Ed Sheeran

Sheeran

Larry Busacca/Getty Images for Songwriters Hall Of Fame

For the third straight year, the U.S. music business is not only growing, it’s growing faster, as overall consumption hit 636.7 million equivalent album units in 2017, up 12.5 percent from 566.1 million in 2016, according to Nielsen Music. And once again, streaming is driving that growth: Overall on-demand streams reached 618 billion, up 43 percent, equating to 412 million streaming-equivalent album units, up from 432.2 billion streams, or 288.2 million SEA, the year prior.

Audio on-demand streams grew 58.7 percent to 400.4 billion, up from 252.3 billion in 2016, while video on demand grew to 217.7 billion streams, a 20.9 percent increase over the prior year total of 180 billion. With that, the U.S. industry produced its first 1 billion-stream song in a single year, as Luis Fonsi & Daddy Yankee’s “Despacito” (featuring Justin Bieber) hit 1.3 billion total on-demand streams in 2017.

Digital-album and CD sales both dropped 19.6 percent, to 66.2 million and 88.2 million copies, respectively, and track sales (554.8 million, down 23.4 percent) also continued to fall, though vinyl once again ticked up, growing 9 percent in 2017 to 14.3 million. But growth in the consumption business model is outpacing the 19.2 percent decline in album sales plus track-equivalent albums (down to 224.6 million units in 2017), a welcome change from the last format shift when downloads didn’t grow as fast as the decline in CDs. That means digital’s share of album consumption grew to 83.8 percent in 2017, up from 78.2 percent the year prior, with physical falling to 16.2 percent from 21.8 percent in 2016.

Overall, Taylor Swift’s Reputation was the top-selling album with 1.9 million copies, with the only other 2017 million-seller coming from Ed Sheeran’s Divide, which scanned 1.1 million copies. Those two albums, respectively, were also the top-selling digital albums, with 868,000 copies and 592,000 copies. That means Reputation scanned over 1 million CDs in 2017.   

Meanwhile, Universal Music Group maintained its lead in distributor market share at 36.7 percent for albums plus TEA plus audio on-demand SEA, an improvement over last year’s 35.7 percent, while Sony Music Entertainment fell to 27 percent from 28.7 percent, Warner Music Group had a Billboard-estimated 20.5 percent, and indies totaled 15.8 percent.

Examining the U.S. business in another way, current music -- defined as sales within the first 18 months of a title's release, longer for albums that remain in the top half of the Billboard 200 and/or have tracks still being played by mainstream radio -- accounts for 39.3 percent of all consumption album units, or 250.5 million units; while catalog album consumption units totaled 60.7 percent, or 386.1 million units in 2017, almost the same split as in 2016.

Breaking out music consumption by genre, including on-demand video, R&B/Hip-Hop and Pop continue to grow at the expense of rock, with rock now comprising 20.8 percent, or 132.3 million total consumption units, making it the second-largest genre; and down from 23.9 percent, or 135.2 million consumption units, when it was the largest genre in 2016. R&B/Hip-Hop emerged as the largest genre with 24.5 percent, up from 22 percent last year, thanks to 25 percent growth to 157.1 million consumption units in 2017, versus the prior year when consumption units totaled 125.7 million units. Pop was the third-largest genre with 80.8 million units, up 9.2 percent from 73.9 million units. But even though the genre grew, it didn’t grow as fast as the market. Consequently, its percentage of total units fell to 12.7 percent in 2017, versus 13 percent in 2016.    

Country is the fourth-largest genre, as its listeners produced 49 million units, or 7.7 percent of overall consumption units in 2017, an increase from 46.5 million consumption units in 2016. But like rock, its overall percentage fell from 2016’s 8.2 percent. Latin was the fifth-largest genre with 37.3 million units, or 5.9 percent, up from 28.7 million, or 5.1 percent in 2016. On a percentage basis, Latin tallied the most growth in 2017, increasing 29.9 percent.      

Fast Facts

-- The two top-selling vinyl albums of the year were The BeatlesSgt. Pepper’s Lonely Hearts Club Band and Abbey Road.   

-- Drake was the most-consumed artist overall of 2017, led by 5.9 billion on-demand audio streams of his songs.

-- Taylor Swift’s Reputation had both the highest sales of 2017 and the fewest SEA totals among the year’s top 10 (280,000).

-- Two Migos hits ("Bad and Boujee" and "T-Shirt") and features with Post Malone ("Congratulations") and DJ Khaled ("I'm The One") saw Quavo appear on four of 2017’s 20 most-streamed songs.

By The Numbers

83.8%
Digital’s album-consumption share (533.8 million consumption units) marks the first time it passed 80 percent.

43%
Total on-demand streams surged to 618 billion, up from 432.2 billion in 2016.

19.2%
Total sales fell to 224.6 million units in 2017, from 278 million in 2016.

This article originally appeared in the Jan 13 issue of Billboard.

Billboard Year in Music 2017

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