Global Music Markets
What we’ll cover:
Global Music Industry Market Share 1
IFPI Global Music Report 2017 2
Key findings from the Global Market Review in 2017 report 3
The ‘Value Gap’ 4
Summary of key findings 5
Global Music Industry Market Share
The global music industry market share data is based on the retail value (given in US dollars) each market generates respectively per year. The data is based on annual reports published by the International Federation of the Phonographic Industry (IFPI). In terms of geography, the largest market by far is typically the United States, followed then by Japan. The United Kingdom and Germany often fluctuate in occupying either third or fourth spot respectively; France consistently makes up the top five.
IFPI Global Music Report 2017
The leading report on the global music industry market share is the IFPI Global Music Report: Data and Analysis Report, which was this year published on 25 April 2017. It contains a detailed assessment of the recorded music industry for the previous year, as well as featuring extensive and authoritative data for the global industry and across more than fifty individual countries. The report helps to build up a comprehensive picture of the key trends in the music industry and provide an invaluable source of data and analysis as well as exploring case studies of recent phenomena in the music world.
Key features of the IFPI GMR 2017 include:
1 Recorded music sales for 2012-2016 by country
2 In-depth analysis of the recorded music sector
3 Country-level data for more than 50 countries, including:
- splits for digital, physical, performance rights and synchronisation revenues – global, regional and national
- digital revenues by format at global, regional and national level for:
o Total streaming revenue
o Paid subscription audio streams (new for 2017 report)
o Ad-supported audio streams (new for 2017 repor)
o Video streams (new for 2017 report)
o Single track downloads
o Full album downloads
o Mobile personalization and other downloads
4 Top global albums and singles of 2016
5 A global ranking of markets in 2016 by overall market, physical, digital, streaming, performance rights, and synchronisation revenues
6 Analysis of major regions (Europe, North America, Asa, Latin America, Australasia)
7 Analysis of changing format popularity: physical, digital, streaming
8 In-depth analysis on the impact of streaming
9 In-depth analysis of performance rights
10 Global-level physical volume data 1973-2016, including CDs and vinyl
11 Per-capita recorded music spend 2016
The main report is available to buy for £2,250 or you can access a free less detailed copy entitled ‘Global Music Report: State of the Industry’.
Access the limited report: http://www.ifpi.org/downloads/GMR2017.pdf
Access the main report: http://gmr.ifpi.org/about-the-report
Key findings from the Global Market Overview in 2017 report
1 In 2016 there was 5.9% growth in the global recorded music market – the fastest rate of growth since IFPI started tracking the market in 1997. This marks the second consecutive year of growth for the market however the IFPI argues that this should be viewed in the context of the industry losing nearly 40% of its revenue in the preceding 15 years.
2 Streaming revenues have surged by 60.4% – there are now more than 100 million users of paid subscriptions globally. This means that digital revenue now accounts for 50% of total recorded music revenues. Record companies see this change as the start of a new chapter in recorded music.
3 Physical format revenues declined by 7.6% – this is a higher rate than the previous year, which saw a decline of 3.9%. The physical sector still makes up 34% of the global market mainly because of its significance still in Germany and Japan.
4 Digital revenues grew by 17.7% to US$7.8 billion – this was driven by the largest growth in streaming in eight years. This offset a 20.5% decline in digital dowload revenue. Digital revenues now account for more than half the recorded music market in 25 markets worldwide.
5 The revenue generated by collecting the use of recorded music by broadcasters and public venues (performance rights) – grew by 7% to US$2.2 billion in 2016. This revenue stream accounts for 14% of the market but still fails to fairly reflect the value of the use of the rights. Germany and Japan, despite holding a higher market share than the UK and France, significantly underperform here. IFPI therefore believes that there is still room for significant market growth and calls for addressing the shortcomings in performance rights legislation worldwide.
6 Synchronisation revenue, such as the revenue gained from the use of music in films and advertising, grew by 2.8% compared to the 7% increase in 2015. It kept the same 2% market share as in the previous year.
7 Asia and Australasia saw growth by 5.1% with the region seeing a 45.6% rise in streaming income (offsetting the global decline in digital downloads) which made up an overall 18.7% rise in digital revenue. Like the global trend, physical formats declined (-1.8%). Japan remained the largest market in the region (+1.1% growth: +12.6% digital, -1.3% physical). The Chinese market continues to grow (+20.3%).
8 European markets grew by 4% in 2016. The region is heavily diverse – for example, streaming comprises 69% of the market in Sweden (+9.9%) but in Germany physical sales still represent 52% of the total market (streaming revenue did also increase by 73%).
9 Latin America continues to be the fastest growing region (+12%). Digital revenue grew by 31.2% thanks once again to the surge in streaming – Mexico saw growth of 23.6% however Brazil declined by 2.8%.
10 The North American market grew by 7.9% this year largely because of streaming growth (+84.1%). The US remains the largest market in the world, seeing an 80.5% rise in streaming income and general growth of 7.6%.
11 By the end of 2016 IFPI estimates that the number of paid accounts for streaming services reached 97 million worldwide with a total of 112 million users – marking a fundamental transition in the leading format of the music business.
12 Streaming increases have been driven by a growth in competition as Spotify’s competitors make huge progress.
The ‘Value Gap’
As an emerging artist you have to understand what the industry has labelled as the ‘value gap’ and how this directly impacts you and your music. Before 2015 the music industry was in period of decline that stretched back to over a decade. Now thanks to the increase of streaming revenues the industry is witnessing growth for consecutive years. However, in order to maintain sustainable growth for the entire music sector there is a need to fix a fundamental flaw known as the value gap. This value gap refers to the problem that those who are creating and investing in music are not receiving fair revenues. This ‘mismatch’ has now become a legislative priority as the music industry aims to create a level playing field for the digital market to secure the future of the industry.
The value gap was created by what the IFPI labels as the ‘inconsistent applications of online liability laws’. In simple terms, there are certain services out there which claim they are not liable for the music they make available to the public. For example, the video sharing platform YouTube, which has developed on-demand music platforms, uses these laws as a shield to avoid licensing music on fair terms (these platforms are known in the music industry as ‘safe harbours’). This creates an issue because as the music industry transitions from downloads and physical formats to streaming services there needs to be proper and fair remuneration for those who invest heavily in creating music. The value gap creates unfair competition between services like YouTube and Spotify. This becomes all the more unsustainable when you consider that video sharing platforms or user upload video streaming services, like YouTube, comprise the world’s largest on-demand music audience.
In 2016, a group of over 1000 leading artists including Sir Paul McCartney and Sting wrote to the European Commission pressing for change to address the value gap, whilst in America, Taylor Swift and Katy Perry have been two of the leading voices in petitioning Congress. One of the leading pieces of legislation on the matter that significantly impacts the value gap is the Digital Millennium Copyright Act which is deemed to be outdated. It has allowed major technology companies to grow and generate huge profits by creating ease of use for consumers to carry almost every recorded song on their smartphone.
The European Commission has since proposed draft legislation to try and rectify the value gap by clarifying that if services engage with uploaded content then they are liable for that content and need to be licensed accordingly.
Summary of Key Findings
1 Global revenue growth: +5.9%
2 Digital share of global revenues: 50%
3 Digital revenue growth: +17.7%
4 Growth in streaming revenues +60.4%
5 Physical revenues: -7.6%
6 Download revenue: -20.5%
7 Global Recorded Music Revenues Increase by 5.9%
8 112 million users of paid streaming subscriptions driving streaming revenue growth of 60.4%
9 Digital income now accounts for 50% of global revenues
10 The ‘Value Gap’ remains the biggest challenge to sustainable growth
Article Source: International Federation of the Phonographic Industry (2017) IFPI Global Music Report 2017: State of the Industry Report Available at: http://www.ifpi.org/downloads/GMR2017.pdf [Accessed 13th July 2017]