Streaming Dominates Music Industry, Report Shows
By Movieguide® Contributor
2023 was the greatest year for the music industry ever, but rather than going to the artists, most profits landed in the pockets of streaming services.
According to a year-end study from The Recording Industry Association of America, last year was the eighth consecutive year of growth for the music industry, with revenue topping $17.1 billion. As is the current trend with all entertainment, streaming was the top dog, accounting for over 80% of all revenue.
Within the streaming space, subscriptions for services like Spotify were by far the largest pull, with the average number of subscribers over the year landing just below 97 million. Collectively, subscriptions generated over $11 billion in revenue.
While paid subscriptions are cash cows, ad-supported models are not to be overlooked. Spotify’s free service, YouTube and other ad-supported streaming platforms collected $1.9 billion over the year. Meanwhile, online radio services such as Pandora and SiriusXM generated $1.3 billion.
Despite their dominance in the music industry, business for streamers is not all smooth sailing. The top platforms feel the pressure to continue adding new features, including adding audiobooks to Spotify and Apple’s Music Replay to summarize your year in music. However, these additions are not enticing enough, and streaming services are struggling to find a profit.
Last year, Spotify laid off over 2,300 employees—roughly a quarter of its workforce—and posted massive losses in the first half of the year before showing a slight profit in Q3.
While streaming is certainly the king of the industry, vinyl proved yet again to be the industry’s sweetheart. Physical sales grew 11% in 2023, with vinyl accounting for $1.4 billion in sales. 2023 also marked the second year since 1987 that more vinyl records were sold than CDs (43 million vs 37 million). Even still, CDs saw a growth in sales as well, rising 11% from 2022.
Movieguide® previously reported on the music industry:
“YouTube is the key driver of our subscription revenues,” said Sundar Pichai, Alphabet’s CEO. “YouTube Music and Premium have real momentum. They are engaging passionate users and driving great returns for the music industry and creators.”
YouTube Music offers subscribers ad-free access to over 100 million songs, along with background listening and downloads. YouTube Premium covers those features and includes all of the content on the platform. The services, launched in 2015, saw their first price changes last year as Music rose from $9.99 to $10.99 and Premium jumped from $11.99 to $13.99.
“Many doubted a subscription model could thrive on YouTube,” Lyor Cohen, global head of music at YouTube, wrote in a blog post. “They said the market was crowded and our platform was too different. Today – 100 million subscribers later – our distinctiveness is precisely what drives our success and why I still see so much room for growth.”
