Breaking out streaming further, paid subscription revenue totaled nearly $4.1 billion -- more than overall streaming totals that also included Sound Exchange and ad-supported royalties in 2016 combined -- while on-demand ad-supported streaming from the likes of YouTube and Spotify’s free tier grew to nearly $659 million, a 34.6 percent increase over the $489.4 million generated in 2016. SoundExchange distributions -- i.e. programmed streaming royalties from web radio -- fell to $652 million from $884 million, a 26.2 percent drop, due to Pandora cutting direct deals with labels and those royalties being paid directly to the labels, instead of to SoundExchange, as had been done in the past. Most of those Pandora payments to labels can be found in the other ad-supported streaming category, which more than tripled to $261.8 million, from $81.3 million in the prior year.
Within paid streaming, services like Apple Music, Amazon Unlimited and Spotify Premium grew more than $1 billion year over year, to $3.5 billion from $2.24 billion, a 56 percent increase; while the limited paid subscription offerings -- such as Amazon’s Echo and Prime offerings and Spotify’s non-portable streaming-only tier -- more than doubled to $591.6 million from $263.4 million in the prior year. Likewise the subscriber count grew 55.5 percent to 35.4 million paid subscribers from the prior year total of 22.7 million subscribers.
Downloads continued to suffer the biggest declines, falling 24.7 percent to $1.33 billion, down from the $1.77 billion the channel had generated in 2016. Within that, download track sales suffered the heaviest decline, falling about 25.5 percent on both number of units (553.5 million copies in 2017, down from 2016's 743 million copies) and revenue ($650.8 million in 2017, down from about $873 million the year prior).
Digital download sales of albums fell to 66.4 million units in 2017 from 85.1 million units in 2016, which meant its revenue fell accordingly, reaching just $623.7 million, as opposed to $818.8 million in 2016. Percentage-wise, that represents a 22 percent drop in units and a 23.8 percent decline in revenue. Overall, downloads accounted for 15.3 percent of revenue -- which means that, combined with streaming dollars, overall digital revenue now stands at nearly $7 billion, or 80.2 percent of total revenue for 2017.
Meanwhile, the decline in physical album sales slowed year over year, down 3.7 percent in revenue to just below $1.5 billion from the prior year’s total of $1.55 billion. CD sales dropped by 10 million units, to 87.6 million in 2017, while the LP gained less than 1 million units, up to 15.6 million copies, according to the RIAA. Overall, physical accounted for 17.1 percent of revenue in 2017, a higher share than digital sales.
Looking at suggested retail prices, the CD has increased to an average price of $12.08 per copy from the prior year’s $11.59 per copy, while the price of vinyl LPs has also increased, to $24.97 a copy in 2017 from $24.06 for 2016. Moving over to downloads, the average retail track price has increased one penny to $1.18, while the average price of a download album fell to $9.39 in 2017, from $9.62 in 2016.
The remaining 2.7 percentage points of revenue comes from synchronization, which totaled $232.1 million. That represents an increase of 13.5 percent from the $204.4 million generated in the prior year.
Previously, those percentages for the different income streams were 52.9 percent streaming, 20.7 percent for physical, 23.6 percent for downloads and 2.7 percent for sync.
With U.S. music revenues soaring, RIAA CEO Cary Sherman noted, “This remarkable re-invention didn’t happen by accident. It is the result of years of painstaking work by record labels who continue to strengthen the teams and systems necessary to support an artist’s ambition, all while working closely with hundreds of digital platforms to bring music to fans in new and innovative ways."
He further added that music labels around the world had spent an estimated $4.5 billion a year in discovering and developing new artists.
“The Internet offers countless opportunities to distribute music, but with millions of songs and tens of thousands of albums released annually, it’s increasingly difficult for artists to break through and be discovered by fans,” Sherman said. “Record labels help artists stand out and elevate the music to the next level, whether it’s an established act or an up-and-coming new artist.”