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Streaming is Decimating Both Physical and Digital Music Sales; 2017 Industry Report

by VVN Music

The advent of streaming has been a huge blessing for music listeners.  They now have the biggest music libraries in the world available to them 24/7.

...but it is killing artists.

According to Paul Cashmere from our affiliate, Noise11:

So was it a good year for the music industry? Answer: Yes … but not for artists. With the increase in streaming mainly through Spotify and with the major labels holding a major shareholding in Spotify and with Spotify about to float, the major labels will make a killing in 2018 and the artists will be screwed big time.

The business play is extremely dirty and all weighted to the labels. The labels received their Spotify shareholding in consideration for the use of their artist’s copyright. That is considered a capital investment. Artists are then paid when their songs are streamed but are not entitled to anything for the capital investment (shareholding). That all goes to the record company and its shareholders. The rich get richer, the poor get the picture. The Spotify float will generate billions for each of the three majors and artists won’t be entitled to any of it, even though it is their copyright that created the shareholder value.

The consumption of music is on the rise by large margins according to the year-end report from BuzzAngle.  Album consumption is up 12.8% while song consumption increased 25.9% from 2016 to 2017 but all of the increase was in streaming.  Audio streams were up 50.3% and video streams 21.9%, a total combined streaming increase of 38.4%.

Unfortunately for the artists, those streaming increases are decimating the historical forms of consumption. The actual purchasing of individual songs is down 23.2% and albums by 14.6%. As most song purchases are through digital download, it's no wonder that Apple is winding down their download service.

That drop is reflected in digital album sales which were also down 22.6%. Now, the semi-good news.  Physical album sales are not dropping anywhere near as fast.  For those that said the CD was dead, 74.5 million were sold last year, down just 7% from the year before, and CD sales are now far outpacing digital album sales which were at 64.9 million.

Then there were the two niche formats. Vinyl sales went from 7.2 million to 8.6 million, up 20.1% and Cassette sales more than doubled from just 42,100 in 2016 to 99,300 last year.

Rock continues to be the most popular genre in album sales but it is quickly losing ground.  The genre currently has 22.1% of the market (down 5%) while Rap/Hip-Hop has 17.5% (up 19.3%). Latin is the fastest growing genre for albums, in sixth place at 7.5% but up a whopping 23.2% in 2017.

Deep catalog tracks and albums make up the majority of both album and single consumption, making up 51.2% of both formats.  Recent music makes up another quarter of the market while catalog is third (12%) and new music trails.

Taylor Swift's reputation was the biggest selling album of the year at 1.9 million while Ed Sheeran's Divide is a distant second at just 1.04 million. A total of six albums by veteran artists made the top 25.
  • 08. Guardians of the Galaxy: Awesome Mix, Vol. 2 - Various Artists (551,000)
  • 17. 4:44 - Jay-Z (363,000)
  • 19. Guardians of the Galaxy: Awesome Mix, Vol. 1 - Various Artists (360,500)
  • 20. Live in No Shoes Nation - Kenny Chesney (337,000)
  • 21. Self Destruct - Metallica (335,000)
  • 24. Ripcord - Keith Urban (257,000)
Add in streaming at 1,500 streams per album "unit", and there are big changes. Sheeran takes the number 1 spot with 2,645,600 in total sales. Kendrick Lamar's DAMN. was second with 2,573,000 and Taylor Swift drops to third with 2,354,000. With streaming, there were NO veteran artists in the top 25. 

The first Guardians of the Galaxy collection was the biggest seller in vinyl with 64,200 followed by the Beatles' Abbey Road at 62,200. In total, twelve of the top 25 albums in sales were from veteran artists. 

Of course, there are no veteran artists anywhere in the list of most streamed albums, but the numbers on that list are astounding.  The top streamed album was Lamar's DAMN. with almost 3 billions streams.

Luis Fonsi and Daddy Yankee had the second most consumed and sold song of the year with "Despacito" behind Ed Sheeran's "Shape of You" in both categories. Coldplay was the only other veteran artist to make both lists with the Chainsmokers on "Something Just Like This". It was the sixth biggest song by way of sales and number 13 with streaming added. 

"Despacito" was the most streamed song of the year as the first ever to break the billion stream mark. Sheeran was a little behind with 979 million streams.