Thanks to Streaming & Crossover Hits, US Latin Recorded-Music Industry Skyrockets With 37 Percent Growth in 2017

Luis Fonsi & Daddy Yankee, 2018
Dimitrios Kambouris/Getty Images for NARAS

Luis Fonsi and Daddy Yankee attend the 60th Annual Grammy Awards at Madison Square Garden on Jan. 28, 2018 in New York City. 

Overall the genre made up 2.8 percent of the total $8.7 billion U.S. music market.

Latin music revenues in the United States skyrocketed last year, growing 37 percent to $243 million, driven primarily by music streaming, according to the RIAA. That amounts to 2.8 percent of the total $8.7 billion U.S. music market, which saw growth overall of 16.5 percent in 2017

The genre's streaming revenue grew 54 percent year-over-year, reaching a record high of $204 million and amounting for 84 percent of total Latin revenues. 

Breaking down the streaming income, paid subscription streams were up 83 percent and accounted for 49 percent of Latin's total streaming revenues. As well, on demand ad-supported streams on services including YouTube, Vevo and Spotify's free tier had a significant impact on Latin music, growing 34 percent to $45 million, amounting to 19 percent of its revenue. In comparison, that category only totaled 8 percent of the overall U.S. market. 

The gains follow another positive report for 2016 that was issued last year, announcing a 3 percent increase in Latin music revenues between 2016 and 2015 that marked Latin's first revenue growth in over a decade. 

"2017 was the year that Latin music filled our playlists and dominated the airwaves like never before," said RIAA chairman and CEO Cary Sherman in a statement. "More than any other genre, the growth in streaming is powering Latin music's resurgence. That's a welcome development for a community that has endured an especially challenging decade. Streaming is helping break down walls between countries and continents, all while record companies invest in the critical teams and resources to help support an artist's global ambition. It's no accident when a song tops a global playlist, it's the result of a dedicated team of professionals working to expand an artist's audience."

Sherman also noted the Latin music market is "disproportionately" skewing towards free streams, reflecting on what this means moving forward. 

"For the market to sustain its growth and for record labels to invest in and support more artists, a level playing field is essential," he said. "That means addressing music's 'value gap,' a critical priority for the global music community."

It's no coincidence that free tier streaming services played such a large part in Latin music's boom last year, seeing as music videos hold a particularly important role in singles' success -- as demonstrated by Luis Fonsi and Daddy Yankee's YouTube record-breaking "Despacito" visual, which has been watched more than 5 billion times. Likewise, J Balvin and Willy William's "Mi Gente" has followed a similar route with an impressive 1.7 billion views of its own. 

Speaking with Billboard last year, Universal Music Latin America chairman and CEO Jesus Lopez explained the importance of videos in Latin music, saying for both "Despacito" and "Mi Gente" the videos were "crucial to develop these projects."

Elsewhere, the RIAA reports Latin music's distributions from SoundExchange in 2017 were down 13 percent but revenues for the category of digital and customized radio were up 34 percent to $59 million -- the difference being made up with direct payments from those services, categorized as ad-supported streaming. 

As well, digital downloads accounted for 9 percent of the total U.S. latin music market, increasing 3 percent YOY and bucking the declining sales trends across the overall U.S. music market. Digital single track sales drove that uptick, with a 16 percent increase, while digital albums were down 20 percent. 

Physical sales were down 43 percent to just $12 million.