Each year, the Record Industry Association of America (RIAA) releases a recap for yearly earnings. They have generally been pretty doom and gloom with the overall industry bleeding money with sales from CDs dropping dramatically and the major players unable to capitalize and create new sources of revenue for themselves and their artists. The 2014 report shows that while total revenues did dip from $7 billion to $6.972, a 0.5 percent change, there are plenty of promising signs, notably in streaming.
Physical and digital sales continue to fall at a somewhat discouraging clip, but it isn't surprising. Digital single downloads fell from $1.567 billion to $1.409, down 10.1 percent and digital album downloads fell $1.232 billion to $1.150 or 6.6 percent. Older forms of revenue like music videos and ringtones continues to slide rapidly.
Physical album sales fell 12.7 percent from $2.123 billion to $1.854 billion, still the single biggest source of revenue for the music industry, but if the trend continues that won't stay the same. The vinyl craze has proven to be a legitimate source of revenue with sales increasing 50 percent from $210 million to $314 million, though not enough to offset the sliding physical album sales.
The glimmer of hope comes in the digital space and notably the future of music consumption — streaming. SoundExchange payouts, or royalty payments from various digital radio sources, grew 31 percent to $773 million. Subscription services showed impressive growth in both paid subscription and ad-based revenue, growing 25 percent to $800 million for paid subscribers and 34 percent to $294 million for ad-supported.
The numbers give a pretty interesting outlook on where the music industry is heading. The RIAA has been hesitant to embrace streaming services and we have seen artists fight the advance of these new technologies, but industry-wide in the United States it is clear that one is on its way to becoming the primary source of revenue. Artists will need to figure out how to maximize payouts from all streaming platforms including Pandora, Spotify, YouTube and others, while also still trying to get a share of the shrinking sales market.
Check out a few of the graphs below via Pigeons and Planes and read the full report here.
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