Warner Music’s Streaming Revenue Overtakes Downloads For First Time
The ubiquity of music streaming and the waning interest in music downloading is starting to come to a head: Warner Music Group said that last quarter, the company made more revenue from selling streaming subscriptions than it did from selling music downloads. This makes them the first major label to achieve the feat.
Warner CEO Stephen Cooper announced that its recorded music unit, comprised of companies like YouTube and Spotify, saw revenue growth of 33 percent in Q2. He added that digital revenue as a whole grew 7 percent, which means, according to math, that downloads from retailers like iTunes decreased during the same period.
This is not to say that streaming services are profitable just yet: in 2014, Spotify reported an overall revenue of €1.08 billion (about $1.2 billion), but a net loss of €162.3 million (about $182.3 million).
“We believe our model supports profitability at scale," Spotify directors Martin Lorentzon and Pär-Jorgen Pärson wrote in a management report. "We have already proven that we’ve created real value for our users, and we know that the more time people spend with our product, the more likely they are to become paying subscribers."
One way streaming companies and labels are attempting to turn free listeners into paying ones is by forcing them into it: Major labels like Warner have been trying to convince YouTube, Spotify and similar entities to reel back on all the free music they offer and make paid subscriptions the primary, if not only, option.