For the first time, a major record label says it’s making more money from streaming music than it is from MP3 sales.
Warner Music Group’s streaming revenue from services such as Spotify and YouTube grew 33 percent year-over-year last quarter, Recode reports. The label said this growth “more than offset a decline in download revenue” from digital stores such as iTunes.
“Declines in download revenue are expected to be a continuing trend,” Warner said in an earnings statement.
Why this matters: Warner’s earnings underscore just how quickly streaming music has changed the record business. It was only a few years ago that downloadable music sales overtook CD sales industry-wide, and that transition took nearly a decade. Streaming music has proven much more effective, combining a steady flow of subscription dollars with ad revenue from people who might otherwise turn to piracy.
Tightening the subscription screws
That’s not to say the music industry is thrilled with the status quo. Several artists such as Taylor Swift and Radiohead have complained about how little they make from streaming (while sidestepping the fact that labels take the lion’s share), and have pulled their music from Spotify in protest of its ad-supported tier. These artists have taken a warmer attitude toward services that require a paid subscription, such as Tidal.
Of course, the labels wouldn’t mind seeing more money from streaming as well, but they don’t want to cut off the ad revenue stream entirely. Recent reports have claimed that labels are mulling new restrictions on Spotify, such as monthly listening caps.
At the same time, Apple is reportedly pressuring labels to abandon free streaming entirely as the company rolls out a revamp to its existing Beats Music service. Unnamed sources told The Verge earlier this month that Apple had even offered to pay YouTube’s licensing fees to Universal Music Group in exchange for pulling its songs from the site.
The Department of Justice and the Federal Trade Commission are reportedly looking closely at these dealings, which come just a couple years after a court found that Apple colluded with book publishers on ebook pricing.