Streaming music, with its revenues and royalties is arguably the most complex, music format in industry history. Webcasters (Pandora) and on-demand streamers (Spotify) each have different rules and payment schedules. There are paid subscribers, free ad-supported subscribers, and even plans bundled with cell phone fees (Cricket/Muve). No wonder there is so much confusion on the subject.
One thing we know is the on-demand subscriber base is growing. According to industry sources, U.S. paid on-demand subscribers totaled 5.261 million at the end of May 2013. As shown on the above chart, six month growth for Spotify (47%) and Muve (53%) has been strongest. Overall subscriber growth during the last six months averaged 32%.
Other on-demand streaming companies with significantly smaller market share include Slacker (149k pd subs), Sony Music (89k pd subs), RDIO (81k pd subs) and MOG (64k pd subs).
Satellite radio with its 25 million subscribers is also a big player in this non-traditional music revenue sector, but not on our chart because they are distributed via satellite, (not internet) and are not an on-demand service. Also not listed [yet] is the newly-launched, Google Play.
The Big Question
The No. 1 streaming concern among content creators is payments. “How many subscribers will be needed to eventually generate equitable payments for content owners?” What is the target we need to hit?
Some pundits suggest 20 million U.S. subscribers would form a meaningful threshold, others insist the current system will need over 100 million to reach payouts that might match current income standards. The answer is complicated by considerations over shrinking revenues from physical and digital download sales which places more growth pressure on the new format.
Currently, only about 1.6% of the U.S. population are paid, on-demand music subscribers. So we have both enormous room for growth, and enormous need for it to grow…
And now to the weekly sales numbers…
Jay Z continues to be the biggest name in album sales taking the top spot on the Top 200 chart for a second consecutive week with sales of just over 129k. As you’ll recall, ‘Z’ did a million unit deal (@$5 each) with Samsung that was not counted for SoundScan purposes, but counted very nicely in Mr. Z’s bank account. His debut last week then stormed the chart with sales of over 528k. Now after two weeks his RTD SoundScan total flies at 658k. Will we see similar promotions in country and other formats as corporate brands continue to experiment with ways to engage consumers?
The Top Current Country Albums list is acting like a patient on life support and will likely continue to do so until mid-August when scheduled high-profile releases are expected to entice record buyers. In the meantime, country YTD album sales fell further from last week’s -1.8% to -2.3%. Country continues to out perform all genre sales, however, which are off 6.4%.
Here’s a glance at this week’s tepid Top 5: FGL (31k), Blake Shelton (21k), Darius Rucker (13k), Hunter Hayes (13k) and Taylor Swift (9k). This extra light chart top explains why the entire Top Current 75 only scanned [a pitiful] 256k units!
One of the new party phrases I hear is, “It’s a tracks business now.” Well, country track sales are up 9.5% YTD. BUT, if you do some top level math for 2013’s YTD 103 million country tracks and 21.4 million album sales you will quickly see that albums remain a large piece of the retail sales pie.
Tracks: 103 m X $1.29=$132,870,000
Albums: 21.4 m X $9.99=$213,786,00
On the country tracks list we continue to see the year’s power duo (FGL) “Cruise” its way to No. 1 (again); but Voice-throb Danielle Bradbery has climbed to the No. 2 spot with her song “Heart Of Dixie.” Readers will recall Bradbery recently wowed Voice viewers and was selling weekly cover song tracks like popcorn in a movie theater.
In addition to discovering talent, did The Voice also pave the way to revive sales of cover songs? Bradbery and other contestants sold large quantities of the cover tracks they performed weekly. Could that work for other artists as well?