Years after alarms were sounding about its demise, the music industry is back in tune.
Global recorded music sales grew by 9.7% in 2018, to $19.1 billion, the fourth consecutive year of growth after many years of decline. The results were driven by a surge in paid streaming, which rose by 33% last year, according to a new report by the International Federation of the Phonographic Industry (IFPI).
Still, the music industry is far from its peak around the turn of the millennium. Adjusted for inflation, sales in 2018 were just over half of what they were in 1999:
There are now 255 million paid music subscribers, accounting for 37% of total industry revenue. When ad-supported services are added, streaming now accounts for 47% of sales of recorded music.
Meanwhile, revenue for physical formats was down 10% last year. What’s more, digital download revenue fell by 21%, further evidence that the days of owning CDs and mp3s have given way to subscriptions to streams. (Revenues from vinyl, however, posted growth for the 13th consecutive year, growing by 6% and capturing a 3.6% share of the overall market.)
The fact that the music industry has thrown its weight behind streaming is noteworthy when you consider that not long ago, it fought against digital formats. At one stage, it even created a smartphone game called Music Inc, where you manage a band, a task that proves futile time and again due to the costs of online piracy.
But the inevitable shift to digital music left major record labels without many other good options. Spotify and other streaming services have helped keep (paywall) the days of Napster piracy at bay, even if it also means the end of an era of big profit margins.