Apple Music is having a big impact on the profitability of the music industry, according to a new report from the Recording Industry Association of America.
How big? Apple Music is one of the key players driving what looks to be the recording industry’s first back-to-back yearly growth since 1998-1999.
Retail spending on recorded music grew 8.1 percent to $3.4 billion in the first half of 2016, says the report, which is currently in draft form. If the industry continues this kind of success, the second year of back-to-back growth will be achieved.
2016’s success thus far can be seen by looking at the financials recorded by major music companies, with Universal Music Group, Warner Music Group and Sony Music Entertainment all reporting gains.
Music sales peaked in 1999, the year peer-to-peer file trading service Napster launched, and have been a fraction of that number ever since. This means that the astounding success of iTunes in the early 2000s, while fantastic for Apple, did little more than slow the decline of music sales in the United States.
Although there’s no doubt that music sales would have declined at a much faster rate had a good legal alternative not arrived, iTunes also cut overall U.S. sales by boosting singles sales at the expense of albums.
Streaming music is going mainstream
Apple got into the music streaming game late, giving chief competitor Spotify a years-long head start. But now Apple Music is helping streaming music go mainstream.
“We’re starting to see on-demand music streaming as no longer a thing that hipster college kids and young people do,” New York University music biz teacher and former industry exec Larry Miller told Bloomberg. Citing unnamed label executives, Bloomberg said most Apple Music subscribers “are people new to paying music, not former Spotify customers.”
Apple Music has around 17 million users, according to Apple’s most recent media event. That’s less than twice the number of subscribers Spotify has, however, with CEO Daniel Ek recently revealing that his company has a massive 40 million paying users.
Source: Bloomberg
