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Seven Takeaways from IFPI's Study of the Global Music Market Last Year
The headline figure from IFPI’s 2015 “Recording Industry In Numbers” report would be the previously reported 0.4 percent fall in global music sales to $14.97 billion. Digging into the 132-page document, however, reveals a wealth of interesting analysis -- case studies on Germany, South Korea and Brazil, the rise of China, and much more. Here are seven takeaways from this year’s report, published today (April 20).
LITTLE CHANGE AT THE TOP
Despite varying results for many of the world’s biggest music territories, the top 10 market rankings remain much the same as last year, with the U.S. consolidating its position as the largest music market ($4.9 billion in trade value), comfortably ahead of its nearest rival, Japan ($2.6 billion). Germany remains third ($1.4 billion), followed by the U.K. ($1.3 billion), France ($843 million), Australia ($376 million), Canada ($342 million) and South Korea ($266 million), which overtook Brazil ($247 million) in 2014.
THE U.S. MARKET GROWS... KIND OF
The U.S. recorded music market grew by 2.1 percent in 2014, seeing a 6 percent increase in digital revenues ($3.46 billion) which helped to combat a 7.2 percent fall in physical sales ($1.3 billion). Those digital revenues now account for nearly three-quarters of the country's total $4.9 billion in revenue. Subscription streaming was up 33.5 percent, hitting $490 million -- almost double that of advertising-supported streams, its conjoined twin (for now). Together, subscription and advertising-supported streaming services accounted for 21 percent of the country’s digital market. Downloads made up 55 percent of that digital market. Those figures do, however, come with an important proviso: this year’s report is the first to count revenues collected by SoundExchange ($773 million in 2014, according to IFPI) as digital sales rather than performance rights income.
PHYSICAL ISN'T DEAD...
Digital and subscription services may well be the future of the industry, but this year's report illustrates the continued resilience of physical formats. In the U.S., physical revenues fell by approximately $100 million year-on-year, but still made up 26 percent of the total market ($1.3 billion). In Japan and Germany -- the world’s second- and third-biggest markets, known for their strong physical markets -- physical sales were 78 percent ($2 billion) and 70 percent ($984 million) of all recorded music sales, respectively. The format’s popularity is similarly robust in Poland (71 percent of the market), Austria (65 percent), France (57 percent) and South Africa (62 percent). Argentina experienced a remarkable 17 percent growth in physical sales. Global vinyl sales were also up by a massive 55 percent on the previous year -- equaling 2 percent of total world revenues.
... AND NEITHER ARE DOWNLOADS
Global download sales declined 8 percent in 2014, with almost all established markets experiencing a sharp drop in revenues from both single and album downloads. Nevertheless, the format still accounts for the bulk of global digital revenues (52 percent), and in some emerging economies revenues actually grew. In Japan, album downloads grew to $88 million, up from $73 million. In South Africa, download sales rose by a massive 73 percent, while the Netherlands saw album download sales grow from $7.6 million in 2013 to $10.4 million. In Spain, single track and album downloads both saw growth. Download sales also experienced minor growth in Poland, Slovakia, Turkey and China, among others, which collectively contributed to a slower rate of decline than perhaps anticipated.
LATIN AMERICA IS HEATING UP
For the fourth consecutive year, Latin America is the fastest-growing region for music sales, with revenues rising by 7.3 percent -- 4 percent of the total world market. Overall digital revenues in the region increased by 32 percent, with several individual markets registering exceptional growth rates in digital, including Argentina (+67.7 percent), Colombia (+94.9 percent), Paraguay (+69.1 percent) Peru (+96.5 percent) and Venezuela ( a remarkable +272.8 percent). Brazil, the region’s leading market, grew by 2 percent, to total $247 million.
CHINA BEGINS TO DELIVER ON ITS PROMISE
The world’s most populated country is way down at No. 19 in the world rankings, but signs of growth are starting to show. Overall sales grew 5.6 percent, to $105 million in 2014. Digital revenues were up, to $91 million, over 2013's $82 million. Significantly, 2014 was the third consecutive year of growth in the market.
PERFORMANCE RIGHTS REVENUES ON TRACK TO CROSS $1 BILLION
Improved efficiencies in collection and increased demand for music from third party businesses such as radio stations, bars and restaurants helped push performance rights income to $948 million in 2014. The sector now accounts for 6 percent of total industry revenues, with Latin America (+12.6 percent), Europe (+7.5 percent) and Asia (+0.7 percent) all reporting a rise in income.