Digital download sales were up in 2012 in the United States. Track sales set a record. Digital album sales set a record. In fact, sales were so healthy the gains nearly offset the decline in physical sales.
But, as some people pointed out, looking at just download revenue gives an incomplete sense of the digital market. Why leave out all the growth happening in other parts of the digital economy? (For starters, there is no single system for tracking all digital streams as there is SoundScan for purchases. But that's another topic for another day.)
So what does the U.S. digital market look like when subscription and performance revenues are added? The picture changes quite a bit, actually. When put side by side, downloads are still the master of the digital economy but subscriptions and performance revenues are clearly important pieces of the revenue pie.
Here's my rough (emphasis on rough) estimate: digital tracks, digital albums, subscriptions and digital performance royalties generated about $2.4 billion in trade revenue for U.S. record labels in 2012. About $1.7 billion, or 73%, of that $2.4 billion, came from downloads. The rest came from subscriptions services like Spotify and Rhapsody and performance revenues from services like Pandora.
To get an estimate of subscription revenue, I started with the figures available in the RIAA's U.S. Manufacturers' Unit Shipments and Value Chart. RIAA members' subscription revenue grew 13.4% from $212.4 million in 2010 to $241 million in 2011. I forecast a healthy 30% growth in subscription revenue in 2012, more than double the previous year's growth rate because Spotify launched in mid-2011.
The digital performance forecast of $341.6 million was straightforward. I used the same growth rate -- 17% -- for 2012 that revenues grew in 2011. The number was taken from the same RIAA chart. I left off mobile revenue.
The digital download numbers are from Nielsen SoundScan and were reported by Billboard.biz this week. I accounted for the share of catalog and new release titles sold each year (for both tracks and digital albums) and made a rough estimate of the average sale price. To make the numbers comparable to the RIAA's data (which represents trade value, not consumer spending), I calculated rights holders' share of revenue and deducted mechanical royalties due to music publishers.