First, video killed the radio star. Then, downloads killed CDs. Now, will streaming eliminate digital downloads?
BOSTON― In 1966, a teenager would physically go to her record collection and decide which record she’d play. Fifty years later, a playlist can be made in seconds that includes any song from that record collection. Going even further, thanks to streaming, a teenager can do this without even owning the music. And today, streaming has become so popular that it provides most of the revenue for the music industry.
At one point CDs surpassed vinyl, and then digital downloads surpassed CDs. Today, streaming could be rendering digital downloads a thing of the past. Streaming has surpassed digital downloads in revenue creation, according to data collected by the Recording Industry Association of America (RIAA).
In 2015, streaming barely edged past downloads, contributing 34.3 percent of revenue while digital downloads contributed 34 percent, according to the RIAA. In 2016, however, streaming contributed to 47 percent of the music revenue for the music industry, an increase of 57.4 percent over the previous year, according to a RIAA mid-year report. Permanent digital downloads contributed only 31 percent.
This shift in revenue has led some to wonder if this means the end of the digital download. Downloads are declining in a similar way to physical CDs, according to an article from The Atlantic last year. Digital downloads might not completely disappear – after all, CDs haven’t – but they might fall by the wayside as streaming gains ground.
This trend might be due to a shift in the mindset of music consumers, according to David Herlihy, a professor at Northeastern University who studies the music industry.
People aren’t concerned with physical ownership of music in the same way that they used to.
“At the end of the day, music access is replacing music ownership,” said Herlihy. After music became digital, it was no longer tied to a physical format. People had easier access to music, and through various means consumers could obtain music for free. The music industry went from making large profits off CDs to losing revenue through piracy, explained Herlihy. That, in part, forced a change in format.
“The industry lost a decade trying to control what was uncontrollable,” said Herlihy, “people got used to free and you can’t compete with free.” Streaming, however, found a “sweet spot,” he explains, between charging for music and convenience for the consumer. Finding music for free on the internet can take time, after all. Consumers are drawn to a service that allows easy access to millions of songs, even if it charges a monthly rate. And what that’s done, said Herlihy, is inherently change an industry.
“The industry is now transitioning from a product business to a service business,” said Herlihy. While legacy players in the industry have resisted this transition, Herlihy believes that more record labels need to make a change to figure out what the consumer wants in order to improve that relationship. That may prove lucrative.