“The
consumption of music is skyrocketing, but revenues for creators have not kept
pace. In 2015, fans listened to hundreds of billions of audio and video music
streams through on-demand ad-supported digital services like YouTube, but revenues
from such services have been meagre —
far less than other kinds of music services. And the problem is getting
worse”
RIAA CEO Cary Sherman
statement following the company’s release of the 2015 numbers
Jamaican
artiste, Music is slowly dying. Cause of death; ad-based streaming services. On
the plus side, now is a good time to press your album as a vinyl record.
According
to the RIAA (Recording Industry Association of America), vinyl sales generated
more revenue than all on-demand streaming services in 2015 as reported in the
article “Vinyl
Sales Eclipsed Every Adbased Streamer In 2015”, published March 23, 2016
by Parker Hall, Digitaltrends.
The
RIAA stats make this glaring obvious:
1.
17 million vinyl copies sold
2.
US$422 million in revenue from vinyl
sales
3.
US$385 million in sales from ad-based
streaming services e.g. YouTube, Spotify, VEVO and Soundcloud
Streaming
has been on the rise as Physical Digital Music Purchases and Digital
Downloading took a nosedive in 2014 as noted in my blog article entitled
“RIAA
says Streaming beating CD Sales - Why HD
Audio Physical Digital Music comeback progresses as Piracy is the Problem”.
However
both platforms have enjoyed growth when 2015 revenue figures are compared to
2014 revenue figures year-on-year:
1.
30% increase in ad-based streaming
services
2.
32% increase in vinyl sales
However,
there is more to the numbers than meets the eye.
Ad-based streaming
services vs Vinyl - Broken Music Industry model needs paid streaming
Vinyl
is more efficient in generating revenue, bringing in a lot more revenue from
fewer people than ad-based streaming services, which is basically free
streaming.
In
fact, paid streaming is where most streaming services such as YouTube, Spotify,
VEVO and Soundcloud make the bulk of their money, averaging some 10 times more
revenue than free ad-based streaming.
Ironically,
the main purchasers of vinyl records, Millennials, make their purchases only to
support the artiste, as they do not actually play them at home. They instead prefer
to frame them in their beautifully designed album covers as one would do to a
painting as noted by ICM Unlimited research in the article “Streaming
Drives Vinyl Sales, Not Necessarily Vinyl Listening”, published April 14,
2016 By Parker Hall, Digitaltrends.
This
distorted earning profile of the music industry is striking; an obsolete music
format is generating more revenue than billions and billions of on-demand free
streams, to quote RIAA CEO Cary Sherman: “Need further proof that some
fundamental market distortions are at play? Last year, 17 million vinyl albums,
a legacy format enjoying a bit of a resurgence, generated more revenues than
billions and billions of on-demand free streams”.
This
would explain in part why content publishers and advertisers have rolled out
ad-blocker detecting software to combat the growing phenomenon of ad-blockers
on smartphones as noted in my Geezam blog
article entitled “How
Ad-blocker Detecting Software protect US$22 billion Advertising Industry”.
They're
trying to protect their revenue coming from free ad-based streaming, even as
the vinyl LP and EP formats makes more revenue as evidence by Taylor Swift's
1989 vinyl version making more revenue for the artiste than all of her
streaming deals as pointed out in my blog article
entitled “Taylor
Swift and Vinyl – Why Female Hipsters diggin’ her New Groove as Vinyl Sales
Rise”.
Clearly
the Music Industry model is broken as Musical artiste cannot survive on
ad-based streaming; paid streaming is the answer in the long run.
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