On-demand audio streams see a 103% growth in the US during 2013

We reported on the first Nielsen Soundscan numbers for recorded music sales in the US in 2013 earlier this week, but they were lacking a key component: streaming.

Now the official tally is in, and streaming is the one truly bright spot for the music industry in the United States. Overall music streams were up by 32%, these include Rdio, Spotify, YouTube/Vevo, Zune, Cricket and MediaNet.

If we look at on-demand audio streaming services alone though that figure is even higher with an increase of 103% over 2012. This is particularly good news in terms of revenue as on-demand streams drive higher royalty rates than - for example - a YouTube play.

As reported earlier this week while music streaming and vinyl sales brought the most uplifting numbers for the industry overall music sales for 2013 were down with a 6.3% decline in transactions from 2012.

Album sales suffered especially, with CDs declining by 14% and digital albums’ growth flattening at 0%. Individual digital track sales showed for the first time a decline (-6%). These figures clearly show that 2012 was the peak for download sales and that in the US we’re going to see a gradual decline in these formats as well going hand in hand with a growth of on-demand streaming services. At the beginning of 2013 few were willing to stick their neck out on the cannibalisation effect of streaming services, but it’s now clear that cloud music services are affecting the performance of download platforms like the iTunes Store, in spite of that outlet still being immensely powerful (Beyonce’s release being the latest example).

Justin Timberlake had the biggest album debut week with the 20/20 experience selling 968k copies in the first week, and the artist with his two releases ended up selling over 3.2 million albums in 2013, no mean feat in the current environment.

David Bakula, SVP of Industry Insights at Nielsen Entertainment stated: “With more than 118 billion streams in 2013 reported by our data providers, which is the approximate revenue equivalent of 59 million albums purchased, the industry remains vibrant as consumption continues to change and expand. 2013 was also great year for creative album release events.”

Of course these numbers don’t give us the full picture as we're missing data around the value of the transactions that occurred over the course of 2013. Namely, how much money was generated by the likes of Spotify, Rdio, YouTube in the past year? Are revenues generated from these services offsetting the decline in sales?

Also, the scope of the report is such that internet radio services like Pandora are not included. Given the continued growth of this sector it will be important to look at the reports from royalty collection organisation SoundExchange to truly understand where the industry is at and where it’s headed.


(Andrea Leonelli)