RIAA: Streaming Accounted for 51% of Total Revenue in 2016

Woman streaming music from her phone

Revenue from streaming music accounted for the biggest share of overall revenue in the U.S. music industry for 2016, according to the Recording Industry Association of America (RIAA).

RIAA said that the industry posted $7.7 billion of revenue for the year, as Apple Music, Spotify, Pandora, and YouTube drove the 11.4% year-over-year increase. Among these online streaming channels, Apple Music paid the best rates at a range of $12 to $15 per 1,000 streams.

Payment Terms

Spotify has paid an estimated $7 for every 1,000 streams, while YouTube pays a significantly lower rate at $1, the RIAA said. The association believes that “legal loophole” allows YouTube to pay that amount. Still, this did not prevent the streaming music services to comprise 51.4% of revenue in the previous year.

This business segment provided $3.6 billion in revenue for companies, up 68% year over year. As revenue from streaming music increases, the need for royalty calculations becomes more relevant. The International Confederation of Societies of Authors and Composers (CISAC) said that royalty collections from the music business worldwide rose 6.8% to €8 billion.

Royalty Collections

CISAC released a report that despite a “transfer of value” in the digital market, revenue growth remained strong after it amounted €9.2 billion in 2016. Still, CISAC President Jean-Michel Jarre believes that it could be larger if not for YouTube’s payment of “mere crumbs to authors.”

Digital revenues amounted to €945 million in the previous year, representing 11.8% of income. While this seems a small percentage, it may not take long before online revenues begin to capture a larger share due to the increasing use of streaming channels.

Conclusion

Recording artists, composers, publishers and other members of the industry should be aware of how royalty calculations work since not all forms of media pay the same amount. Though many in the industry think that the current rates in the music industry are fair and reasonable, many believe that there is still room for improvement.