We’ve just hit a massive milestone in the evolution of the music industry: Re/code reports that for the first time, a record label is reporting higher revenues from music streaming than paid downloads.
Paid downloads have long been the primary way that listeners consume music, with downloads overtaking physical sales in the US (by volume) back in 2012. But downloads have since gone into decline, as faster internet connections have allowed the rise of streaming services, often offering users free access to libraries of millions of tracks, financially supported by adverts.
This shift towards free music has left a sour taste in some artists’ mouths, who feel the ad-supported model doesn’t properly value their work. Singer Taylor Swift had a public spat with Spotify, one of the largest streaming services, arguing that “there should be an inherent value placed on art,” and she “didn’t see that happening, perception-wise,” on the platform.
Similarly, rapper Jay Z recently acquired and relaunched the streaming service Tidal, which does not offer a free, ad-supported tier. The company aims to differentiate itself because it is “artist-owned,” and through the high-quality music it offers users who pay for the most expensive tier.
And now Warner Music Group has announced that its streaming revenues are, for the first time, larger than those from digital downloads. CEO Stephen Cooper said that “the rate of this growth has made it abundantly clear that in years to come, streaming will be the way people enjoy music,” according to Re/code. “We’ll continue to collaborate with our streaming partners to expand their businesses, and more importantly, to ensure that copyright owners, artists and songwriters receive appropriate value for their work.”
This shift also underscores why Apple’s expected launch of its own streaming service is important to the company. Through iTunes, Apple has long dominated the digital music business. But as digital downloads decline, it risks losing its industry-leading position to challengers like Spotify, Tidal, and others.
Though Apple is yet to make an official announcement, it is expected to relaunch the Beats Music streaming service it acquired later this year. The Cupertino company recently poached high-profile DJ Zane Lowe from BBC Radio 1, along with a number of other BBC employees. A source with knowledge of the matter also told us that Apple is trying to persuade musicians to put together curated streams and playlists, and that Lowe is the “mastermind” behind the project.
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.