U.S. Latin Music Revenues Up 44 Percent In First Half of 2017

Daddy Yankee and Luis Fonsi
Omar Cruz

Daddy Yankee and Luis Fonsi

Unsurprisingly, given the record-breaking success of Luis Fonsi and Daddy Yankee's song of the summer "Despacito," Latin music revenue in the United States is up 44 percent in the first half of 2017 over the same period last year, according to the RIAA, reaching $115 million. Overall, 82 percent of that revenue -- $94 million -- was derived from streaming, a 56 percent increase from the first half of 2016, when streaming revenue accounted for $60.3 million.

Within that streaming revenue figure, paid subscription revenue totaled $40 million, or 35 percent of all revenue, an increase of 74 percent over the same period the year prior. Ad-supported on-demand services like Spotify's free tier and YouTube accounted for $20 million, or 18 percent of total value, up 34 percent year over year. SoundExchange distributions from digital radio streaming were also up year over year, increasing three percent to $23 million; when factoring in payments from other services, that totals an increase of 52 percent.

All sales revenue categories predictably fell in the face of streaming's domination. Physical sales totaled just $7 million, down 15 percent year-over year and accounting for just six percent of all revenue. Digital singles sales revenue fell four percent, while digital album sales revenue fell 14 percent, with all downloads accounting for nine percent of total revenue. With synch revenue making up another four percent, overall digital accounted for 94 percent of all revenue in the U.S. Latin sector in the first half of the year, according to the report, up from 90 percent over the same period last year.

The Latin market accounted for 2.9 percent of the total U.S. recorded-music market in the first half of 2017, which totaled $4 billion.

This report continues the turnaround for the Latin market in the U.S., which saw its first revenue growth in the U.S. in 2016 in more than a decade, with the RIAA largely blaming piracy for the 12-year decline.

"One of the most gratifying and encouraging storylines of the year is the continued Latin music renaissance," RIAA chairman/CEO Cary Sherman said in a statement accompanying the report. "For more than a decade, the Latin music sector endured precipitous declines primarily because of rampant counterfeiting. Thanks to the emergence of streaming and continued record label investments in key markets, Latin music is on the rebound. Streaming is a global phenomenon that makes genres and geographies less relevant than they used to be, and Latin music is a primary beneficiary."

Yet Sherman also took time to admonish services such as YouTube for what the record industry calls the "value gap," arguing the YouTube does not pay its fair share for the use of the music it hosts on its site. With "Despacito" becoming the most-viewed video on the service of all time, passing 4 billion views in August since it was originally uploaded this January, Sherman hammered the point home in his statement.

"With Latin music pervading the charts and racking up billions of plays, one might logically think that free streaming would produce enormous payouts to artists and labels," he said. "Instead, this is perhaps ‘Exhibit A’ for the problem that is undermining the value of music -- the value gap -- with only $20 million earned from free on-demand services like YouTube despite some Latin songs topping the most watched videos of all time. These enormously successful and profitable companies can do better. And that’s why a united music community continues to be incredibly animated about music’s value gap and calls upon policymakers across the globe to address these inequities."

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