Music-streaming revenues are still growing at a decent clip, but how much of that growth comes from payments for streams versus payments of advances to major labels?

Midia Research’s Mark Mulligan has been calculator-bashing again to figure out the answer, and it raises a few questions about the wider industry picture.

Start with the 31% non-adjusted year-on-year growth in streaming revenues to $2.9bn in 2015 recorded by the IFPI. Spotify accounted for around $1.1bn of royalty payments to labels, with its payouts having increased 85% year-on-year.

“Label payments from other streaming services grew by just 10% from $1.6bn in 2014 to $1.8bn in 2015,” noted Mulligan. “Not exactly the most robust of pictures for the wider streaming market place.”

It’s the analysis of streaming revenues for labels in 2016 that should spark more debate though. The three major labels reported a combined $918m of streaming revenues in Q2 2016, generating $311m more revenue year-on-year – and a $91m net increase in digital revenues once declining downloads were factored in.


Yet by Mulligan’s calculations, “advanced label streaming payments were 158% of the $91 million that digital music revenue grew by in Q2 2016. Yes, that’s right, advanced streaming payments accounted for all of the digital music growth, and more.”

Labels are sure to have something to say about his claim that the streaming market is “haunted by advance payments”, but if true, the findings will reignite several arguments within the industry: not least independent labels’ concerns that major-owned distributors of independent music are being used to swell the market-share figures that may influence the size of advance payments.

There is also the ever-present question about the sustainability of the streaming services: these advances may be a drop in the cash-ocean for Apple, Google and Amazon, but what impact will they have on Spotify, Pandora and others’ prospects of competing with those tech giants?

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