September 20, 2017:RIAA half-year figures reveal 17% rise for US recorded-music revenues

RIAA half-year figures reveal 17% rise for US recorded-music revenues

Paid music-streaming subscriptions are the star of US industry body the RIAA’s latest half-year figures, which show a 17% year-on-year rise in recorded-music retail revenues in the first six months of 2017.

That means $4bn of spending on recorded music in the first half of the year, up from $3.4bn in the first half of 2016. When converted to wholesale (i.e. labels’ cut) revenues, the RIAA’s figures show a rise of 14.6% to $2.7bn.

This is big news: the US industry really is bouncing back from its long decline. In the calendar year 2016, retail revenues there grew by 11.4%, so the growth is actually accelerating.

Streaming accounted for 62% of the $4bn of US retail revenues in the first half of 2017, with downloads accounting for 19%, physical sales 16%, and sync revenues 3%. A year ago, streaming’s share of the market was 47%.

According to the RIAA’s report, US streaming revenues grew by 48% year-on-year to $2.5bn in the first half of 2017 – figures that include on-demand audio-streaming services, video-streaming services and revenues collected by SoundExchange from radio-like services like Pandora and SiriusXM.

Within this, paid subscription revenues shot up 61% to $1.7bn, and now account for 43% of ALL recorded-music revenue in the US. There were an average of 30.4 million paying music subscribers in the US in the first half of this year, up from 20.2 million in the first half of 2016.

The RIAA is also, for the first time, breaking down these revenues between ‘full-service’ and ‘limited-tier’ subscriptions – Spotify and Apple Music’s $9.99 tiers being examples of the former, and Pandora Plus or Amazon Prime Music of the latter – with the limited-tier services generating $225m of the $1.7bn subscriptions total. That’s 213.4% year-on-year growth though.

The report claims that revenues from ad-supported on-demand streaming services grew by 37% to $273m. That figure includes Spotify’s free tier as well as YouTube and Vevo. The RIAA cites estimates of 140bn songs streamed on these services in the first half of 2017, while taking a potshot at YouTube for “unreported streams” that may mean the real figure is higher.

Other points of interest: download revenues fell by 24% to $757m but physical sales dropped by just 1% to $632m. It may not be long until the combined forces of CD and vinyl are worth more, again, than the downloads format that could have replaced them.

What is the RIAA saying about all this? You may have seen this coming: the body is hailing the growth while sticking to its guns on accusing YouTube’s safe-harbour status of threatening the recovery’s longer-term prospects.

Our story continues to be one of great promise, but our footing is fragile, and a sustained, durable recovery is jeopardised by a fundamentally uneven playing field,” wrote CEO Cary Sherman in his analysis of the figures.

Sherman also predicted that the US may see more than one trillion streams this year across on-demand and digital radio services, based on the 460bn in the first half of 2017. But the RIAA’s policy is to point out the differences between those streams in terms of payout and legislative background.

How many hours of watching music videos would it take to generate a single dollar for music creators? An astonishing 58 hours,” wrote Sherman, calling attention to the “massive response to YouTube’s recent self-congratulatory blog” [read more on that here] as proof that the industry is together in its opposition to the way the current safe-harbour rules are applied to Google’s video service.

As we’ve said before, the music industry is more confident than ever that legislators on both sides of the Atlantic are taking on board its arguments about modernising safe-harbour laws and thus tackling the ‘value gap’ issue.

But that makes announcements of impressive industry figures a sensitive line to walk: an industry that’s growing at 17% year-on-year – a rate unthinkable just half a decade ago – must pick its words carefully when portraying YouTube as a harmful entity.

That delicate dance will continue, but leaving the safe-harbour issue aside for now, there are other arguments that may be fuelled by the RIAA’s report. As retail and wholesale revenues grow strongly, debate about how fairly (or not) that money is being shared with artists and (via publishers) with songwriters will continue.

The RIAA, its label members and their partners in the music-streaming world will rightly celebrate the 17% growth. But these figures will, as ever, anchor some of the most important and sensitive debates within our industry for months to come.

Stuart Dredge
READ MORE: Analysis Data News
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