Slower Growth, Higher Revenues: What the Latest Streaming Stats Mean

In the world of music streaming, all eyes are on the U.S., where new data hints that the country may be nearing its saturation point for paid music subscriptions. According to the latest census data, there were 131.43 million households in the U.S. last year. Now, fresh statistics from the RIAA (Recording Industry Association of America), published on August 29, reveal that the number of paid music streaming subscriptions hit 99 million during the first half (H1) of 2024. What this signals is that while music streaming is still growing, it’s doing so at a noticeably slower pace.

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In H1 2024, the U.S. added just 2.5 million new paid streaming accounts – a modest 2.7% year-on-year (YoY) increase compared to the same period in 2023. For context, the year before saw a 6.6 million increase, while 2022 had 7.9 million new accounts. Rewind to 2020, and the U.S. market was adding a whopping 14.4 million accounts per year. This consistent deceleration highlights a significant slowdown in subscription growth as the market matures.

It’s important to note that these figures represent premium subscriptions only. They exclude limited-tier offerings and family plans are counted as individual accounts.

The U.S. Leads, But It’s Not the Whole World

The U.S. remains the largest music market on the globe, accounting for roughly 38% of the total wholesale revenues in the $28.6 billion global recorded music industry in 2023, according to the International Federation of the Phonographic Industry (IFPI). However, while the U.S. is critical, it’s not the entirety of the global picture. There’s still significant room for growth in other key international markets, meaning the industry’s future expansion might shift its focus beyond American borders.

But the fact that paid streaming subscriptions in the U.S. grew by only 2.7% YoY in H1 2024 (from 96.5 million to 99 million) will likely stir up discussions across the industry in the coming months.

Revenue on the Rise, Subscriptions Slowing

Even though the volume of new accounts is slowing, revenue from paid music subscriptions in the U.S. continues to rise. In the first half of 2024, revenue from premium subscriptions grew by 5.1% YoY, bringing in $5.23 billion. This disparity between subscription growth and revenue increase suggests that the average revenue per user (ARPU) is improving.

In total, the U.S. recorded music market pulled in $8.65 billion during the first half of this year. On the retail side, revenues from both physical and digital music grew by 3.9% YoY. On the wholesale level, where money goes back to record labels and distributors, the market generated $5.5 billion – a 3% YoY increase.

Streaming Reigns Supreme

Streaming continues to dominate the U.S. music market, accounting for 84% of total recorded music revenues for the fifth year in a row. Overall, revenues from streaming services (which include paid subscriptions, ad-supported services, digital radio, social media platforms, and even fitness apps) hit a record high of $7.3 billion, a 3.8% increase from H1 2023.

However, ad-supported streaming (think YouTube, Spotify’s free tier, Facebook, and others) grew at a slower rate than in past years. Revenues from these services rose by just 2.4% YoY, reaching $899 million, making up 10% of total music revenue for the first half of the year.

Physical Formats Make a Comeback

In a surprising twist, physical music formats are experiencing a resurgence. In H1 2024, revenues from physical formats like vinyl and CDs hit $994 million in the U.S., up a notable 12.7% YoY. Vinyl, in particular, continues to shine, with revenues growing 17% YoY to $740 million, accounting for three-quarters of physical format sales. For the fourth consecutive year, vinyl outsold CDs in units – 24 million versus 17 million.

CD sales, however, remained relatively flat at $237 million during this period, according to the RIAA.

The Road Ahead

As the U.S. music streaming market inches closer to saturation, the industry will likely turn to international markets for new growth. But one thing is certain: the music business, both digital and physical, continues to evolve in ways that will keep it at the forefront of entertainment for years to come.