Any doubts over whether streaming services are a big deal for the music industry can now be dispelled.
Revenue generated by subscription services like Spotify, Rhapsody, Rdio, and others was up 13.5 percent (from $212.4 million to $241 million), according to the Recording Industry Association of America’s (RIAA) year-end music shipment statistics for 2011. The stats also revealed that total paying customers also rose by 18 percent.
Previously, there had been some indication from music artists that subscription services were doing more harm that good. By plugging into a music service, people weren’t as likely to purchase songs, which of course translates to lower overall revenue. Back in November, more than 200 indie labels falling under distributor STHoldings pulled their songs from streaming music services for this reason. More recently, Black Keys drummer Patrick Carney criticized services like Spotify for being unfair to artists. His band also declined to make their latest album El Camino available on the music service.
But these new stats from the RIAA prove that subscription services don’t always bring down music sales.
“Access models like subscription services and Internet radio (represented by digital performance royalties) have continued to grow both in popularity as well as in their revenue contribution to the industry,” the RIAA said in a statement. “No longer just a niche, digital music has shown it can be a model — or perhaps more accurately a variety of models — for the music industry going forward.”
The RIAA’s stats also reveal that digital performance royalties (money from online radio services like Pandora) increased by 17 percent from 2010 to 2011 ($249 million to $292 million in 2011).
Digital download sales were also up year-over-year. Singles increased 13 percent, while digital albums increased 25.1 percent. Also worth noting is that more than 100 million digital albums were sold in 2011, which is a first for the industry. So clearly, subscription services aren’t cannibalizing other sales. If anything, subscriptions are actually helping to boost sales overall.