Exclusive: Merlin Unveils the Numbers Behind its Labels' Streaming Growth

Member labels of independent rights organization Merlin saw growth in both streaming and download revenue in 2012, according to numbers released by the organization Thursday. But the labels are doing the best at streaming services.
Over 92% of Merlin's labels had streaming revenue growth in 2012. Over half of the labels increased streaming revenues between 50% and 100%. Seven percent of labels said streaming revenue remained flat and less than 1% said streaming revenue decreased.

The labels’ digital download revenue also increased in 2012, although to a lesser degree. Nearly 64% of labels reported gains in download revenue while download revenue remained unchanged for about 23% of labels. Nearly 14% of labels experienced a decrease in download growth.

The digital growth fueled overall business growth: 73% of labels had an increase in total revenue and 21% saw their total revenues grow by over 50%.
Merlin CEO Charles Caldas says these numbers are a sign that streaming services are now a substantial and growing part of today's music business. He also believes streaming revenue is incremental to download revenue. "This appears to be new value coming into the market or possibly value that we lost by virtue of piracy and unmonetized music coming back into the pot," he tells Billboard.
Independent labels don't have the same access to the physical market as do major labels. For this reason, Merlin labels' digital market shares exceed their physical market shares -- 56% better in the U.S. and 52% better in the U.K. The labels perform even better at streaming services. Merlin's analysis shows streaming shares exceed their download shares by 12% to 20% depending on the label and territory.  
Merlin is protective of its digital gains. It wants to prevent the major labels using their size to improve their market positions. Caldas singles out two things major labels have done recently. One is the so-called "land grab" in distribution that has increased the majors' digital market share. The other is the majors' effort to influence how digital services are shaped. Merlin prefers the level playing afforded by digital platforms. "The beauty of an Rdio or Spotify or an open platform is it's very hard to herd consumers, and clearly that's good for us [and] not good for the majors."