Streaming continues its ascent, accounting for three-quarters (75%) of total recorded music revenue industry revenues last year. With its impressive 30% year-over-year growth, streaming music revenues reached $7.4 billion in 2018 as paid subscriptions continued to proliferate, according to the Recording Industry Association of America (RIAA) year-end revenue report. [pdf]
Streaming, which includes premium paid subscription services, ad-supported on-demand services and streaming radio services, is accounting for an ever-growing share of total music industry revenues. In 2016, for the first time, revenue from paid streaming accounted for the majority (51%) of music industry revenue, while 2017 streaming revenues accounted for about two-thirds (65%) of the total.
Paid music subscriptions in the US reached an average of 50.2 million in 2018, a considerable jump from 35.3 million the year prior as an average of more than 1 million new subscriptions were added on a monthly basis.
Revenue from on-demand streaming services supported by advertising reached $760 million (up 15% from 2017). Separate data from Nielsen shows that the total amount of songs listened to through on-demand streaming hit 611 billion in 2018, representing a 49% increase from 2017.
Digitized and customized radio revenues, meanwhile, rose to $1.2 billion last year, up 32% from 2017. RIAA reports that this is the first time digital radio revenue has surpassed the billion-dollar mark.
Music consumers in the US are clearly very familiar with these digital radio options. Pandora and iHeartRadio are the top digital radio brands in terms of awareness among Americans aged 12 and up for 2019, according to separate research from Infinite Dial, which also showed that 30% of listeners had tuned in to Pandora in the month prior to their survey.
Part of the reason for this continued growth could be the proliferation of Smart Speakers, in addition to widespread smartphone ownership across age groups that makes tuning into paid streaming services easy.
Streaming has cannibalized revenue from digital downloads, which represented just 11% of total music industry revenue in 2018 and declined for the 6th year in a row. Total US digital download revenue fell to $1 billion (putting it below digitized and customized radio revenues). Permanent album downloads fell 25% and individual tracks sales dropped by 28%.
While revenues from physical products (including CDs, LPs/EPs and others) declined by 23% from 2017 to $1.2 billion, physical revenues did for the second consecutive year exceed revenues from digital downloads.
Finally, revenue from CD sales decreased by 34% to $698 million. At the same time, the resurgence in the popularity of vinyl records has made vinyl the only physical music product that saw a revenue increase (8%) in 2018, bringing total revenue from vinyl record sales to $419 million.