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Worldwide record industry is adapting to digital, says IFPI

- 2 April 2014

The fast-growing popularity worldwide of online streaming for music consumption is confirmed by the annual survey of international recording industry body the IFPI.

IFPI's Recording Industry in Numbers

IFPI’s Recording Industry in Numbers

IFPI ceo Frances Moore points out in her introduction to the report, Recording Industry in Numbers, that global music revenues fell by 3.9% last year but Japan, a major market that has been slow to adopt digital platforms, accounted for the vast majority of that fall. In the rest of the world, the decline was just 0.1%

Adopting an emerging catchphrase, Ms Moore said the industry has become ‘a portfolio of businesses’, spanning digital delivery by streaming, download and broadcast, physical carriers CD and vinyl, and performance rights.

Growth in most of those areas showed the industry beginning to reverse years of decline, she said, with Europe’s six biggest markets ‒ France, Germany, Italy, the Netherlands, Sweden and the UK ‒ all registering positive revenue flow, and the US stabilising. Trade revenue in the UK, the fourth biggest global market, was up 2.2% at $1.3bn (£834m). In the UK, digital and physical revenue represented 44% each of total revenue.

While global trade revenue over the last 10 years has fallen from $22.5bn to $15bn, digital delivery’s share has risen over the last five years from 26% to 39%. Since 2008, subscription’s share of the revenue was up from 2% to 11%, downloads from 14% to 26% and performance rights from 4% to 7% ‒ that last increase in part due to a proliferation of internet radio stations. The revenue share of CDs has fallen from 64% to 41%.

Subscription-based streaming was the fastest-growing revenue stream, up 51.3%, reflecting the emergence of ‘premium’ offers such as higher audio quality to lure consumers of free ad-supported services. In the UK, subscription revenue was up 37.3%, in the US 65.4%, while traditionally conservative market Germany showed a 105.8% leap and in Italy it was 177.6%.

The report defends streaming’s often-criticised per-play payment system to rights owners, pointing out that download purchases yield a once-and-only payment while streaming offers a cash flow in line with usage.

Research commissioned from Ipsos MediaCT showed three distinct categories of digital consumer, with downloaders stressing ownership and streamers preferring to ‘listen to music without having to purchase each song’, and others opting for a combination of both. While download still dominates in the UK and US, streaming is hugely dominant in Scandinavia and South Korea.

In strong classical markets the UK, Germany and Austria, more than half of downloads were of complete albums. Innovative packaging such as special edition box sets have helped CD’s longevity, the report says, with decline slowing to 6.4% in the UK and 1.5% in Germany.

www.ifpi.org

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