CMU Trends Guide Streaming Business Library

CMU Trends In Ten: Digital Music Market

By | Last Updated: April 2020

This is a ten step guide to the digital music market today, summarising the evolution of digital music over the last two decades, and then explaining the basics of the modern streaming music business.

01. The shift to streaming is ongoing
The story of recorded music over the last two decades has, of course, been a story about the shift from selling plastic discs to selling downloads to monetising streams.

It’s no secret that it was a challenging transition, with overall recorded music revenues declining steeply throughout the 2000s. CD sales began to slump in the early years of that decade and it was sometime before download sales – mainly via the iTunes Store – started to boom. Even when they did, download revenues were never sufficient to compensate for continuing declines in CD sales.

It was at the start of the 2010s that streaming services really started to gain momentum. The download market peaked around about 2013 and then also went into steep decline. At the same time streaming revenues began to grow significantly year on year. So much so, since 2015 the overall recorded music market has been back in growth, so that each year the global record industry makes more than the previous year.

Streaming is now the record industry’s single biggest revenue stream, accounting for more than half of recorded music income worldwide. Streaming continues to grow, in doing so fuelling the continued growth of the wider sector.

That said, physical sales – while still declining – remain part of the business, especially in many of the traditional recorded music markets. In the UK, physical still accounts for about a fifth of trade revenues. The so called vinyl revival has helped with this, though CD revenue is still more than double vinyl revenue.

In addition to streaming, download sales still generate a little money (5.4% of UK revenues), and royalties collected from broadcasters and public spaces that play recorded music are another growth revenue stream (12.8%). Other sync revenues (from movies, games and ads) are also growing, though are relatively small overall (2.6%).

So, the key trends for several years now have been significant growth in streaming, additional growth in vinyl, public performance and sync, and further declines in CD and download. Though for now all those different revenue streams have a role to play in the wider record industry.