New data released by the RIAA on Tuesday (Mar. 22) shows that U.S. revenues from ad-supported streaming aren’t keeping up with the segment’s volume of activity.
Streaming activity from both interactive paid and ad-supported platforms rose 92.8 percent last year to 317.2 billion streams according to Nielsen Music, a dramatic increase over 2014’s 164.5 billion. Despite that success, streaming revenue from both interactive paid and ad-supported services rose only 46.5 percent, to $1.6 billion.
The difference between the growth of listening and how much that listening pays has led to a lower per-stream rate; the “blended” rate, a combination of what paid and ad-supported services pay rights holders per song play, declined to 0.505 cents per stream from 0.666 in 2014.
People within the industry complain that ad-supported streaming, particularly YouTube, is being under-monetized. They say they are happy with the royalty rate from paid services, but point to the declining per-stream rate and counter that free streams which carry ads are not rising in step with the growth in streaming activity.
The per-stream rate could improve this year. SoundCloud will better monetize its streams now that it has licensing deals with all three major labels as well as Merlin. In addition, Apple Music’s partnership with Dubset will put fully licensed remixes and DJ mixes into the fast-growing subscription service. Dubset says it will soon announce partnerships with more music services.