HOW
STREAMING
CHANGED
EVERYTHING
On the back of on-demand streaming,
the music industry is rebounding,
but its impacts go beyond total revenue
By Michael Raine
Five years ago
,
in Canadian Musician’s 35 th anniversary issue, con-
tributor Andrew Seale wrote an insightful article
examining the evolution of music promotion
and distribution in the digital age. While it wasn’t
all doom and gloom – we do try to keep things
positive around here, generally speaking – no one
pretended 2014 was a euphoric time in the music
business.
Caught in 15-year tailspin, by 2014, the global
music industry was just hoping to stop the bleed-
ing. “Disruption” is too euphemistic to describe
the havoc Napster and its spawn caused from
2000 to 2014. From a record high of $27.8 billion
globally in in 1999, the recorded music industry’s
revenues were nearly cut in half by 2014, bot-
toming out at $14.5 billion (all figures in USD).
The “new normal” became a common phrase
as everyone, from major labels to indie artists,
accepted their fate and searched for anywhere
other than album sales to boost revenue. Digital
revenues were growing, but it was driven largely
by one-dollar songs on iTunes. Streaming, though
42 CANADIAN MUSICIAN
beginning to receive a lot of attention, was
viewed almost as an experiment and conversion
rates – getting users from free, ad-based tiers to
paid subscriptions – were minimal. And so, that
modest digital growth was significantly outpaced
by cratering CD sales.
And then it all changed in 2015. For the first
time this century, revenues climbed. But most
importantly, the change of fortunes was thanks
almost exclusively to this relatively new format.
That year, familiar negative trends continued.
In North America, physical music sales declined
another 8.8 per cent while digital downloads
fared even worse, down 12 per cent. Yet, amaz-
ingly, overall revenues were up 1.4 per cent due to
an incredible 46.6 per cent increase in streaming
revenues.
It was historical, not only because streaming
reversed music’s perpetual losses, but 2015 was
the first time that digital was the primary revenue
source for recorded music, accounting for 45 per
cent of all revenue versus physical’s 39 per cent.
Maybe nothing exemplified this more than
an advertisement in the IFPI’s 2015 Global Report.
In that same report revealing that streaming was
the foundation of the music industry, there was a
full-page advertisement from Napster. The same
brand credited for unleashing the illegal down-
loading plague had been purchased by legal
streaming company Rhapsody. Now, the infa-
mous cat-in-headphones logo graced a full-page
ad, saying “Thank You” in big, bold type to the
music industry it nearly destroyed, while boasting
that it had 3.5 million legal customers.
We had, indeed, entered a new era.
There was a stark difference in the way the music
industry, particularly the major labels, reacted to
the imposition of streaming compared to down-
loading. In 1999 and the years that followed, the
labels went to war with Napster, even ludicrously
suing individual users before litigating the com-
pany itself into oblivion. But it was obvious that
music fans wouldn’t accept a return to a world of
$20 CDs. They had seen what was possible and
couldn’t un-see it. If Napster was gone, some-
thing else would take its place, and so began a
game of whack-a-mole – Kazaa, LimeWire, Gnute-
lla, The Pirate Bay, etc. – with a new enemy always
popping up. By 2003, when the iTunes Store