The global recorded music market grew by 5.9% in 2016 according to new figures published by the International Federation Of The Phonographic Industry yesterday.
In line with statements issued by record industry trade bodies at a national level, the IFPI cautiously welcomed the sector’s solid growth as it launched its stats pack in London, but quickly yelped “value gap” and “safe harbour”, which everyone in the room immediately translated as “fucking fucking YouTube”.
We already knew the record industry saw decent growth last year, with 2016 figures for most markets around the world following a similar trend: subscription streaming boomed compensating for tanking download sales and slowly declining CD revenues, resulting in an overall uplift.
Although the trends are the same globally, the shift from CD to downloads to streams has occurred at different speeds in different markets. The performance of different revenue streams in the UK, however, is pretty close to the global averages, the British market shifting over to digital slower than the biggest recorded music market in the world, ie the USA, but much faster than the second biggest market, that being the still CD-dominated Japan.
Overall, globally, digital combined now accounts for half of recorded music revenues, with physical sales, broadcast and public performance revenue and sync accounting for the other half. It goes digital (50%), physical (34%), public performance (14%) and sync (2%).
In the digital domain, it is all about streaming, and by that we meaning paid-for subscription streaming, with the likes of Spotify and Apple Music really behind the record industry’s return to growth after fifteen years of decline. Streaming revenues were up 60.4% worldwide, while physical went down 7.6% and downloads fell 20.5%. The overall rise of 5.9% means that in 2016 the record industry generated $15.7 billion.
So, overall, good news. Though all the major label execs speaking at yesterday’s stats launch were keen to stress that they weren’t going to get all complacent about the return to growth, noting that there was still a long way to go before the record industry returns to revenue levels achieved at the peak of the CD era.
In the words of Universal Music’s Michael Nash, the takeaway from the 2016 figures for him was that when it came to putting the record industry back on solid ground, it was by no means “mission accomplished”, but we now know that it’s “not mission impossible”.
Of course, one of the reasons for the subdued response to the 5.9% growth scored in 2016 – which, somewhat ironically, has been less ecstatically received than the 0.2% growth recorded in 2012 – is that record company bosses reckon that the boom in the streaming market isn’t quite as boomful as it could be. That’s because of the existence of opt-out streaming services like YouTube, which secure much better rates from music rights owners because of the copyright safe harbour and what the IFPI likes to call the ‘value gap’.
We recap the safe harbour debate in this CMU Insights blog post here. Yesterday the IFPI was keen to stress that this remained a key issue that meant its sector’s return to growth, while welcome, wasn’t as significant as it could or should be.
IFPI boss Frances Moore said: “Music’s potential is limitless, but for this growth to become sustainable – for investment in artists to be maintained and for the market to continue to evolve and develop – more must be done to safeguard the value of music and to reward creativity. The whole music community is uniting in its effort to campaign for a legislative fix to the value gap and we are calling on policymakers to do this. For music to thrive in a digital world, there must be a fair digital marketplace”.
That legislative fix is most likely to come first in the European Union, where a limitation on the safe harbour is included in the draft new Copyright Directive. Moore said yesterday that, if passed in its current form (it could as yet be revised), she felt the record industry could work with that legislative fix to address the value gap in Europe. Lobbying efforts would then be required to secure similar limitations elsewhere, and especially the US.
But hey, enough of that, 5.9% growth! Woo! Let’s have a party! Let’s eat some cake! Let’s dance a little jig! Let’s give Spotify – a key player in enabling that growth – a moment on the bragging step. You know, before the streaming firm’s IPO puts increased scrutiny on its business model and everyone starts slagging off the market-leading streamer again.
Says Will Page, Spotify’s Director Of Economics: “What Spotify set out to make happen ten years ago is finally happening. The music industry is growing, thanks to the growth in streaming, and Spotify – as the biggest player in the music subscription space – is driving that growth. Spotify’s success story has expanded beyond established markets, with Brazil and Mexico now making up two of our top four countries worldwide by reach. A combination of increasing smartphone adoption and Spotify’s success makes the potential for these emerging markets to ‘re-emerge’ and to exceed previous peaks”.
We’ll analyse the IFPI’s figures in more detail and provide three reasons to be optimistic, and three reasons for pessimism, in CMU Trends next week. CMU Trends is accessible to premium subscribers – to go premium for £5 a month click here.[from http://ift.tt/2lvivLP]