Music Streaming Services Are Getting Record Amounts of Money

Music streaming services are pulling in up about two-thirds of all recorded music revenues via paid subscriptions, according to a new report released March 26 by the Recording Industry Association of America. Recorded music revenues have grown for each of the past eight years and rose by 7% last year to an estimated retail value of $17 billion — a record, the 2023 Year-End Music Industry Revenue Report found.

Paid subscriptions for music streaming services, like Spotify and Apple Music, brought in over $11 billion in revenue. Subscriptions are at an all-time high, up 5.7% in 2023 to almost 97 million. Ad-supported on-demand streaming services, like YouTube and the lowest tier of Spotify, made $1.9 billion in revenue, while digital radio services like SiriusXM and internet radio stations made $1.3 billion in 2023. Limited-tier subscriptions (like Amazon Prime and Pandora Plus) made $1 billion.

It’s all part of a musical ecosystem that may still seem like a brave new world to those raised on records, 8 tracks and cassettes. Today, streaming services seem to offer a cornucopia of sounds, all available for purchase from the comfort of your couch. CNET named Spotify the best streaming service for 2024 due to its rich mix of features and best-in-class free tier. But Apple Music is close behind, and other contenders include YouTube Music, Tidal and audiophile-favorite Qobuz.

Still, while active presales of Taylor Swift’s upcoming album may have you believing otherwise, fewer people are purchasing digital downloads of songs and albums these days. Digital downloads declined 12% to $434 million, the RIAA said, which is only 3% of all recorded music revenue for 2023. At its peak in 2012, digital downloads accounted for 43% of recording industry revenue.

Vinyl comeback, new streaming features

Sales of physical music products are growing, though, after what RIAA calls a “remarkable resurgence in 2021.” Vinyl albums outsold CDs for only the second time since 1987, and overall physical music revenue grew 11% to $1.9 billion last year.

Despite music streaming services getting the lion’s share of the money, the top companies are still feeling the pressure to attract more customers by offering new features, like Spotify Music Videos, and Apple Music’s Replay, which recaps your music habits. 

They’re also downsizing. After laying off 600 people in January 2023 and 200 people the following June, Spotify saved the biggest staff cut for the very end of the year, saying goodbye to a fifth of the company’s workforce. The New York Times reported in December that the company would cut 1,500 jobs as it struggles to stay profitable.

According to the Times, Spotify lost twice as much money in the first nine months of 2023 as it did during that same time the previous year but turned a small profit in the third quarter and raised subscription prices in over 50 countries.