The entertainment habits of Americans have undergone massive changes over the last decade. None more so than in the music business, where the public’s general unwillingness to invest in digital downloading and CDs means more and more new customers flock toward streaming services like Pandora, Rdio and Spotify.
Sales of digital albums plummeted a significant 11.6 per cent to 53.8m over just the first six months of 2014. Compared to just a year ago, when 60.8m units were sold over the same period, according to Crain’s Chicago Business. Even worse, sales of single individual digital tracks, which were becoming the post-millennium staple of the music industry, tanked a total of 13% to 593.6m.
At the same time, video and audio streaming multiplied a massive 42% to 70.3 billion streams, way up from sales of 49.5 billion in 2013. It’s impossible to know for certain, but streaming looks to be to be here to stay. This streaming boom plus an unpredicted fad for vinyl albums—which have gone up 40%, not to mention old-school turntables being manufactured again as well as an industry in refurbishing—shows an ever-increasing cynicism from the public in blindly investing in new, more disposable music technology. The vinyl business, which was written off as a sort of eccentric cult of aging nostalgic boomers by music industry heavyweights, now sees them looking at the possibility of a return to retail. Sure, vinyl sales represent only a fragment of sales made at 4 million from January to June. It’s just 3% of all album sales, but the big traditional record labels like Warner Brothers own massive back catalogs of handsome albums with copious, more easily legible liner notes and graphics. As their kids have long left home and more and more boomers retire, old-fashioned vinyl offers a far fuller audio experience beyond nostalgia. With so many old LP records scratched, often because of the running feet of infants, the projected remanufacturing of billions of albums can be predicted.
At any rate, the reality is that album sales—both physical and digital—plummeted 14.9% this year to 120.9m from 142m. Yet streaming revenues are yet to make up the difference causing artists and labels to worry about making enough money to survive. Streaming leaders like Spotify and Beats, which was just acquired by Apple, are the industry’s Great White Hope. Streaming sales have exploded as subscriptions reached 28 million last year, way up from 8 million in 2010, as revenues as high as $1.11 billion were quoted in the Wall Street Journal.
Consequently, all the big tech players and investment houses are now following Apple’s lead and beginning to invest in streaming services, with Google buying out Songza, Amazon starting a service of its a own and some of the largest technology and media companies are investing in the services.
Of course, none of this can go on without cooperation from the artists. Thus far Spotity, Beats, Songza, etc., have each made separate deals with record labels. Many artists want to opt out of a new system where they are paid a small flat fee for the use of their recording rather than the old systems where they were paid according to individual sales. Indeed, more and more artists like Prince, Neil Young and David Byrne will not lease their music out to streaming services and choose to do business with the public on their own through the web. Indeed, some artists are so disgusted at being ripped off by streaming services and labels that they give away their music for free. Indeed, groups like one of my favorites, De La Soul, give away their music for free with a view to appealing to a widening audience and feel they can make up for it with concert and clothing revenues.