For a long time, many major music labels seem to be very much against digital music. The reason is that most of these music companies wanted to keep the focus on traditional album sells via CDs that are more profitable than selling a digital single. More record companies have begun to embrace streaming music and attempt to squeeze all the profit possible out of the medium.
One music company that’s doing a good job of squeezing money from digital revenue streams is Warner Music Group. Warner is definitely seeing the Spotify Effect with the music company reporting that streaming music services contributed 25% of all of the digital revenue seen for its recorded music group last quarter.
That 25% would equate to $54 million or roughly 80% of Warner’s total money made during the quarter. Another really good thing having to do with streaming music for record companies is that streaming revenue continues to grow quickly. Streaming also doesn’t appear to be cutting into traditional digital music sales from places such as iTunes.
Perhaps the best the news from Warner is that digital sales grew more than physical sales shrank. Growing digital sales and revenue as sales of physical music declined is one of the top priorities for many music labels. Warner’s definition of “streaming revenue” is money made from subscription services such as Spotify and Rhapsody. It also includes any money made from Internet radio, but not from cloud services.