In 2013, overall music sales were flat compared with the previous year. But despite treading water, many music industry professionals were expressing optimism about streaming services and other forms of revenue.
In a report issued by the Recording Industry Association of America (RIAA), the future of the music industry was laid bare. The revenue from streaming music services grew markedly in 2013, with a 39 percent increase from 2012. Streaming music services like Pandora, Rhapsody, SiriusXM and Spotify have combined for more than $1.4 billion in total revenue.
The number of online consumers who have subscribed to these streaming services totaled 6.1 million in 2013, a considerable increase from 3.4 million the previous year. These impressive numbers do not include Beats, a new subscription-based streaming services that opened in late 2013.
In 2013, performance royalties paid to record labels and artists by SoundExchange increased nearly 30 percent to a total of $590 million. SoundExchange represents about half of U.S. streaming music revenue. Over 2,400 services in digital radio currently use SoundExchange for their daily operations.
As digital radio royalties become an even more prominent entity in the music ecosystem, labels and recording artists are concerned about their bottom lines. While music streaming continues to experience steady growth, overall revenue slipped from $7.01 billion in 2012 to $6.99 billion in 2013. Overall revenue has hovered around the $7 billion mark each year since 2009. The industry experienced revenue of $8.8 billion in 2008.
If these streaming services can convert an appropriate amount of free users into paid subscribers, record companies, record labels and artists may finally reap the benefits of the new Internet age. A premium subscriber to Google, Rdio or Spotify’s streaming service is paying approximately $120 each year on their music. That amounts to between 10 and 12 full-length albums.