Nielsen recently released its 2016 mid-year music report and it has some big takeaways. On-demand streaming is exploding. R&B/hip-hop and Latin are surging and Rock and country music need to catch up, says Pandora’s Glenn Peoples.
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By Glenn Peoples, Music Insights & Analytics at Pandora
Nielsen Music’s report on the first-half of 2016 is out. The main themes are easy to spot: purchases are tanking and the industry is finally getting and maintaining substantial streaming growth.
The highlights: On-demand audio streams jumped 97.4 percent to 113.6 billion. Led by a 97.4-percent growth in audio streaming, total (audio and video) on-demand streams rose 58.7 percent to 208.9 billion (on-demand audio streams accounted for 82 percent of that growth.) Digital album and digital track sales plummeted 18.4 percent and 23.9 percent, respectively. But with the growth in streaming, total digital consumption grew 14.8 percent.
Here are some thoughts I had after reading through the report:
R&B/hip hop and Latin music are streaming stars. A couple genres over-perform in on-demand streaming services relative to their sales numbers. R&B/hip hop accounted for 24.9 percent of total on-demand streams compared to 16.3 percent of physical albums, 22.9 percent of digital albums and 22.9 percent of digital tracks. Latin music’s 8.3-percent share of on-demand streams in H2 2016 was multiples ahead of its physical albums/digital albums/tracks shares of 2.4 percent, 1.0 percent and 1.8 percent.
Rock and country do better with purchases than on-demand streaming. A couple genres do better with purchases than on-demand streaming. Rock’s share of purchases were 43 percent for physical albums, 38.5 percent for digital albums and 21.8 percent for digital tracks (a tie with the pop genre). But rock’s share of total on-demand streams was just 17.9 percent in H1 2016. Country’s physical albums/digital albums/tracks shares of 13.1 percent, 9.6 percent and 12.2 percent are far above its 5.0-percent share of total on-demand streams.
The CD is an even tougher format for new albums. Mass merchants sold 23 percent fewer CDs in H1 2016. This won’t come as a surprise if you’ve been in a Walmart, Target or Best Buy lately and seen how little shelf space is allotted to the format. What’s there is dominated by catalog titles. A Nielsen stats forphysical albums attests to this: current album sales fell 20.1 percent while catalog album sales fell just 1.7 percent. It’s no wonder Kanye West no longer wants to release CDs.
Does popularity lead to creativity or vice versa? Nielsen points to the digital release strategies of albums by Drake, Beyonce and Kanye West as proof that “creative release strategies” continue to be “a major story.” Those artists’ new releases were certainly major stories in H1 2016. With a debut on HBO, Beyonce’s Lemonade arguably had the most creative release strategy of the three. Drake’s Views and West’s The Life of Pablo had noteworthy release strategies. Views gave a brief exclusives to Apple and iTunes sold only full-album downloads, not individual tracks (aside from already-released singles).The Life of Pablo debuted at Tidal and forewent a CD release (although it’s available on vinyl). All three albums have performed exceptionally well. But I think the greater question is whether creative release strategies foster success or does success provide artists the luxury or freedom to pursue creative release strategies? One thing’s for sure: the more popular an artist, the more media attention comes from a creative release strategy. But artists of all levels are having to think differently about how they release and promote their music. The way people discover, buy, stream and share music changes each year. As a result, the marketing playbook is being thrown out the window.