Halfway Through 2018, Streaming's Continued Growth Defies Mathematical Trends
In the first half of 2018, overall on-demand streaming increased 41.7 percent to reach 403.5 billion U.S. streams, according to Nielsen Music. That growth defies mathematical trends, which dictate that, as a base enlarges, it becomes harder to achieve a bigger percentage growth than in preceding time periods.
That increase is larger than the 36.3 percent bump in 2017 over the prior year’s 208.9 billion streams at the six-month mark. Also at midyear 2018, total U.S. album consumption units (album sales + track-equivalent albums + total stream-equivalent albums) reached 360.2 million, an 18.4 percent increase over 2017 that follows another: a 7.8 percent gain in album consumption units counted in the first half of 2016.
When looking at only album consumption units constructed with audio on-demand streams -- the kind used in tallying the Billboard 200 and U.S. market share -- the industry grew by 13.8 percent to 270 million units at midyear 2018, compared to 237.2 million at the midway point of 2017. Audio on-demand streams grew 45.5 percent to 268.3 billion, from the 184.5 billion accumulated in the first six months of 2017, while video on-demand streams grew 34.7 percent to 135.2 billion from the 100.4 billion streams tallied in the first half of 2017. (Overall video stream count is not available because YouTube stopped reporting streams of song videos that do not garner at least 1,000 views a day in mid-2016.)
The most-streamed song so far this year is Drake’s “God’s Plan,” with 1.12 billion total on-demand streams, a 63 percent rise over the 689.8 million streams garnered by the top on-demand streaming song at this point in 2017, Ed Sheeran’s “Shape of You.” Yet at last year’s midpoint, six songs had reached the half-billion-stream mark, compared with four this year.
Post Malone’s beerbongs & bentleys was the most-consumed album with 1.79 million album units, while the Greatest Showman soundtrack led with 1.06 million album sales. Sheeran’s “Perfect” topped song sales at 1.01 million downloads, while Jack White’s Boarding House Reach tallied the most vinyl sales, at 37,000 copies.
DISTRIBUTOR MARKET SHARE
The Universal Music Group remains the top distributor by distribution ownership, with 37.55 percent market share, a jump from the 36.51 percent the major had at the midway point of 2017. Meanwhile, Sony Music Entertainment’s market share fell to 25.77 percent from 26.73 percent last year, and the Warner Music Group saw its market share grow to about 21.11 percent from 20.81 percent. (The WMG number is a Billboard estimate, as exact market share percentages are unavailable due to Nielsen Music not yet tracking the streaming activity of WMG’s Alternative Distribution Alliance.) Finally, Billboard puts independents, collectively, at about 15.48 percent.
However, when market share is tracked by label ownership, Billboard estimates that the indie sector collectively accounts for 36.28 percent, up slightly from 36.16 percent at the midyear point in 2017. (The 2017 indie market share number here has been corrected from what was printed last year.)
*Billboard estimate calculated using Nielsen data.
R&B/hip-hop remained the most popular genre with a 31.2 percent market share, and had the largest gain overall, up from 28.65 percent in 2017. Conversely, rock came in second at 23.1 percent, but had the largest decline, falling from the 24.81 percent it had accumulated in the first six months of 2017. Latin continued to show strong growth, accounting for 7.74 percent market share, up from 6.46 percent for the corresponding period in 2017, while the other large genre, pop, grew to 15.09 percent this year from 14.76 percent last year, with its album consumption units increasing to 46.22 million from 38.93 million units.
While country grew 8.1 percent to 25.74 million album consumption units at the midway points, its market share actually declined to 8.4 percent, down from 9.03 percent last year, because it isn’t growing as fast as the overall market. Likewise, electronic/dance music fell 7.1 percent to 11.05 million album consumption units, from 11.9 million, while its market share dropped to 3.61 percent, from 4.51 percent in the first six months of 2017.
SALES BY FORMAT
Album sales dropped 17.6 percent to 68.8 million, versus the 83.5 million reported in the first half of 2017. In the second half of this year, the album sales decline is expected to accelerate further, as Best Buy will have completed its withdrawal of CDs from its inventory, as planned, by summer’s end. Meanwhile, digital track sales are falling at an even faster rate, with a 27.4 percent drop to 223.1 million downloads in the first half of 2018, as compared to 307.2 million in the corresponding period last year.
Looking at album formats, CD sales declined to 33.6 million, a 19.9 percent drop from the 41.9 million counted in the first half of 2017. Digital album downloads similarly fell, to 27.5 million from 35.1 million; but vinyl sales increased 19.2 percent, to 7.6 million from 2017's 6.36 million.
SALES BY AGE
Finally, consumption of current albums -- defined as those released within the past 18 months -- grew slightly to account for 39.2 percent (141.03 million) of all consumption units from the 111.6 million units it had last year, when it totaled an even 39 percent at the midyear point. That means that catalog albums, with 219.12 consumption units, tallied 60.8 percent of the market, down from when 185.55 million units accounted for 61 percent at last year’s half-way mark.
For current releases, album sales are stronger than streaming units, with current accounting for 43.1 percent, versus catalog's 56.9 percent. But that’s a far cry from when current album sales accounted for 62.7 percent of overall album sales at the six-month mark in 2004, according to Nielsen Music, while current album sales had fallen to 56.4 percent by the half-way point of 2008. That means that over the last 14 years, there has been nearly a 20-percentage point swing in the age of music that consumers purchase, with catalog album sales growing from 2004’s 37.3 percent to today’s 56.9 percent share.
During that 14 years, catalog has become even stronger in streaming than it is in sales. Overall, catalog represents 61.5 percent of total streams in the first half of 2018. But unlike in sales, streams of current albums are, at least, growing: at the midway point in 2015, current accounted for 33.4 percent of all U.S. on-demand streams, meaning current-album streams have grown nearly five percentage points since 2015.
The numbers in this story represent the U.S. industry accounts as represented by Nielsen Music in its 2018 midyear report issued July 6. Beginning with the first week of the second half of the year, in accordance with the U.S. industry’s request, Nielsen has switched its formula to counting the stream-equivalent album component of album consumption units. With that switch, 1,250 paid audio streams now equal one audio streaming equivalent album, while 3,750 ad-supported audio and/or video streams are needed to equal one audio streaming equivalent album. Consequently, in week 27, Nielsen reports that album consumption units, including video streams, totaled 330.6 million consumption units, down from 360.15 million, versus 315.8 million consumption units, up from 304.12 million. Billboard will deal with the revamped metrics going forward, not in this story.