Access models, represented by services like Spotify and SiriusXM, showed strong growth. Paid subscriptions and streaming royalties rose 23.2 percent to $1.03 billion. Digital subscription revenue grew 24.9 percent to $477.9 million, an increase of $95.2 million, when measured in retail dollars. Distributions from SoundExchange, which collects digital performance royalties from services such as Pandora and SiriusXM, grew 19.7 percent, or $63.8 million, to $387.2 million. Royalties from ad-supported streaming services grew 27.1 percent, or $34.7 million, to $162.7 million.
A better analysis of streaming royalties requires subscription revenue to be converted into wholesale dollars. Unlike revenues from subscription services, SoundExchange distributions and ad-supported royalties have no corresponding retail figure. Both amounts exist entirely as trade revenue that arose from business-to-business transactions rather than business-to-consumer transactions of subscription services. As such, subscription revenues should be converted from retail to trade value.
This alternate, apples-to-apples analysis reshapes the digital pecking order. Under this approach, subscription services accounted for about $286.7 million in wholesale revenue to record labels, an amount $100 million below SoundExchange distributions. Total wholesale subscription and streaming revenue grew $155.6 million to $836.6 million in this different accounting (is grew $193.7 million in the original accounting).
Growth in the number of paid subscribers was a disappointing 200,000, putting total paid subscriptions at 8.1 million during the period. (The RIAA provides the average number of subscribers for the six-month period. The subscriber count at the end of June was undoubtedly larger.) This gain is even more disappointing considering Spotify had offered three-month subscriptions for $1 in both November and May. But the improvement would have been better without the closing of Muve Music, to low-cost subscription service Deezer acquired from Cricket Wireless in January. But considering subscription revenue grew 24.9 while subscribers rose just 2.5 percent — meaning the average subscriber paid more — it appears many low-value Muve subscribers failed to migrate to Deezer
It should be noted that Apple Music did not impact these first-half digital numbers. Apple Music launched on June 30, the last day of this report's time period. And because Apple offered three-month free trials, people that signed up on the first day wouldn't have been counted anyway. But the free trials for these early adopters will lapse at the end of September.