As subscription services dominate public debate, new revenue figures show that Internet and satellite radio are making a huge imprint on the U.S. record business. Last year’s digital performance royalty distributions by SoundExchange rose 31 percent to $773 million and have climbed 207 percent over the last four years.
Another way to appreciate SoundExchange’s ascension is to look at annual growth in dollar terms. Last year distributions grew $183 million, up from $164 million in 2013 and $134 million in 2012. The rate of growth may have slowed — 31 percent last year compared to 46 percent in 2012 — but the dollar increase has increased.
To put SoundExchange in perspective, consider its distributions of the first half of 2014, $323 million, were considerably higher than the royalties earned from subscription services, according to RIAA’s mid-year report. The retail value of subscriptions was $371.4 million. Assuming subscription services paid 70 percent of revenue, rights owners would have collected $260 million.
The impressive growth reflects the growing influence of the performance rights organization that collects and distributes royalties for Internet radio, satellite radio and cable radio. Distributions totaled just $36 million in 2007, the year before Pandora launched its popular iPhone app. The organization hit the $100-million mark the following year and surpassed $250 million in 2010.
SoundExchange has grown mighty with the help of popular services like Pandora and SiriusXM Radio, which have 76.5 million active users and 27.3 million subscribers, respectively. New services are especially popular among younger consumers. A new Edison Research survey found listeners aged 13 to 17 spent more time listening to streaming audio every day, 64 minutes, than to AM/FM radio, 53 minutes.
