Wednesday 21 August 2013
The Recording Industry Has Revenue Growth: The “Sweet Spot” with Licensed Digital Services and New Markets
The International Federation of the Phonographic Industry (IFPI) has released two reports concerning recorded music. The first is The Recording Industry in Numbers 2013 Report (RIN 2013) and the second is the Digital Music Report 2013. The RIN 2013 “provides a comprehensive picture of the key trends in today's global music business, with in-depth statistics and analysis . . ..” Some highlights of the RIN 2013 include:
· Overall global recorded music trade revenues increased by 0.2% in 2012, the first year of growth since 1999. All the revenue streams IFPI tracks (physical, digital, performance rights and synchronisation revenues), with the exception of physical sales, increased in 2012. A total of 21 countries saw market growth in 2012, including nine of the top 20 markets.
· The world's top 20 markets table shows that the US remains the world's largest music market; digital sales success in Sweden has made that country the world's 12th largest music market (up two places on 2011); India has also moved up the rankings.
· Digital channels now account for 35% of overall industry trade revenues, while physical sales now represent 57% of record companies' income. Downloads remain the biggest source of digital revenues, with combined unit sales of track and album downloads up by 11% in 2012.
· Music subscription services are seeing rapid growth. Music subscription and ad-supported streaming services now account for 20% of digital revenues globally, up from 14% in 2011. Subscription and ad-supported revenues combined now account for almost one third (31%) of all digital music revenues in Europe.
· Emerging markets are helping fuel the industry's recovery. Brazil, India and Mexico have seen market growth respectively of 24%, 42% and 17% since 2008. In 2012 revenues in India reached an all-time high while Latin America was the fastest growing region of the year.
· Albums continue to hold their appeal, accounting for 56% of recorded music sales value. Digital album downloads grew faster than singles and vinyl sales hit their highest point since 1997. Consumer usage on streaming services shows that the album format remains very relevant. Many of the year's best-selling albums generated a large streaming volume across all tracks included on the album.
· Sources of music licensing income are also on the rise. Performance rights revenues (from broadcasts and public performance) were the fastest growing sector in the recording industry in 2012, accounting for 6 per cent of recorded music revenues. Revenues grew by 9.4% globally, to US$943 million. Income from synchronisation deals - music used in TV adverts, films and brand partnerships - were also up. These grew by 2.1% to US$337 million in 2012.
The Digital Music Report 2013 highlights include:
· Download sales increased in volume by 12 per cent globally in 2012 and represent around 70 per cent of overall digital music revenues
· The number of people paying to use subscription services leapt 44 per cent in 2012 to 20 million. Subscription revenues are expected to account for more than 10 per cent of digital revenues for the first time in 2012.
· Digital channels account for the majority of record companies' income in an increasing number of markets including India, Norway, Sweden and the US
· Digital retailers' rapid global expansion is opening up the potential for markets such as Brazil and India, to become major sources of future industry growth. At the start of 2011, the major international services were present in 23 countries. Two years later, they are in more than 100 countries.
· Digital music consumption has become mainstream, as shown by consumer research by Ipsos MediaCT across nine markets in four continents. Two-thirds of internet users (62%) have used a licensed digital music service in the past six months. Among younger consumers (aged 16-24) this figure jumps to 81 per cent.
· Consumer satisfaction with licensed music services is demonstrably high. 77 per cent of users of licensed services rate them as excellent, very good or fairly good. Even 57 per cent of those who use unlicensed services believe "there are good services available for legally accessing digital music."
· Many non-digital revenue channels are also increasing. Performance rights income increased in value by an estimated 9.2 per cent in 2012 and now accounts for around 6 per cent of overall industry revenues, up from 3 per cent in 2007.
· Album charts in most markets show that investment in local repertoire is alive and well. In many countries, local repertoire accounts for the vast majority of the top selling albums of the year. Five major non-English language markets illustrate this. In Italy, Spain and Sweden, eight in 10 of the top selling albums of 2012 were by local artists; in Germany, seven in 10, and in France six in 10.