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Marketplace Morning Report

Streaming services start to even the score

Adriene Hill Sep 22, 2015
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Back in June, on the eve of Apple’s announcement about its new paid, streaming service, Doug Morris, CEO of Sony Music, got up in front of a crowd at a music industry event and sounded downright optimistic. “I think it’ll have a halo effect on the entire streaming business,” he said. “I think it’s the beginning of an amazing moment for our industry.”

 

It’s a moment, all right.

But amazing remains to be seen.

“There’s no doubt that the last two years have been really huge for streaming,” said Mark Mulligan, a music industry analyst with MIDiA Research.  

According to a report released this week by the Recording Industry Association of America, between the first half of 2014 and the first half of 2015, revenue from paid streaming services surpassed revenue from physical music sales — CDs, vinyl, DVD soundtracks — for the first time. Revenue from paid streaming services grew about 3 percent during the reporting period; revenue from ad-supported streaming services, like YouTube, was up 27 percent.  

 “That growth brings with it questions about the long term future of streaming,” Mulligan said. “Can we afford to have the majority of people switching from paying to listening for free?”

Of course, “free” is a relative term.

“In effect, everyone’s paying even if it’s an ad-supported stream,” said David Bakula, an analyst with Nielsen, noting that there’s still money coming in.

And making some money, he said, is better than the old days when lots of people just downloaded music illegally.

But whether streaming services, which are offsetting the decline in digital downloads, can stem the long decline of the music industry is open question.

Spotify, for one, says it has seen a bump in sign-ups for its paid service since Apple Music launched nearly three months ago with a 90-day free trial. .

We could find out as early as next week if Apple’s fans will keep paying, once their free trials expire. 

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