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Statistics Show Music Streaming Is Now Too Big To Fail...For The Music Industry

Brett Hershman

A new report from Statista suggests the music streaming business is now too big to fail. This assertion was made after the world’s largest music streaming service Spotify, secured a new multi-year licensing deal with the world’s largest record label, Comcast Corporation (NASDAQ: CMCSA) owned Universal Music Group.

The partnership is “built on mutual love of music, creating value for artists and delivering for fans,” both companies said in a joint statement.

The deal is a big win for music streaming. Major record labels, generally inept to changing trends in the industry, have made a commitment to next generation of music consumption. The agreement has both parties making compromises showing maybe streaming services can coincide with labels; Universal is agreeing to lower royalty rates, and Spotify is allowing Universal to exclude free users from listening to new releases for up to two weeks.

The marriage between the labels and streaming will certainly shape the future of the industry.

Streaming services simply can’t survive without the labels’ music and labels are starting to rely on the revenues that streaming services like Spotify are delivering. Apple Inc. (NASDAQ: AAPL) could follow suit with exclusive partnerships and deals of their own for Apple Music after Spotify has paved the way.

“Streaming today represents the majority of the business” and “the long-term success of Spotify, and others like it, is essential to the ecosystem’s enduring health”, said Sir Lucian Grainge, Chairman and CEO of Universal Music.

Streaming services accounted for the majority of the music industry’s revenues for the first time in 2016, according to Statista.

“With physical sales and music downloads clearly on the decline and streaming subscription numbers higher than ever, it seems as if streaming has finally become too big to fail,” the report concluded.

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