Last month the revenue from streaming services had surpassed CD sales for the first time in history. Now, The Wall Street Journal is reporting that after securing $400 million in fresh funding, Spotify is now valued for $8.4 billion and worth more than the entire US recorded music industry.
The nearest competitor – Pandora, sits at around $3.5 billion. According to the RIAA, the revenue of the entire industry as of 2014 was $6.97 billion, which accounts for physical sales, digital purchases, and streaming.
27% of the recorded music industry’s $6.97 billion earnings are from streaming, including paid subscriptions and ad earnings. Yet Spotify, just one company that makes up that percentage, is actually worth more than every single US retail music revenue source combined. The data here compares two different things – value (of Spotify) and revenue (RIAA’s $6.97 billion). According to the report, the US music industry’s valuation could eventually equal its revenue in the near future, with Spotify being more valuable overall.
While there is a 8.7% drop in permanent digital download sales, the streaming revenue has an increase of 25%. So while the industry has remained pretty stagnant for the last five years (there was a 0.5% drop from 2013 to 2014), at least it’s not getting much worse.