UK streaming market survey

[crowlem]

The UK government just completed some research on the streaming market (motivated by concerns over artist royalties and other issues).

Some interesting highlights:

Overall revenue has been almost cut in half since 2000, probably not surprising to anyone on this forum but what is curious is that physical albums barely see an uptick. Given the vinyl resurgence I would of expected the needle to have moved, evidently it hasn’t.

Despite that chopping to revenues, average artist royalty payments are increasing:

The catch being that their average royalty payments are incredibly low even after that increase. It’s also incredibly suspicious that they chose not to include artist revenue prior to 2017. I wonder why…

Another interesting data point is the splits of services people use:

It is wild to me that Amazon Music, an app that is universally considering the worst app in terms of interface, is second place. To me that says that people prioritise low cost above all else (Prime makes it cheap). Plenty of other possible takes though.

The paper concludes in a rather odd way considering this examination was motivated by a concern over the artist compensation.

“The music streaming market is changing rapidly, and further technological advances in the years to come may spark further changes to the way we listen to music. So far, our analysis indicates that the market is on balance delivering good outcomes for consumers. However, we could have concerns in future if aspects of the market changed in ways that harmed consumers’ interests.”

While streaming is the best thing from a consumer perspective, from reading their analysis the conclusion I took away is that it is incredibly destructive to artists and actually, the music industry as a whole.

Link to the full report is here:

Executive summary

[Martin_Webster]

@crowlem

Given the vinyl resurgence I would of expected the needle to have moved, evidently it hasn’t.

Vinyl has never sold as much as CD or cassette. Whilst this year vinyl may outsell CDs in the UK, this only accounts for a few percentage points in revenue for the music industry.

Indeed, CD sales have dropped by over 95% since their peak in the early 2000s, and vinyl is only just returning to 1990 levels, i.e., when it had all but disappeared from the high street.

“Vinyl resurgence” implies a revival, but let’s be honest, collecting vinyl is a very much a niche activity.

[crowlem]

You aren’t wrong, I just had an impression it was larger than it is.

Clearly vinyl, CD and digital downloads are a rounding error at this point.

[Martin_Webster]

Another thing rarely mentioned is that revenue, including streaming and digital downloads, is half what it was in the early 2000s. I guess Napster and the ease of piracy really did kill the music industry.

[BCBC (Somewhere in British Columbia)]

@crowlem

While streaming is the best thing from a consumer perspective, from reading their analysis the conclusion I took away is that it is incredibly destructive to artists and actually, the music industry as a whole.

Dismaying. While consumers may pay less and have more apparent choice, real choice is diminished by algorithmic driven offerings. I don’t rely solely on streaming services though they clearly dominate the landscape.

[crowlem]

Totally agree and it looks like that trend is only getting worse.

From the report it seems that we continue to be in a race to the bottom. The big 4 (Apple, Spotify, Google and Amazon) will continue to lower the bar to fight for market share.

Smaller players will stagnate on low margins and without growth will struggle to maintain their subscribers. The split agreed with every service, 70% of revenue to labels and 30% to the platform, is the same on all platforms (according to Qobuz). The likes of Apple can easily take a loss on music if it leads to more spending in their ecosystem. Qobuz can’t.

From an artist compensation point of view, as they eluded to in the report, the absolute mess that is label contracts is what is harming the artists. The platforms are all beholden to the label and the labels use nasty contracts to extract profit from a weakened market.

This is not to say that these platforms are angels (far from it) but it does seem that a lot of the public attention has been misdirected at the platforms when in reality we should be looking at the labels.

[SandsOfArrakis (The Spice Must Flow)]

Years ago there were many music shops here in the Netherlands. Selling CD’s, DVD’s, BluRays and video games. Even in the small city that I live in (about 18000 people) there were 3 of them. But they have all disappeared. The same thing goes for the big cities.

I’ve recently visited a MediaMarkt in nearby Leeuwarden. In the past about half of the ground floor was dedicated to music. Nowadays its just a small corner, and not near the main walking paths either. What they have for sale is just a mix of popular music, that most people listen to through streaming.

I’ve bought my first CD’s in the early 90’s when I went to college. And I’ve been buying a lot of them over the years. But the last time that I’ve bought a CD has been at least 10 years ago. The same thing pretty much goes for movies.

For movies and series I’m subscribed to HBO Max, Amazon Prime and through Apple One to Apple TV.
Music streaming to Apple Music (also through Apple One) and Qobuz.

I guess I’m a shining example of how the whole market has changed. I’ve done some illegal downloading in the past. I won’t deny that. But nowadays when it comes to music, everything that I love listening to is either from my own local collection or available on Apple Music/Qobuz.

How the future will look like for the streaming providers? I don’t see Apple Music keeling over, but I’m far less certain about Qobuz. I love Qobuz for its integration with both Roon and Audirvana Studio. Its sound quality beats Apple Music here. But sound quality alone won’t win Qobuz the streaming war. They’ll need more subscribers. Tidal is, I believe, in a similar boat.

When it comes to high res audio. Spotify still hasn’t gone hi-fi, even though they have announced it well over a year ago. Apple has done so. But even before offering lossless, they already had a huge amount of subscribers to their service. I’m less familiar with Amazon, since that doesn’t seem to be that big here in the Netherlands. Tidal and Deezer are small players here as well, same as with Qobuz.

Most folks who use streaming services probably have no clue what hi-res means and are happy just playing mp3 grade music. Probably the reason Spotify still isn’t hi-fi. Hi-res is a niche. Same as people who use programs like Roon and Audirvana are also a niche.

Only time will tell how many streaming services will remain in the coming years.

[Martin_Webster]

@BCBC

While consumers may pay less and have more apparent choice…

I’m sure I read somewhere that the average UK household owned less than 30 CDs, so it’s easy to understand why the likes of Spotify are successful.

But I also recall “music lovers” openly sharing each other’s collections (CD and other illegitimate means including CD rips from public libraries, and YouTube) [twenty years ago.] It was so easy to rip-off music [then].

So, I think piracy is ultimately responsible for where we are now, and streaming has simply negated the need for piracy because that requires greater effort.

I also think the labels were caught napping, focusing efforts on making it harder for consumers to enjoy their music wherever they like, rather than attempting to second guess where things were going.

[ToneDeaf (Ozzie)]

Interesting and indeed it seems a peculiar conclusion

@crowlem

Clearly vinyl, CD and digital downloads are a rounding error at this point.

If I interpret the first chart correctly, not quite a rounding error in monetary terms? 250 on 1100 (£ millions) or so?

[crowlem]

@ToneDeaf

250 on 1100 (£ millions) or so?

Yeah that’s a good point, should probably rephrase that.

In my head I was more thinking about the fact that the revenue from that source has flatlined and the “resurgence” according to that chart is not real, in revenue terms. It’s stagnant not climbing.

[ToneDeaf (Ozzie)]

Yes, agree.

I have no clue at all how to extrapolate from here. Especially with some atypical recent years for music producers and consumers alike, with covid. Time will tell.

It does strike me though, looking at the longer trend, that the industry move to (legal) download from the mid 00ties hasn’t done much at all for overall revenue. While a potential negative impact of (in the graph absent) illegal / grey-area downloads (with early Napster from 1999 to 2002 or so; and other file sharing vehicles probably still continuing) seems not so clear. Almost like the industry shooting itself in the foot.

I still regularly buy CDs, and occasional vinyl via Bandcamp, but probably even more second-hand from local stores and Discogs. Guess the second-hand market is not great at all for anyone involved in the creative process - I want to believe that would really amount to a rounding error, but hard to substantiate. Start to feel implicated now …

(I haven’t yet read the report. Maybe there is some info on this too?)

[crowlem]

They didn’t cover the used market because it doesn’t result in any revenue for artists or labels.

It could be sizeable and in that instance it would effect how much revenue they pull in because people have the option to buy used. That being said it wouldn’t change anything, there wouldn’t be anything actionable.

People are always going to buy used when it makes sense and the government wouldn’t be stupid enough to try and limit that, particularly as the conclusion of the report is that streaming is amazing for consumers.

My takeaway from their report on physical is that the vast majority of people stream only, while revenue from physical sales is non trivial as a share, that’s only because streaming pays next to nothing.

Even from a labels point of view, despite them being able to hoard all of the profits, it’s still lower than it was pre streaming.

They don’t seem to care about the artist angle and they are probably right. The problem isn’t streaming, it’s the label contracts. Artists on average earn less than the average salary in the uk because labels exploit people through convoluted contracts.

The only positive in the whole report is that it looks like the labels share of music is diminishing, albeit slowly.

[SukieInTheGraveyard (This one time, at Bandcamp... I spent too much money!)]

@ToneDeaf

Guess the second-hand market is not great at all for anyone involved in the creative process

As an avid buyer of 2nd hand CDs, as well as brand new downloads, I console myself with the fact that I’m saving unwanted discs from ending up in landfill.

[Paul_Williams]

Revenue may have gone down over the years but then the costs of providing the music have also gone down tremendously. Physical CDs require a huge infrastructure to get them into the hands of the consumer - from CD manufacturers, wholesale and retail network plus costs of transport and storage of the physical product at each stage of distribution.

Overall revenue may have fallen but this may have been at the expense of the costs of handling a physical product. Thus, this decline in total revenue does not mean, of itself, that the artists are any worse off. Indeed given the ability of streaming services to provide access to everyone, even the most obscure local group or artist now has immediate access to an international audience that would have been impossible under the old music distribution system.

[crowlem]

@Paul_Williams

Physical CDs require a huge infrastructure to get them into the hands of the consumer - from CD manufacturers, wholesale and retail network plus costs of transport and storage of the physical product at each stage of distribution.

As I understand, the labels had distributors handle all of this, they took a 25% cut.

Which on the face of it sounds like it would do something to remedy the 50% cut in revenue. In reality, digital now has costs associated with it. Just different ones.

There are digital distributors, analytics companies (who track the labels royalty payments and provide insights). It won’t be 25% but it won’t be free.

All that being said, I do agree with you that streaming services have had incredible effects on surfacing new music. The barrier has been lowered dramatically so anyone can enjoy it and having access to so much music is incredible. From a consumer point of view, it’s fantastic.

Even in this rather damning report, the cause for all the woe isn’t concluded as streaming, it’s the labels.

[j_a_m_i_e]

@Martin_Webster

So, I think piracy is ultimately responsible for where we are now, and streaming has simply negated the need for piracy because that requires greater effort.

I also think the labels were caught napping, focusing efforts on making it harder for consumers to enjoy their music wherever they like, rather than attempting to second guess where things were going.

This is a great and very easy read on the subject, it alternates between the inventors of the MP3 and later AAC, a guy working on a CD pressing plant in rural America who was ‘patient zero’ in terms of early CD leaks / piracy and the rise & fall of Doug Morris the head of Universal and the music industry in general during the late 90s and early to mid 2000s

https://www.amazon.co.uk/How-Music-Got-Free-Industry/dp/0525426612

[Simon_Price]

The market obviously collapsed with CD decline and the onset of file sharing as the internet developed . Also I think cd production doesn’t have much life in it now.

But also the high street for music and audio has died to a large degree so buying streamers for audio is not on the public consciousness as it once was vis a vis CD player purchase needed for cd buying. For instance in the uk we had Sony centres, independents hifi shops on high streets, Tottenham Court Road etc. This is much less the case now and generally unless you live in big towns and cities you have to look for hifi.

The problem is then the hifi industry hasn’t adopted to take up YouTube as it should , and new means to promote streaming and audio. Ie how people now get information is through video. Larger review channels do but if all the hifi brands posted regularly to YouTube and not just adverts, then the consciousness about audio contextualised with music would be there and I think streaming would be way more successful.

The hifi industry has a part to play in bringing down prices, making audio appeal to the masses more - the responsibility of all audio firms and contextualising audio as a means to an end for music - and selling music and talking about music. Keeping it highly technical isn’t helping to increase market capitalisation but simply niche, increasing prices.

[Daniel_Parker1 (Daniel Parker)]

Very interesting discussion and disturbing that reality is the artist suffers with these trends. Given these dynamics, those on this forum who want to see the artists they like enjoy success can make the choice to buy their product (vinyl, CD, digital downloads), and can buy tickets to their shows. I enjoy exposure to lots of music that is new to me thanks to hi-res streaming, but when something really stands out for me I also buy the product, often vinyl and equally often digital downloads. For artists I’ve liked and followed for many years I generally will buy their music from them, in addition to even more conveniently listening to the same music via streaming.

I encourage others to commit similarly, within your means and based on your personal judgement about where to spend your money. We may be a niche audience that can only move the needle fractionally, but every little bit matters to the artists whose work we all enjoy so very much.

[Mike_O_Neill]

I live in a suburb where many residents have disposable income and nowadays we don’t have a Physical CD shop . There used to be 5 dedicated shops now zero. We have a super new upgraded Mall - no CD/Vinyl shop !!

To get to a decent CD shop I have to travel 20 km .

The graph shows it. I wonder of the Physical CD how many were online purchases.

A sign of the times

[SandsOfArrakis (The Spice Must Flow)]

My guess would be most physical CD’s are online purchases these days. There are barely any big stores around here (Netherlands) anymore who sell physical media. And what little they do sell seem to be a handful of artists and a bunch of compilation albums. Music that you can easily find on every streaming platform.

And why would you still buy physical media when you can stream music all month for the price less then a single music CD. And truth be told. Not counting the handful of audiophiles who have invested a lot for their listening pleasure. Most people are just happy with the your average soundbar, homepod or whatever. On which a streaming service will sound pretty much the same as a CD player hooked up to that.

The times do have changed a lot. I’ve always loved strolling through rows and rows of CD’s, DVD’s and computer games. But I fear those days have come and gone.