The music recording industry saw its first major sales boost in nearly 20 years, due in large part to the increasing popularity of online streaming websites, an industry trade group said Tuesday.
According to the International Federation of the Phonographic Industry, worldwide recording industry revenue rose by 3.2 percent in 2015 to $15 billion, due mostly to an increase in streaming subscription sales, which overtook physical sales for the first time.
It marks the first significant rise in music industry revenue since 1998, when sales grew by 4.8 percent.
The group’s CEO, Frances Moore, said the rise in streaming popularity “reflect[s] an industry that has adapted to the digital age and emerged stronger and smarter.”
The group estimates that 68 million people currently have digital music subscriptions. In 2010 just eight million people held streaming subscriptions. In the past year alone, streaming revenue is up by more than 45 percent, almost matching sales from digital downloads on iTunes and other websites.
News not all good
But it wasn’t all good news for the music industry, which before last year had seen its revenues rapidly falling year-over-year. Revenue growth is still well below the mark set in 1998, and according the industry group, “user-upload platforms” like YouTube are cutting into its profits.
An estimated 900 million people listen to music for free on websites like YouTube, and the group said it cost the recording industry $634 million just last year.
“The market-distorting value gap must be resolved if music is to thrive in the long term,” the report said. And this causes a “serious impact” on the ability of streaming services to attract paying customers.
YouTube responded to the report, saying its website provides a platform for artists to gain exposure, and it has paid more than $3 billion to the music industry – a number it said is “growing significantly year on year.”
“Only about 20 percent of people are historically willing to pay for music. YouTube is helping artists and labels monetize the remaining 80 percent that weren’t previously monetized. The global advertising market is worth $200 billion. This is a tremendous opportunity,” the statement read.