US spending on music soared to nearly $10bn last year, its highest level in a decade, as services such as Spotify powered the industry to its fourth year of recovery.
Sales jumped 12 per cent to $9.8bn in 2018 in the US, the world’s largest music market, according to figures from the Recording Industry Association of America.
The last time the industry made $10bn in sales was 2007, when Avril Lavigne made the biggest-selling album of the year and Beyonce’s “Irreplaceable” dominated the charts.
The music business has been in a nascent recovery as more people sign up to stream music through Spotify, Apple and Amazon. More than 50m Americans paid for a music-streaming service at the end of 2018, a fivefold increase from 10m in 2015, the RIAA found. Every month, more than 1m people signed up for a music-streaming subscription.
“You can feel rising excitement and optimism within the halls of the record labels, and it’s a moment worth celebrating,” said Mitch Glazier, chief executive of the RIAA.
Streaming now makes up three-quarters of all recorded music sales in the US. Revenues from streaming grew 30 per cent to $7.4bn last year, “accounting for virtually all the revenue growth for the year”, the RIAA said, as people streamed new releases from Ariana Grande and Drake in the billions.
However, even at $10bn, the business is only half the size of CD-era peak in the 1990s. CD sales have continued to plummet as retailers threaten to stop selling them. Revenues from CDs fell 34 per cent last year to $698m, the first time it amounted to less than $1bn since 1986.
The industry has been cautious about sounding overly optimistic as it battles with the large tech companies that distribute their music over how to split the streaming riches. Music companies have been lobbying against YouTube for years, while this week Warner Music sued Spotify in India, after the two were unable to agree on payment terms to license music in the country.
“A lack of accountability for many Big Tech companies that drive down the value of music, remain serious threats as the industry strives for additional growth,” said Mr Glazier.
Sales for the music industry are dominated by three companies: Vivendi’s Universal Music, Sony Music and Warner Music. Vivendi is looking to cash in on the recovery in music by selling as much as half of Universal Music Group, which Wall Street analysts have recently valued at up to $50bn.