Is the music industry popping the champagne cork prematurely?
Revenues in the US-based music industry have grown by 16.5 percent since 2016, according to a just-released report by the Record Industry Association America (RIAA). In a comeback 2017, revenues approached $9 billion.
Sounds pretty solid. But Cary Sherman, the longtime CEO the RIAA, is warning against early celebrations. According to Sherman, the music industry is only at about 60% its size ten years ago. And the current recovery is a ‘fragile recovery,’ according to the cautious boss.
“We‘re delighted by the progress so far, but to put the numbers in context, these two years growth only return the business to 60% its peak size — about where it stood ten years ago — and that’s ignoring inflation,” Sherman wrote DMN. “And make no mistake, there’s still much work to be done in order to make this growth sustainable for the long term.”
Of course, streaming is powering the comeback. Not just Spotify, but Apple Music, Amazon, Pandora, and even Tidal are bringing in new subscribers. The number people paying for subscriptions is growing exponentially, with Spotify counting 71 million alone.
Indeed, 75% the growth in revenue last year came just from music subscriptions. Other formats are sagging badly, including CDs and paid downloads. In fact, the precipitous decline the CD is still being felt, thanks to the format’s incredibly powerful markup and earning potential.
In that soup, Sherman may have ulterior motives for killing the celebration.
One is that the Sherman has long positioned the RIAA as an industry bulldog, specifically when it comes to piracy and other threats. All those millions dues aren’t just for fancy fices and big salaries — it’s to help protect against the bad guys. You need us to protect you — from the internet, from Congress, from Google.
But the results the RIAA’s multi-decade war on piracy are questionable, with millions spent to fight bad guys that just keep reappearing somewhere else. And whatever strategy has been employed against the likes Google and YouTube has done little. In fact, at least one study has asserted that the RIAA’s anti-piracy enforcement has had little impact on the industry’s recent recovery. That is, despite millions poured into long-winded court cases and endless lobbying.
Throughout, Sherman has received criticism for paying himself a multi-million dollar annual salary, one that seemed out–step with a struggling industry fighting for its life.
Meanwhile, streaming innovators like Spotify fered a paid alternative that actually worked. In that complex picture, YouTube is also a force for good: after all, people might be streaming music videos for free these days, but they’re not torrenting them. You know who these fans are; they can be converted (just ask Lyor Cohen).
All which raises the question over whether future growth the music industry requires the protection the RIAA. Or, if Sherman’s role is far less important — or even distracting — to the next phase this business.