Streaming Services Really Are Saving the Music Industry, Global Sales Prove

Piracy plummets and revenue rises for the first time in 13 years, but will the artists reap the rewards?

adele, music industry sales
Adele / Photo by Getty Images
Kyle McGovern WRITTEN BY
Kyle McGovern

Here's something you don't read every day (and certainly not in the last 13 years): The music industry's global revenue increased in 2012. According to a study released earlier this week by the International Federation of the Phonographic Industry, global sales rose 0.3 percent last year, the first sign of industry growth since 1999 (via the New York Times).

Last year's total revenue amounted to $16.5 billion. That's nowhere near the industry's more-than-a-decade-ago peak of $38 billion, but it's something.

“It’s clear that 2012 saw the global recording industry moving onto the road to recovery,” Frances Moore, chief executive of the IFPI, told the Times. “There’s a palpable buzz in the air that I haven’t felt for a long time.”

On the whole, things are looking a little less apocalyptic for the music industry. Nielsen SoundScan's year-end 2012 report revealed that if you don't distinguish between format (album or track) or delivery method (physical or digital), then last year, Americans actually bought more music than ever before. Factor in that piracy is on the decline, streaming services such as Pandora are on an upswing, and iTunes has sold more than 25 billion songs, and suddenly the sky isn't falling quite so hard.

Of course, the biggest issue with streaming services comes with the awfully low payout for the artists. As our own Marc Hogan pointed out last month, "While the average musician might earn 7 to 10 cents on an iTunes download, artists receive a fraction of a fraction of a cent each time their songs are played on streaming services." So while someone like Psy earned $8 million on his 1.2 billion views for "Gangnam Style," cellist Zoe Keating received less than $1,700 for the more than 1.5 million plays that she racked up on Pandora in six months.

“At the beginning of the digital revolution it was common to say that digital was killing music,” Edgar Berger, chief executive of Sony Music Entertainment's international division, said to the Times. On the contrary, Berger added, it could be argued "that digital is saving music." Not something you'd expect to hear back in 2000, so it's understandable that industry bigwigs would be excited.

As the Hollywood Reporter notes, digital income did indeed bolster the growth. Revenue from downloading and subscription-driven outlets jumped nine percent in 2012, generating a total of $5.6 billion.

The IFPI also found that subscription-based streaming services — including Spotify and Rdio, among others — fattened in 2012. Last year, the number of subscribers to said services ballooned by 44 percent, amounting to a total of 20 million users.

Meanwhile, another study, this one from the NPD Group, estimates that file-sharing declined "significantly" last year (via THR). NPD Group reports that 11 percent of Internet users ages 13 and older used a P2P service to download music in 2012, down from 13 percent in 2011 and 20 percent in 2006.

Overall, NPD claims that last year saw a 26 percent decline in illegally downloaded music.

Looks like the industry really does rely on streaming services for support. Well, streaming services and Adele. The Oscar winner's diamond-certified 21 ranked as the best-selling album of 2012, with 8.3 million units sold. That EGOT can't be far off.

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