Music Industry Revenue Increases 10 Percent in First Half of 2018

Spotify CEO Daniel Ek

The growth has been driven by streaming, with revenue increasing 28.4 percent in the sector from 2017.

The music industry growth mode continues to enjoy nice increases, with U.S. revenue expanding to $4.6 billion in the first half of the year, a 10 percent increase over the $4.18 billion recorded in the corresponding six months of 2017, according to the RIAA.

As usual, streaming is driving the growth with revenue increasing to $3.35 billion, up 28.4 percent from the $2.83 million generated in the first half of 2017. Within that paid subscriptions grew to $2.55 billion, up from $1.91 billion, or a 33.3 percent increase; while ad-supported revenue nearly $498 million, a 15.6 percent increase over the $430.6 million paid out to labels and artists by services last year. Rounding out streaming revenue, SoundExchange distributions from programmed streaming totaled $398.6 million, up 17.4 percent from the $339.5 million paid out in the year earlier six-month period.

Also heartening for the industry, paid subscribers totaled 46.3 million subscriptions, a nearly 15 million increase, or 47.4 percent, from the 31.5 million subscribers counted at the mid-year point in 2017.

But in each instance cited, the percentage growth for 2018 over 2017 is smaller than the percentage growth recorded in 2017 over 2016. But that's to be expected because as the revenue base gets bigger, annual percentage growth changes continue upward but by smaller percentages.

Looking at licensing, synchronization royalties paid to labels grew by 10.8 percent to $131 million from $118 million in the first half of 2017.

Moving over to sales, digital download revenue fell 26.5 percent to $562.2 million from nearly $767 million. Within that, download singles fell to $270.4 million from $373.7 million as the track count fell to 221 million from 306.6 million, a 27.6 percent drop; while download albums fell to $265.2 million from $360.4 million, as the unit count fell to 26.3 million from 35.8 million; and other digital revenue fell to $26.4 million from nearly $31 million, or a 17 percent decline.

Finally looking at physical sales, revenue fell 24.9 percent to $461.6 million from $615 million garnered in the first six months of 2017. Within that, CD sales fell precipitously to $245.9 million from $420 million, a 41.5 percent drop as the unit count fell to 18.6 million units, or nearly half of the 35 million units shipped in 2017. Moving over to vinyl, LPs increased by nearly a million units to 8.1 million for total revenue of $198.6 million, up about 12.7 percent from the $176.1 million garnered in 2017 when the unit count was 7.2 million units.

So looking at revenue by percentage, streaming now accounts for 75 percent of U.S. revenue, while sales comprises 22 percent of revenue — 12 percent from downloads and 10 percent from physical; and synchronization was 3 percent in the first half of 2018.

In 2017 at the mid-year point, those percentages were, 64.2 percent streaming, 18.3 percent downloads, 14.7 percent physical and 2.8 percent synch.

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