We've known for a while that the future of digital music is in streaming rather than downloading — but now it's official.
Warner Music has become the first major record label to announce that it's making more money from streaming services like Spotify than from digital downloads on platforms like iTunes.
Warner Music's first quarter results showed continued growth in digital streaming revenue, which surpassed the decline in digital download revenues for the first time.
"Notably, in this quarter we saw continued growth in streaming revenue which surpassed download revenue for the first time in the history of our recorded music business," said Stephen Cooper, the CEO of Warner Music Group.
The total digital revenues increased by just 0.7 percent or $2 million, because of the sharp decline in download sales.
"Declines in download revenue are expected to be a continuing trend," read the official company report. The results are further evidence of the large swing from downloading to streaming music among the listening public.
The surge in streaming revenue is the result of an increase in licensing fees on platforms like Spotify and Deezer, from Warner artists such as Ed Sheeran, Michael Bublé, Led Zeppelin and David Guetta. The financial results also reflect the broadcast fee income for PLG for the first time — which was probably the main driver in meeting the milestone. PLG, or Parlophone Label Group, is a group of record labels across Europe that Warner acquired from Universal in 2013.
"The rate of this growth has made it abundantly clear that in years to come, streaming will be the way that most people enjoy music," Cooper said in a statement at the beginning of the quarterly earnings call.
"We'll continue to collaborate with our streaming partners to expand their businesses, and more importantly, to ensure that copyright owners, artists and songwriters receive appropriate value for their work."
The news comes as record labels are trying to pressure the likes of Spotify, YouTube and Deezer to do away with the free versions of their streaming services.
Despite the growth in streaming revenue, digital revenues still only account for 43.9 percent of Warner Music's total revenues. The $144 million made from digital sales makes up 61 percent of music recording revenue in the US, but larger international physical sales and revenues from concerts and such mean that digital still represent less than half of total earnings. In fact, physical revenues increased more year-on-year than digital earnings — bringing Warner into the black with income of $19 million compared to a loss of $59 million for the same period last year.
