Ad-based streaming services, such as YouTube, VEVO, Spotify’s free tier, and SoundCloud generated a total of just $385 million in 2015, despite logging play counts in the hundreds of billions.
While both platforms were up by 30 percent or more in revenue from 2014 — with free streaming generating 30 percent more and vinyl generating 32 percent more year-over-year — vinyl sales brings in more revenue than free streaming from a much smaller user base.
In fact, while the number of plays from free streaming has been skyrocketing, revenue growth is actually dipping. While revenue was up 32 percent in 2014 (on 64 percent more plays), 2015 saw streaming plays double (up 100 percent) over the previous year, yet the revenue growth actually went down to 30 percent.
In other words, even as it grows by leaps and bounds, ad-based streaming just isn’t profitable on a large scale. Paid streaming averages around 10 times more revenue than free streaming, essentially supporting the platform entirely.
RIAA CEO Cary Sherman had ominous things to say in a statement following the company’s release of the 2015 numbers:
“The consumption of music is skyrocketing, but revenues for creators have not kept pace. In 2015, fans listened to hundreds of billions of audio and video music streams through on-demand ad-supported digital services like YouTube, but revenues from such services have been meager — far less than other kinds of music services. And the problem is getting worse.”
She went on to mention the vinyl resurgence, but not to praise it, instead using the LP format as an example of how distorted the digital music industry is when it comes to paying artists.
“Need further proof that some fundamental market distortions are at play? Last year, 17 million vinyl albums, a legacy format enjoying a bit of a resurgence, generated more revenues than billions and billions of on-demand free streams.”
Though the rise of vinyl sales does say good things about consumers being willing to pay for music, it also says terrible things about the state of the music industry, which is increasingly fueled by unprofitable ad-based streaming.
