Music Market at tipping point for second year in a row after seeing an increase in revenue sales.
Strong growth in the global recorded music market increased by 5.9 percent totalling a revenue of US$15.7 billion in 2016, the highest rate since IFPI began tracking the market in 1997. According to IFPI’s Global Music Report, digital sales has up 17.7 percent across the board, revenue which has surpassed physical for the first time in 2015 and increased again totalling $7.8 billion (50 percent hike) of all music sales for the first time.
What is most significant in this report is that 2016 marks the second successive year that the recorded music market has grown after continually falling sales during which revenues dropped by almost 40 percent at its lowest point. Streaming is helping drive growth in developing music markets including China (+20.3 percent), India (26.2 percent) and Mexico (+23.6 percent) in revenue growth.
Digital revenues is proven to be the next positive business model surpassing physical since the explosion of streaming, it’s quite likely that more artists are turning towards digital distribution – a rather new trend that is gradually taking precedent the last few years. Record labels have been fueling the growth through ongoing investments, not only in artists, but also in the supporting digital platforms – allowing over 40 million tracks across hundreds of servces worldwide.
Frances Moore, IFPI Chief Executive commented that the market’s upturn “hadn’t happened by chance” and cautioned against being complacent or excessive back-slapping.
“As an industry, we’ve had years of investment and innovation to make it happen and we’re starting to see the shift now: from adapting to the digital age to actually driving the digital age,” said Moore.
“The story of recorded music over the last couple of decades has really been one of transformation – from physical to digital; from downloads to streaming; from ownership to access. We want to achieve one more transformation and that is from decline in growth,” she added.
On tackling piracy worldwide, IFPI and its national groups has identified 19.2 million URLs as hosting infringing content in 2016 and make requests to Google to ‘delist’ infringing sites.
Adele’s single ‘Hello’ from her latest album ’25’, to date, has garnered almost 2 billion views on YouTube.
With only two years into recovering after a long period of decline, Stu Bergen who also attended the launch of the report cautioned by adding: “We have a long way to go before we’ve established a truly robust and healthy environment for our artists. Whatever growth we see in the future, we will always need to stay vigilant about every new opportunity. We’re not sitting back and waiting for streaming to do the heavy lifting.”
The breakdown of the Global Music Report has found that the mass usage of streaming services such as Spotify, Amazon and Apple Music globally, which has established and became the main driver behind the industry’s consistent upturn. By the end of 2016, data showed that over 112 million people worldwide are paying music subscribers. When we also account for the users under the ad-supported, the number rose to 212 million accounting for the majority (59 percent) of global digital revenues – half of all record sales in 25 markets. This account for a 20.5 percent fall in download sales, as well as, a 7.5 percent drop in physical revenues.
Performance rights revenue increased to $2.2 billion (up 7 percent), which accounts for 14 percent of the market, with the U.S., UK and France the three biggest territories. The industry also saw growth in the sync market, growing 2.8 percent, which represents 2 percent of all recorded-music revenues.
Beyonce’s Lemonade topped Adele’s 25 and Drake’s Views on IFPI’s 2016 Global Albums list (based on physical and digital sales, but excluding streams). Metallica’s Hardwired…To Self-Destruct and David Bowie’s Blackstar concluded the top five highest-seeling albums worldwide.
The launch also included the topic on tackling the value gap in the industry. Addressing a major problem in the industry, the executives also referred to the unspoken white elephant in the room that is YouTube’s low royalty rates. IFPI data showed that user-uploaded video streaming services returned $553 million to rights holders in 2016 from over 900 million users worldwide – proved a wide disparity between that return and the $3.9 billion rights holders received from streaming serves in the same 12-month period despite a lower user base of 200 million people.