German Digital Music Market Up Nearly 20% In First Half of 2011
German Digital Music Market Up Nearly 20% In First Half of 2011

Streaming services are experiencing the greatest sales growth in Germany's current digital market while the overall digital market expanded by 19.3 percent from the beginning of January to the end of June 2011, according to the German Federal Music Industry Association (BVMI) in Berlin. Digital business now accounts for 17.2 percent of total music sales with 2011's revenues of 111.8 million Euro ($152.8 million) up from 2010 revenue of 93.7 million Euro ($128.1 million).

Total sales of physical and digital products came to around EUR 650 million ($888.6 million) in the first half of 2011 (2010: 660 million Euro [$902 billion]), down 1.5 percent on the year-ago period.

In the first half of 2011, sales from online subscription services such as Napster, Simfy Premium and MusicLoad Nonstop rose by 21.4 percent ( 681,400 Euro [$924,932] in revenue), with advertising-financed streaming services such as MyVideo and Clipfish generating 64.8 percent (552,900 Euro [$750,506] in revenue) over the same period last year. Streaming services, including those accompanying mobile subscription models account for 11.5 percent of the digital market (revenue 12,850 million Euro [$17.4 billion] in the first half 2011).

However, à la carte downloads have the greatest share of the digital market with an 83.8 percent share and revenue of 93,437 million Euro ($127.7 billion). Sales of albums and single track downloads increased by 26.9 percent compared with the same period last year.

Despite a five percent decline over the previous year, physical product sales in the first half of 2011 still accounted for 82.8 percent of total music sales. Sales of CDs declined slightly (down 4.2 percent), while sales of vinyl increased by 17.4 percent. But with only one percent of the total market, vinyl still remains a niche product.

Commenting on the sales figures for the first half of the year in Germany, Frank Briegmann, president of Universal Music Germany, Austria, Switzerland and Deutsche Grammophon and German Federal Music Industry Association member said to Billboard: "The contraction of only 1.5 percent in the first half of the year is a positive signal for the German market. However, we will not know what this figure really means until the end of the year. We will continue working intensively with our physical and digital retail partners on models to stimulate buyers and are optimistic for the coming year."

Dr. Florian Drücke, managing director of BVMI in Berlin, to Billboard: "Subscription models and ad-supported streams are increasingly in demand by users. A glance at the situation in Scandinavia in particular shows that it is right to continuing stepping up these services." Drücke stressed that with almost 70 legal online music services, Germany had already made considerable progress by international standards and was offering services to cater to differing user preferences.

In Germany the number of illegally downloaded albums has increased drastically (up 35 percent to an estimated 62 million) while the number of illegal single-downloads is still decreasing (down 28 percent to 185 million), according to a new study about digital content use by DCN-Studie in Berlin, commissioned by the Association of the German Phonographic Industry (BVMI) in Berlin, the Association of the German Book Publishers (Börsenvereins des Deutschen Buchhandels) in Frankfurt and the Association Against Copyright Violation (GVU) in Hamburg. Last year, 185 million (44.7 percent) of the 414 million single-track downloads were illegal. Downloaded albums reached 62 million with a share of 74 percent (46 million) illegal.

The study was conducted by tby GfK Media*Scope among 10,000 people representing 63.7 million Germans over the age of 10.

Another trend continued in 2010: 9.3 million people (15 percent of the population) downloaded music from internet radios and music videos, which is 50 percent more than last year (2009: 6.3 million people). While the 20 to 39-year-olds take music from internet radios and podcasts, the 10 to 29-year-old group accounts for 24 percent of users who prefer ripping streams from music videos on platforms such as YouTube, Myspace, etc.

73 percent of the people that are using illegal sources for music downloads are not spending any money for music. The remaining 27 percent of this group are spending about an average of 18 euros ($25) for physical product.