The US Music Industry Crossed A Threshold In 2016

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The US Music Industry Crossed A Threshold In 2016

Postby Marsbar » Thu Jan 19, 2017 12:54 pm

Nielsen recently released its Year-End Music Report for 2016 and it details a pattern of music consumption in the United States that has never been seen before. Album sales in every format save one are down from 2015. Downloads of digital songs are down. And yet, overall music consumption was up 3%. The reason? On-demand streaming took over the music business. The only real surprise is that it took this long.

With a slice that gobbled up 38% of the pie, on-demand audio streaming accounted for the largest share of total audio music consumption. It was the first time that on-demand audio steaming surpassed digital music sales. Total music streams (audio and video) were up 39.2% year-over-year. Most of that gain came from audio streams which increased a whopping 76.4% from 2015 to 2016. Video streams increased 7.5%.

In contrast, sales of albums and songs tanked in 2016. Digital song downloads were down 25% from 2015. Total album sales (CD, cassette, vinyl and digital) were off by 16.7%. Digital album sales dropped 20.1% while CD sales fell 16.3%. Mass market (down 24.5%) and chain stores (down 21.4%) took the biggest losses in terms of physical album sales.

CDs are still the preferred album format accounting for approximately 52.3% of sales. Digital is the second most popular format with 41% of album sales followed by vinyl with 6.5% of sales.

Vinyl LPs accounted for a small proportion of album sales but they were the music industry’s sole bright spot for sales in 2016. Vinyl sales increased 10% from 11.9 million units sold in 2015 to 13.9 million units in 2016. It was the 11th consecutive year that vinyl LPs produced a year-over-year increase in sales.

On-demand streaming was the star of the music consumption show in 2016. Nielsen measured on-demand music streaming by combining audio and video streams from Spotify, Youtube, Apple, Google Play, Amazon, Rhapsody Song, Tidal, Soundcloud, Xbox Music, Slacker, Tidal Video, Medianet, Aol Radio and Disciple.

There were 431.7 billion music streams in 2016. That breaks down to an average of about 1.2 billion streams per day or 49.3 million streams every hour. That’s roughly equivalent to 3.7 streams per day for every man, woman and child in the US. Breaking out audio and video, there were 251.9 billion audio (690.1 million daily) and 179.9 billion video (492.9 million daily) streams in 2016.

The music industry continued to make money in 2016 because the loss in sales was offset by income from subscription streaming services. BuzzAngle reports that on-demand streams from paid subscriptions increased 124% from 85.3 billion in 2015 to 191.4 billion in 2016. Ad-supported on-demand streams increased 14.3%. Streams from subscription accounts made up approximately 76% of on-demand audio streams.

Kevin Murnane , CONTRIBUTOR Forbes Magazine
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