US 2015 Recorded Music Sales Total $7 Billion on Streaming Growth

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Revenues from streaming music became the single largest component of U.S. recorded music industry sales in 2015, accounting for 34.3% of all recorded music sales. Overall industry revenues grew 0.9% to $7 billion and the wholesale value of sales rose 0.8% to $4.95 billion.

Trailing close behind streaming revenues were digital download revenues, accounting for 34% of all sales. Sales of physical products (CDs and vinyl) accounted for 28.8% of sales. The data were released last week by the Recording Industry Association of America (RIAA).

The streaming category includes subscription services such as Spotify and Apple Music from Apple Inc. (NASDAQ: AAPL), streaming radio services such as Pandora Media Inc. (NYSE: P) and non-subscription, on-demand services like Alphabet Inc.’s (NASDAQ: GOOGL) YouTube and ad-supported Spotify. Total streaming revenues topped $2 billion for the first time and combining all types of streaming revenues rose 29% year over year to $2.4 billion.

Paid subscription revenue rose 52% compared with 2014, from $800 million to $1.22 billion. Streaming radio revenues rose 4% to $803 million, and on-demand ad-supported radio revenues rose 31% to $385 million.

By the numbers, paid subscriptions rose from 7.7 million in 2014 to 10.8 million in 2015, an increase of more than triple the 3.4 million U.S. subscribers in 2012.

Shipments of physical formats totaled $2 billion, down 10% compared with the prior year. Vinyl sales were up 32% by value, and at $416 million reached their highest level since 1988. Synchronization royalties (soundtracks and background music for TV and movies) rose 7% year over year to $203 million.

The RIAA concluded:

Overall, the data for 2015 shows a music industry that continues to adopt digital distribution platforms for the majority of its revenues. While overall revenue levels were only up slightly, large shifts continued to occur under the surface as streaming continued to increase its market share.

Spotify’s CEO announced last week that the company now has 30 million paid subscribers worldwide. Apple Music claimed 10 million at last count. No other subscription music service is even close. What’s interesting about those two numbers is that Spotify claimed 20 million subscribers last year, just ahead of the launch of Apple Music. Now that Apple claims 10 million paid subscribers, Spotify says it is keeping pace.

Pandora claims 81.1 million active listeners, but most are using the ad-supported service. In 2015, ad revenues at Pandora totaled $933.3 million and subscription and other revenues totaled $220.6 million. A generous back-of-the-envelope calculation would indicate that subscribers number around 2 million.