Digital Music To Dominate Global Revenue By 2017

The rise of digital downloads and streaming services is set to push digital music revenue above physical revenue within the next few years, according to a new report.

According to the LA Times, the report from US venture capital firm Siemer Ventures indicates that the majority of music sales will occur in the digital sphere by 2017. Global digital revenue is expected to reach $11.6 billion by 2016.

The report also says that streaming services, whose value to artists has come under scrutiny recently, will add to the 12 percent growth by 2016, while the Siemer report also said that overall global industry revenue will shrink eight percent from last year to 2016, with an estimate of $26.5 billion touted.

Senior Seimer advisor John Rudolph said, “You've got a lot of initiatives that are going to bring in people who are not already engaged with digital music. We tend to think services like Pandora are ubiquitous, and they're not.”

He added, “One of the big issues that all [streaming] folks have is, how do they account for the rights-holders and how do they establish an efficient licensing scheme. Now they're looking internally and going, how do we actually pay people and track content?”

Spotify recently expressed disappointment at the actions of Radiohead/Atoms For Peace's Thom Yorke and Nigel Godrich after they attacked the streaming sector for exploiting emerging artists and pulled their tracks from the Spotify service. The question of royalty payments and viability has been an ongoing debate within the industry, as has the sustainability of the streaming models.

Spotify's artist in residence DA Wallach recently told theMusic, “The only way this is going to become a good profitable business is if we get millions more people using the service, so we're sort of all in this together. That's why we need artists, labels and the industry on board.”

According to the report online streaming revenues grew 40 percent in 2012 to $1.1 billion, which is still a small slice of the music industry but one of the biggest growth areas.

In the past 18 months Australia has witnessed an explosion of streaming services, with companies such as Spotify, Rdio, MOG, Pandora, rara, Deezer, Songl, JB Hi-Fi Now and others entering the market. Google and Apple are expected to launch soon as well.

The pendulum has already swung to the digital sector locally, in 2012 Australia's recorded music revenue totalled $507,400,000 with $229,600,000 coming from physical sources and $237,500,000 from digital sources – the rest came from performance rights and synchronisation revenue.