While intuitively it may seem that streaming services are cannibalizing music sales, RIAA's recently published figures for music sales for the first half of the year tell a different story. As Musically points out, RIAA has revealed that the industry has seen an 8.1% year-in-year rise in revenues to $3.4 billion. Apparently, this increase has subscription-based streaming services to thank.
"For the first half of 2016, strong growth in revenues from subscription streaming services more than offset declines in unit based sales of physical and digital music download products," the RIAA's mid-year report states. According to the report, this is the "strongest industry growth since the late 1990s."
It makes sense that paid subscriptions have increased 112% to $1.01 billion in the first half of 2016 considering, for example, the increase in exclusives, with the number of paying U.S. subscribers doubling to 18.3 million over the past year. Despite the success, though, RIAA CEO Cary Sherman warns music listeners of the contradiction of the high demand for music and the industry undervaluing music at the same time.
"Despite the massive consumer demand for music," Sherman wrote in a blog post, "the damning reality remains that music is fundamentally undervalued, with broken, outdated laws threatening the entire music community and distorting the marketplace." He goes on to discuss how many services are taking advantage of this disparity by paying "only relative pennies for artists and labels," giving the example of how approximately 1000 plays of a song on a streaming service generate "dramatically different payouts" than the same song on a different service that "gets to hide behind the failing 1998 Digital Millennium Copyright Act (DMCA)."
"It’s the same song requested by the user. To the fan, it’s no different, but to the community of musicians and labels who work tirelessly to write, record and bring that music to the public, it can be the difference between making music as a full-time job or going back to waiting tables," Sherman writes. "The example above illustrates just how much the DMCA benefits platforms like YouTube and disadvantages companies like Spotify, not to mention the creators of the music.
"It is notable that both Spotify and YouTube offer subscription services as well as ad-supported on-demand music that is free to users, yet the fundamental disparity between what each of them pays is jarring, and indefensible."
Cary Sherman urges that change needs to happen and that the "broken" DMCA needs to be fixed as it "no longer works for musicians." This change, Sherman believes, needs to come from both Congress and in the form of "voluntary agreements," that, for example, "give artists more control over their works and keep unlicensed songs off YouTube."