Exclusive: On-Demand Streams Now Count Toward RIAA Gold & Platinum

Emeli Sande (left), Cher Lloyd and Jason Derulo are among the first artists to receive RIAA's Combined Digital Single Award Plaques. Credit: Jewel Box Platinum.

In an uncommon move to tinker with the formula used to certify Gold and Platinum awards, the Recording Industry Association of America on Thursday announced it has started to incorporate on-demand streams towards its calculations for certifying the prestigious awards.

The change, only the fifth major alteration in the methodology since the inception of the program in 1958, is meant to recognize how important digital distribution has become and how technology has permanently altered the way people access music. 

The last time the RIAA altered its methodology was in 2006, when it added master ringtones. Two years before that, the organization began counting digital downloads. And prior to that, CDs and cassette tapes were added to the mix. Otherwise, the formula for Gold and Platinum certifications remained largely untouched -- 500,000 unit sales for Gold, 1 million for Platinum and 10 million for Diamond.

Among the on-demand streaming services the RIAA will accept are MOG, Muve Music, Rdio, Rhapsody, Slacker, Spotify, Xbox Music and others. In addition, video streams from, VEVO, Yahoo! Music and YouTube will also count. Under the new formula, the RIAA will distribute awards to 56 new titles, including 30 Seconds To Mars’s “This Is War,” Emeli Sandé's "Next To Me," and Cher Lloyd's "Oath," Thursday night at the National Association of Recording Merchandisers' annual Musiz Biz conference in Los Angeles.

For the RIAA, deciding that on-demand streams should be recognized was the easy part. The hard part was in figuring out how many streams should be equivalent of a single sale. The group agonized for more than a year over that question, said RIAA Chairman and Chief Executive Cary Sherman.

If it looked at, for any single song, how many on-demand streams would generate as much revenue for rightsholders as a download sale, the answer would be somewhere in the hundreds of thousands. The RIAA rejected that path because it would be "impossible" to arrive at a number, given that on-demand streaming contracts are confidential and can vary considerably, Sherman said. In addition, such contracts expire and change continually, rendering any formula based on current contracts obsolete in a short period of time.

"We also felt that pure economics should not be the basis for acknowledging artistic achivement," Sherman said.

Instead, the group opted to rely on average consumption patterns -- for every download of any particular song sold, how often is it also being streamed on demand? The answer: 100.

Eleven new songs, including 30 Seconds To Mars’ “This Is War,” Aerosmith's "I Don’t Want To Miss A Thing” and Lana Del Rey's "Video Games," earned first-time awards because streams tipped them over the marks.