Streaming services and their subscription revenue has saved the music business, according to a new music industry report, which notes that 2017 was the third consecutive year of revenue growth — again, thanks to digital music consumption. Global recorded music revenues reached $17.4 billion in 2017, up from $16 billion in 2016 — an annual growth rate of 8 percent. Streaming revenues in particular have contributed to this growth, and were up 39 percent year-over-year to reach $7.4 billion, or 43 percent of all revenues.
That offset some of the declines from legacy formats, like downloads and physical albums, which fell by $783 million.
In the U.S., digital revenue last year grew 15 percent to $6.5 billion, up from $5.65 billion the year before. A good-sized portion of those revenues came from streaming music subscriptions, which grew 63 percent from $2.5 billion in 2016 to $4 billion in 2017.
The U.S. has also become the most important streaming market worldwide, accounting for 40 percent of total global recorded music revenues. Thanks to the innovation and diversity of music services available in the U.S., the report predicts that the number of paid music subscribers will reach 90.1 million by 2025 — nearly double today’s number of $49.1 million.
In addition to digital’s ability to grow revenues, the changes in how people are consuming music have had other impacts as well.
For starters, the ease of using streaming services has led to an over 50 percent decline in music piracy since 2013, and has driven discovery of more diverse genres and artists, the report claims. It offered a couple of key examples of this, including how Chance the Rapper became the first “streaming-only” artist to win a Grammy, and how six out of the top 10 music videos on YouTube were Spanish-language — with hits like “Despacito” reaching a billion views in 97 days.
Another big change in the new streaming landscape is how powerful playlists have become. Indeed, 54 percent of consumers now say that playlists are replacing albums in their listening habits.
The $1.4 billion of revenue growth the industry has seen year-over-year puts the global total just below 2008 levels ($17.7 billion), the report also said. That means the decline seen over some of the last decade has been reversed — the industry is back in growth mode.