Music streaming is now most popular method of uptake in UK

Ray Walsh

Ray Walsh

July 7, 2015

For a long time the music industry has suffered from not understanding how to move its business model forward into the new digital age. Piracy, a decline in the sale of physical formats, and a misunderstanding of key developing digital markets have all added to the music industry’s woes – problems which until recently it was struggling to get its head around.  Now, however, it would appear that things are finally moving in the right direction, for both industry and artists alike, and the answer (much in the same way that Netflix has worked for movies) is coming in the form of streaming subscription services.

In the UK, due to its ease of use and convenience, music streaming is quickly becoming one of the most popular methods of music consumption, with people turning to online music stream providers such as Spotify, Deezer, Rdio and Google Play at highly encouraging rates. In fact, according to data from the British Phonographic Industry (BPI), music streaming is gaining in popularity at such a rate that it is starting to have a stark and noticeable effect on both digital and physical sales of music.

The news comes at a time when streaming services for music are going through a noticeable explosion.  The launch of Tidal and Apple Music (the Apple music streaming service that Steve Jobs said would never happen) both threaten the dominance of Spotify.

Spotify, however, has itself only a few months ago unveiled a fresh and more modern look for its brand, a revamp that it hopes will help it to stay ahead of its new competitors.  Whether this works, only time will tell, but with Spotify already holding a key foothold in the market, and with its service already integrated with Facebook, we can certainly assume that if it plays its cards right, it should be able to keep a sizable hold on a market that is growing at a reassuring rate for all involved.

By using the Album Equivalent Sales measure (which is how it compares streaming figures to traditional music sales measurements), the BPI has been able to tell that streaming in the UK is up by 80 percent from last year, which it says translates to around 11.5bn streams listened to in the last six months. This is compared to 14.8bn streams listened to in the entirety of last year – a huge surge in the usage of the modern medium.  The new data also shows that British music consumption has lifted by around 4 percent overall – which points to a decline in piracy, and an uptake in streaming services that should begin to translate into increased revenue for musicians, we would hope.

Unfortunately, it is unclear whether the 80 percent increase in music streaming is equating to revenue for musicians, as the BPI has not yet been able to confidently discern the difference between people who are paying for streaming services, and those who are using free streaming services such as YouTube.  One thing which may be a worry to the music industry is that statistics reveal that music streams on YouTube have increased by a staggering 98 percent year-on-year. This is an issue that will affect artists in particular,  as they do not receive nearly as much royalty revenue from streams on YouTube, and instead have to rely on striking advertising deals.

Geoff Taylor, chief executive of the BPI, however, is still confident that the market is moving in the right direction for everyone concerned,

‘The launch of Apple Music will give further impetus to the revolution of music streaming. Millions of households are experiencing the joy of instantly playing any song they want, all around their house and on any device, and exploring a universe of new music and classic albums.’

One noticeable development that is bound to have a direct effect on the uptake of streaming services has been the growing number of high-profile endorsements for online streams from successful musicians. This reveals that artists themselves are encouraged by the upsurge in the uptake of this new format.  It is also a sensible response from artists and the music industry, who instead of going after pirates (a method that has been proven time and time again to be the least effective way of combating piracy) are starting to find ways to win the consumer back, by offering them the right product at the right price.

AC/DC, Drake and Taylor Swift are among the celebrity endorsements of the new medium, with Swift herself doing a fantastic job of helping to put pressure on Apple into paying artist royalties, even during Apple Music’s three month free trial period. After all, why should Apple get to use musicians’ music to encourage people into using its service  (a service that it stands to make a huge profit from) without paying musicians any royalties during the period of time that allows it to launch that service. It is an example of corporate greed gone mad, and Taylor Swift deserves a medal for her stand!

Elsewhere, new statistics from the BPI show that while streaming services are surging ahead, digital downloads and CD sales are in fact both in decline – with digital downloads suffering at a faster rate of decline than CD sales. In the first half of 2015 CD album sales in the UK fell 5.7 percent from 22.68m to 21.38m, while in the same period sales of digital albums dropped 6.6 percent to 13.86m.  This will come as somewhat of a surprise to most people, who might assume that physical format music sales are still declining compared to digital uptake. In fact, in the first half of 2015, vinyl sales went up 56.3 percent to 833,137,  demonstrating that there will always be a demand (from some people) for a hard copy of their favorite album.

Some artists (like Lil Wayne for example) have chosen to release their album exclusively on streaming services (Lil Wayne’s new LP has just come out on Tidal, after a series of delays due to arguments with his label Cash Money), further demonstrating that streaming services appear to have the upper hand over other mediums in just about every way.

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