $17.3 billion, with an increase of 8.1 percent from the previous year.

Industry leaders say that the rise of music streaming is enabling the market to reach new regions of the world while helping to nurture a generation of music fans away from free or pirated music.

“We estimate that only half the world’s population lives in a thriving music environment and we want to bring the streaming revolution to all of it,” Stu Bergen, from Warner Music Group, said.
Latin America and China saw the biggest market growth, with a rise in overall music revenue of 17.7 percent and 35.3 percent respectively.

Despite the healthy figures, revenues for 2017 are still only 68.4 percent of the market’s peak in 1999.

IFPI says governments should do more to tackle the “value gap” between the value created by some digital platforms such as Google’s YouTube for their use of music and what they pay those creating and investing in it.

“Things are looking good but there’s a structural fault in the system. Until we fix it, it will always be a struggle,” said IFPI Chief Executive Frances Moore.