Streaming audio has officially taken over the music industry.
The Recording Industry Association of America (RIAA) released its 2018 annual music industry revenue report, outlining the state of the music business. The results underscore how dominant a force streaming has become.
The RIAA report found revenue from streaming platforms reached $7.4 billion in 2018, accounting for 75% of all music industry revenues, and for essentially all revenue growth across the industry. Overall streaming revenues were up 30% compared to 2017.
The RIAA defines the streaming category to include premium services like Spotify, ad-supported on-demand streaming services like YouTube, Vevo, and Spotify with Ads, and streaming radio services Pandora and SiriusXM.
By contrast, digital downloads (i.e. iTunes) accounted for only 11% of revenue, while physical media accounted for 12% of revenue.
Within the streaming segment, every sector (premium subscriptions, ad-supported on-demand and streaming radio) saw revenue growth in 2018, with paid subscriptions still accounting for the lions share of revenue with $5.4 billion.
While ad-supported on-demand streaming grew by 15% to $760 million, it is still lagging behind in terms of revenue generation. The RIAA found these
services accounted for more than one-third of all streaming in 2018, but only 8% of revenue.
That gap may explain investments made by Pandora, Spotify and others to develop new programmatic audio advertising tools to fill the void.
In total, more than 50 million consumers in the U.S. are now subscribed to a subscription streaming service in 2018, according to the RIAA. It also found that streaming radio services passed $1 billion in revenue for the first time in 2018, hitting $1.2 billion in revenue.