Last year, streaming made most of the music industry’s revenue. Here’s why it affects you.

Guess Chance the Rapper is from the future.

Last year, he won a Grammy for an album that was never physically released. And a new report from the Record Industry Association of America said last year, for the first time ever, music streaming platforms generated most of the industry’s revenues.

More specifically, the music industry trade group reported that streaming brought in 51.4 percent of the industry’s revenue while physical copies were responsible for 21.8 percent. 

It’s no longer just thing. Streaming is now the thing.

Streaming is making such an impact on the music industry, the Grammy Awards changed its eligibility rules this year to accommodate albums that don’t have physical releases.

Last year also marked the first time a streaming-only album broke into the Billboard 200 chart (Of course, it was Chance the Rapper’s “Coloring Book” that did it.)

“We’re in a unique time because of how streaming is changing the way artists release albums and how it’s changing the album as an art form,” David Bakula, a Nielsen Entertainment executive, told Rolling Stone. “Streaming is putting life back in the music catalog.”

How this helps your wallet

New CDs go for around $15-$20. But most paid streaming services average around $10 a month. So, even assuming you’re only going to buy one new release a month, a streaming subscription would save you cash while offering you far more songs.

I worked at a second-hand CD store for a decade. As MP3s grew in popularity, people would buy new CDs at full retail, rip the music to their iTunes, then turn around and resell us the physical copy.

If it was a new release, we’d pay about $3. And we’d resell it for $6.

But that trend is dying. That CD store sees it in the declining rate of new releases they’re buying back — the people that still buy keep and collect them — and the RIAA saw it too.

The trade group reported that revenue from purchased song and album downloads, as well as physical copies of music, have gone down. (Except for vinyl records — more on that retro niche here.)

Streaming also has an additional advantage, because as NerdWallet puts it, you’re not only saving money — you’re also saving precious hard drive space.

“Cloud-based streaming services let you listen to virtually any song you want at any time without shelling out $15 whenever Beyonce surprises everyone with a new album,” the financial website says. “A paid subscription can give you access to exclusive releases and a large catalog and introduce you to new music without taking up space on your phone or computer.”

Most music streaming platforms also offer a free version in exchange for tolerating some ads — which are less obnoxious than terrestrial radio’s.

The streaming category in the RIAA’s report included both paid and unpaid versions of Spotify, Pandora, Tidal, Apple Music, SiriusXM and others.

Even including those unpaid subscriptions, 2016 marked the largest share of revenue streaming has ever collected. It steadily climbed from 9 percent of the market in 2011 to last year’s 51 percent.

The artists you’ll find

According to Spotify, the most streamed artists of 2016 were Drake, Justin Bieber, Rihanna, Twenty One Pilots and Kanye West.

Drake was one of the artists to drop a surprise album last year.

In doing so, he managed to keep his title for the second year in a row as the “most streamed artist,” with over 4.7 billion streams in 2016, according to the music service.

His track, “One Dance” was the number one most streamed song of the year and actually took the title of “most popular song on Spotify ever” with almost 970 million streams. His album “Views” was the most streamed album of the year.

“Views” was released exclusively on Apple Music before going anywhere else, like Spotify or on a CD. But even with that exclusivity, it became the most popular album of 2016, according to a report by Nielsen Music.

Streaming will save music geeks cash

So, the moral of the story here is, if you’re trying to stay on top of the music scene and not bust your entertainment budget, streaming is the way to do it. And others agree.

According to a survey on music streaming that Nielsen conducted in 2015, 83 percent of respondents say that the biggest reason they’d subscribe to a streaming service would be its price.

Here’s the breakdown of revenue changes according to the RIAA:

Percent change from 2015 to 2016 in revenue

  • Downloaded singles: -24.1 percent
  • Downloaded album: -19.6 percent
  • Physical CDs: -20.9 percent
  • Streaming via Soundexchange (streamed radio like Pandora, SiriusXM, etc.): 10.1 percent
  • Streaming via Paid Subscription (Spotify, Tidal, Apple Music, etc.): 108.7 percent

The full RIAA report, “U.S. Music Industry Revenues,” can be viewed here.

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Article last modified on May 22, 2017. Published by Debt.com, LLC .