I can’t recall the last time I purchased a CD. This seems to be a growing trend in our ever digitising world. The revenue from tangible Compact Disk (CD) sales is now the third major source of income for the U.S music industry. Permanent downloads sits at number one, engulfing 41% of industry revenue (as of 2014), and has been the top earner since 2011, when it overtook CD sales. We already know the affect that downloads had on CD’s, CD’s on tapes, and Tapes on vinyl records. Now we are being introduced to a new link in the audio consumption food-chain.
The new bullies of the school playground have arrived. Their names are Spotify, Pandora, Rhapsody, Grooveshark and Rdio.
It is the relatively new concept of music streaming that has caused chaos for music sales. These streaming sites now sit behind downloads as the most profitable method of music distribution. Not only have CD purchases been affected, but so has the download market. The combined revenues for download sites such as iTunes declined for the first time in 2013. In the first half of 2014, this downward trend continued with revenues dropping 13% to $1.34 billion (source). Subscription based, On-demand, and non-interactive radio streaming sites are the cause. For a small, usually monthly fee, users are given a plethora of near unlimited music choice. There is no need to wait for content to download, then sync it to a music player. It all about convenience, with the freedom of sound at the swipe of a phone, anywhere and anytime. The market has been further simplified, again. Despite its rise, the audio streaming world is still distant to the success of video streaming. The comparison of Spotify to Netflix shows 7.8 million subscribers up against 35 million, emphasising the industry gap.
Oddly enough, among the heavy modernisation of music, Vinyl records (both singles and LP’s) are re-emerging. Sales of the vintage medium jumped 40% in the first half on 2014.
The old and the new are rising, and those stuck in the middle are on shaky ground.
