Tuesday, September 20, 2016

Spotify, Apple Drive Music Industry’s 8% First-Half Growth

After almost two decades of relentless decline caused by piracy and falling prices, the music business is enjoying a fragile recovery thanks to the growth of paid streaming services like Spotify Ltd. and Apple Music, according to Bloomberg.

Retail spending on recorded music grew 8.1 percent to $3.4 billion in the first half of 2016, according to a draft midyear report from the Recording Industry Association of America that was obtained by Bloomberg News. That means the U.S. industry is on pace to expand for the second straight year -- the first back-to-back growth since 1998-1999.

The credit goes to streaming -- Internet services that give listeners commercial-free access to millions of songs for a monthly fee -- or for free if they’re willing to hear ads. U.S. streaming revenue grew 57 percent to $1.6 billion in the first half of 2016 and accounted for almost half of industry sales, more than countering shrinking purchases of albums and singles. Subscriptions totaled $1.01 billion, according to the RIAA data.


The results can be seen in the financials of large music companies. Vivendi SA’s Universal Music Group reported first-half growth, while through nine months ended June 30, sales at Warner Music Group, owned by billionaire Len Blavatnik, grew 8.5 percent to $2.41 billion, according to filings. Sony Music Entertainment also reported gains in its latest quarter.

The industry is reluctant to declare victory. Annual sales have hovered around $7 billion for six years, down by half from the 1999 peak, according to RIAA data. Meanwhile the labels are still negotiating new contracts with Google Inc.’s YouTube and Spotify, two of the largest purveyors of free music in the world.

While sales from ad-supported, on-demand streaming grew 24 percent to $195 million in the first half of 2016, according to the RIAA report, those services aren’t doing enough to convince people to pay for music and and don’t make enough money off their free users, the labels say.

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