Study suggests that streaming will soon be more profitable than physical or digital sales

According to Digital Music News, data reviewed by the Wall Street Journal shows that one major record company earns more annually, on average, from paying customers of streaming services than it does from downloads or CD sales.

The study states that the average "premium" subscriber in the United States is worth $16 per year to this company whereas a buyer of downloads and/or physical music is only worth $14 per year.

As the article notes, despite not having a "per stream" royalty rate on Spotify due to different factors including premium versus free subscribers, the streaming giant plays between $.006 and $.0084 per stream.

For those skeptical of streaming's ability to pay off in the long run, Per Sundin, the managing director for Universal Music in Sweden, said, "I am 100 percent sure that this is the future. Streaming services will be the next step for global music consumption."

The study uses Avicii's worldwide hit "Wake Me Up" as an example of a song that makes more money from Spotify than it does from iTunes or CD sales combined. The overall idea suggests that streaming, despite its critics, is a better model than downloads or CD sales.

"The majors are going to need to change their business model very soon," wrote Los Angeles based DIY musician and blogger Ari Herstand. "I predict seeing them return to the career building days of yore. Instead of signing the sexiest, auto-tuned shell of a singer, get ready to see a resurgence of great acts being signed and sustained. It may take the majors a few years to understand that this is the way of a profitable future, but they will realize it soon enough."

As The Wall Street Journal writer puts it, "The lesson for record companies and artists appears to be: making disposable hits may once have been a viable business, but new technology could demand tunes built to last."

Do you prefer downloading and/or buying physical copies of music or would you rather stream your music? Let us know in the comments section below!

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