RIAA finds streaming services made $1.87B in 2014, eclipsing US CD sales for the first time
Ben Sisario / New York Times :
Context & Ripple Effects
In its 2014 year-end tally, the RIAA's own tracking showed streaming crossing a symbolic line: at $1.87B, subscription and ad-supported streaming out-earned physical CDs in the US for the first time. The report came just before the same series logged streaming overtaking downloads as the largest digital format in 2015.
What makes this data point durable is how cleanly the trajectory held: streaming went from roughly a third of US recorded-music revenue in 2015 to 51% of total revenues in 2016, when the overall market returned to double-digit growth, and to 75% of all recorded-music revenue by mid-2018.
First-order effects
- The RIAA's accounting now treats streaming as the industry's core revenue line rather than an emerging category, and the CD business — long the anchor of label P&Ls — is officially the smaller of the two.
Second-order effects
- With streaming established as the growth engine, the economics of the following years shifted toward subscriptions: by mid-2018, three-quarters of streaming revenue itself came from paying subscribers rather than ad-supported tiers, pushing labels and services to compete on conversion to paid plans.
Third-order effects
- If the pattern holds, recorded music becomes an access business where annual RIAA reports measure platform performance instead of unit sales, and industry revenue tracks subscription growth rather than shipments of any physical or downloaded format.
The trend: US recorded-music revenue is consolidating around streaming, with each successive RIAA report showing the format's share climbing from a plurality toward near-total dominance.