The growth of streaming services contributed to music revenue rebounding in 2016 but are consumers ready to pay for music again?
The year 2016 may be remembered as the year streaming services like Spotify and Apple Music stopped the hemorrhaging of music sales revenue.
According to the RIAA, the first half of 2016 saw music revenue from digital downloads overtaken by streaming services by a wide margin for the first time, and Canadian data saw similar trends with total aggregate streams of music in Canada, including from ad-supported sites like YouTube and subscription services like Spotify, grew to 34 billion from 26 billion in 2015.
During the same period, overall sales of digital and physical albums were down 21% from around $24 million in 2015 to $19 million in 2016 year-to-date, according to Paul Shaver of Nielson Music Canada, which tracks consumer behaviour.
“It’s definitely growing for all involved for sure, as we see the increases going up year-over-year, it has to be increasing for everybody,” said Shaver. “There’s still a value gap, unfortunately, from the traditional model of a physical CD that you hold or something you download.”
The growth in streaming services has largely being credited for the last two years of music revenue growth in the U.S. and Canada following a dismal year in music sales in 2014.
But the change to streaming service revenue hasn’t been without controversy. The low royalty rates paid to artists has been decried by some. The rates they are paid are often determined by music labels, which have their own contracts with streaming services.
But some local artists see the growth in streaming music as a largely positive development.
For Nat Jay, a Vancouver-based singer-songwriter, album sales revenues have remained largely unchanged with the rise of streaming services.
“I think that it’s helpful actually for a lot of musicians. For a while, people weren’t buying music at all. They were just illegally downloading.”
Zachary Gray, the singer and guitarist of the Vancouver-based indie-pop band the Zolas, whose third album Swooner was released last March, said that earning revenue from album sales remains daunting.
“I think we’ll look back at this era as a lost decade,” he said, referring to the challenges of making a living as a recording artist.
But, as a music fan, Gray can’t deny the appeal of having ready access to millions of tracks on his smartphone.
“Even though this is an ugly time to be a musician, it’s also the most exciting time,” he said.
Is subscription music streaming is helping the industry or do you think they are underpaying the artists.