The Business of Streaming

 

Words by Caron Williams

Music streaming sites have revolutionised the music business worldwide. Whilst traditional music consumption has decreased, an explosion in digital music consumption has offset that and opened brand new avenues for profitability, resulting in new music streaming avenues emerging every day. What does this mean for music stakeholders and most importantly, how does this affect artists?In the Recording Industry Association of America (RIAA)’s global music market report released last year, they reported that,“With more than 100 million users of paid subscriptions globally, streaming has passed a crucial milestone. It makes up the majority of digital revenue, which, in turn, now accounts for 50% of total recorded music revenues.”

  • Global music revenue grew by 5.9%
  • Digital music revenue grew by 17.7%
  • Physical music revenue declined by 7.6%
  • Download revenue declined by 20,5%
  • Music streaming revenue grew by 60,4%
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  Courtesy of RIAA

Courtesy of RIAA

Whilst the music streaming market in South Africa is in its infancy, with challenges such as the lack of adequate local tracking, there’s still a great appetite for digital music consumption. According to Statista, South Africa’s music streaming revenue industry is currently worth approximately R216 million. They forecast that local music streaming revenue is expected to show an annual growth rate of 7.9 %, which will result in it being valued at R288 million in 2022. This currently excludes video streaming such as YouTube. To put this into perspective, that’s a 334.2% increase in streaming revenue over the period of 2016 – 2017 experienced in South Africa.

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Sipho Dlamini, Managing Director of Universal Music South Africa and Sub-Saharan Africa says: “In South Africa, although the physical market remains important, there are already over 250,000 paying subscribers on streaming services and we expect the market to grow strongly.” Tracy Fraser, MD of Warner Music South Africa adds: “The South African market has been dominated for many years by physical sales, but they are declining rapidly. Digital is growing exponentially, but there is still a lot of growthto come, as smartphone penetration is growing quickly. Streaming is becoming very big for us, but it’s still in its infancy. The largest streaming service is Apple Music, with Google Play and Deezer also leading players. As handset and data prices continue to come down, this growth should accelerate across the continent, which represents a huge opportunity for digital music services and opens the door to more investment in local music by international record companies.”

 

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With music streaming clearly increasing revenue within the industry exponentially, how much are artists profiting from all of this? According to Trichodist’s latest streaming report released this month, YouTube offers the worst pay-outs for music streamed. The streaming service offering the best pay-out is Tidal, followed by Apple Music, Deezer then Google Play.

  • Tidal pays out R0,155  per stream and approximately R15 408 for 100 000 streams.
  • Apple Music pays out R0,094 per stream and approximately R9 396 for 100 000 streams.
  • Deezer pays out R0,074 per stream and approximately R 7 488 for 100 000 streams.
  • Google Play pays out R0,073 per stream and approximately R 7 332 for 100 000 streams.
  • YouTube pays out R0,008 per stream and approximately R 888  for 100 000 streams.

Check out the table below for a full breakdown of how much each streaming site pays per stream.

 

  Table courtesy of Trichodist

Table courtesy of Trichodist