The future of the music industry: Selling audiences to advertisers

By Paul Goldstein Uncertainty rocking both the broadcast radio and record industries has opened an enormous opportunity for recording artists and record labels. Growth for the music industry will come from expanding the overall online radio audience and ad pie at the expense of broadcast radio. When important trends are viewed through the lens of the music/radio consumer, the future of recorded music monetization is revealed. The majority of revenue flowing to artists and labels will soon come from advertising, not the sales of MP3s, CDs or subscriptions. CD sales have been in decline for years; now, suddenly, MP3 sales are collapsing: According to Asymco analyst Horace Dediu, 2014 iTunes download music sales “might drop by an additional 40 percent.” Happening concurrently with the MP3 sales crash is broadcast radio’s downward spiral in Time Spent Listening. Simultaneously, Pandora, Spotify, and other non-broadcast, IP-delivered radio/music services are enjoying astonishing growth. By next year, 170 million people will listen to Internet radio, up 10 million listeners from this year. Ad-supported and subscription streaming services have tripled revenue paid to artists and labels, growing from seven percent to 21 percent of digital revenues in the last four years, according to the RIAA. Strengthened by investments of more than $432 million dollars just last year, streaming radio services like Pandora and Spotify are booming, while broadcast radio struggles. And many of broadcast radio’s top ad-sellers have jumped ship to these Internet radio companies, helping to capture the dollars now fueling an important growth category for the music industry. Read the full article here:

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