Billboard Music Awards
No Surprise Here: Spotify Streams Soar While Track Sales Fall
Streaming activity at the most popular music subscription service has soared as digital track sales have fallen over the past year. The streaming numbers comes from Music Ally's analysis of Spotify's Top 50 chart over the course of a year. It found the Top 50 tracks in the U.S., in aggregate, have risen 108 percent to 62.1 million streams in the week ending July 20th from 29.8 million streams in the same week a year earlier.
Think of it this way: the most popular 50 songs on Spotify are getting an additional 32.3 million streams each week compared to a year ago. That works out to nearly 1.7 billion additional streams of top 50 songs at an annualized rate. Some of those streams may have come from streaming natives who don't purchase music downloads. After all, Spotify and other streaming services have helped bring consumers into the legitimate music market. But it's probable that many streams have come from people who would have otherwise bought the music.
A Billboard analysis of year-to-date of track sales examined the trend in U.S. sales of the most popular tracks. It found that while overall track sales were down 12.8 percent through August 10th, the top 200 tracks were down 13.8 percent, according to Nielsen SoundScan. In other words, the drop in track sales has been slighted weighted toward the top 200 tracks.
A better apples-to-apples comparison can be made by considering sales of only the top 50 tracks (to match the depth of Spotify's charts). With that, the story is slightly changed: the top 50 tracks declined 11.8 percent year-over-year, while over roughly the same period streams of the top 50 tracks on Spotify grew 108 percent. Even so, the crux of the story hasn't changed: track sales have fallen as consumers have flocked to on-demand audio streaming.
Keep in mind that the same 50 songs are not being compared. Instead, the comparison shows the change in track download frequency and streaming activity of popular songs. Also keep in mind that Spotify streaming activity is known only for the top 50 songs. However, it's safe to assume less popular songs and catalog tracks have experienced a similar increase in streaming activity over the past year.
This is not a smoking gun that indicts Spotify or other streaming services as killers of track downloads. This is simply another example, on a growing pile of evidence, that consumers' streaming activity is having a negative effect on their music purchases. The separate paths taken by track sales and streaming activity do not come as a surprise -- common sense dictates that more streaming will lead to fewer purchases because the two are substitutes for one another.
There may not be a simple cause-and-effect relationship between streaming adoption and track sales. After all, YouTube was a popular source for streaming music well before digital purchases began declining last year. In fact, the service will be ten years old in May. It can't go unnoticed that digital sales increased during YouTube's first eight years.
Over the years, however, streaming services have become better substitutes for purchases. YouTube has made it easier for viewers to create and edit playlists, view recommended videos and enjoy a continuous video stream similar to the non-stop experience of Internet radio. Spotify has so thoroughly changed since launching that it's barely recognizable when placed next to its first iteration.
Changes in consumer behavior take time. In the traditional, five-stage adoption process, a consumer becomes aware of an innovative product and seeks information before deciding whether or not to use the product. The product is tested and used to varying degrees and its usefulness is questioned before a decision is made to continue using the product. That process takes time to play out, and it plays out at different times for different types of consumers. The earliest adopters take little time to move through the adoption process. Later adopters require more time.
Many American consumers have apparently figured out the benefits of streaming music rather than owning music. They realize the cost advantages. They appreciate the value of the product. They've figured out how to assimilate the innovative service into their lives. Once these things happened, the music download didn't stand a chance.