Streaming music rakes in revenue, not hurting digital downloads

By on August 10, 2012, 5:00 PM

Warner Music Group, a major player in the music industry who's labels include the likes of Atlantic, Elektra, Warner Bros., Reprise and East West, has released their fiscal third quarter results. The results? For the first time ever, online music streaming services accounted for one-quarter of the group's recorded music revenue.

While there's little doubt the continuing paradigmshift from physical to digital plays symphony to the ears of most music-loving digirati, it's interesting to see those digital sales take on a new form: online streaming.

Services like Pandora, Spotify and Rdio have continued to become increasingly popular amongst users, especially with the widespread adoption of mobile apps. With millions of songs available nearly anywhere at any time, it may be no surprise the subscription model is lifting itself to new heights.

As it turns out, Warner Music Group has some reasons to be excited about this trend too. Crude logic may suggest the recent explosion of streaming subscriptions would cruelly cannibalize sales of digital downloads; however, this does not appear to be the case.

According to WMG, despite the rising uptake of streaming services, digital music downloads (i.e. iTunes) appear unphased. Also a first, the gain in digital sales was greater than the loss of physical sales -- there's simply more music being purchased these days.

All in all, Warner Music Group harvested about $54 million in revenue from streaming music outfits last fiscal quarter. That represents roughly eight percent of WMG's total revenue, confirming that services like Spotify are indeed valuable to the music industry.  Interestingly, YouTube was also included as a streaming revenue source, but WMG omitted profits from digital lockers like Amazon's Cloud Drive.

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