Revenue Up in Music Industry

For the first time since 1999, global recorded music revenues are up. In 2012, revenue increased by 0.3% up to $16.5 billion, and though that’s just a fraction of the $30 billion peaks in the ‘90s, music industry experts are optimistic about the future. Piracy is down, sales are rising, and things finally seem to be stabilizing.

Digital sales, including services like iTunes and Pandora, grew by about 9%, bringing in about $5.6 billion total. Because of the availability of free and legal streaming services like Pandora and Spotify, users are turning away from peer-to-peer downloading services like bitTorrent. P2P services make it easy to contract computer viruses or spyware, whereas with legal services users don’t have to worry about that. Legal streaming services are also easier to use and access for quality music.

According to Russ Crupnick, who is senior vice president of industry analysis at NPD, the next few years will lay the track for where the music industry will go next. Much depends on the balance between digital music purchases and streaming.

“To what extent can the industry keep paid digital revenues up—the iTunes method of buying a track, buying an album?” he asks. “That’s going to be very important in the next three to five years.”

For now, digital streaming and digital sales seem to be balanced well. But more companies are looking to tap into free streaming services, which could mean another shift. And that could be another hit for artists. Current royalties from digital downloads (iTunes, etc.) are between 7 and 10 cents per track, whereas a song that is streamed digitally is only worth a fraction of a penny.

“That’s one of the things that’s going to be a problem in the future, if more people don’t feel the need to own everything.,” claims E. Michael Harrington of the Future of Music Coalition Advisory Board. “People 40 and over might kind of want both… but a lot of people are just satisfied to say “I can access it.’”

With how quickly music comes in and out these days, it wouldn’t be overly surprising to see streaming continue to grow in popularity while digital downloads slowed. Those who have a set of favorite music or artists might find it easier to own certain albums, while those who morph with the industry will probably continue streaming.