Countries with greater adoption of subscription services had lower rates of growth in digital download sales in 2012. This doesn't necessarily indicate subscription services cannibalized digital sales, but it does show that different countries have different types of digital marketplaces where formats are in different stages of maturity.
Digital track sales increased by an average of 21% in the nine markets where subscription services account for greater than 10% of digital revenues, according to the IFPI’s Recording Industry By Numbers 2013. However, track sales experienced more growth in markets where subscription services are less popular. The 12 markets where subscription services account for less than 10% of digital revenues saw digital track sales rise by 28% last year.
Track sales grew in a few countries where subscription services dominate digital revenues. Track sales rose 72% in Sweden (subscriptions account for 91% of digital revenue) and 21% in Finland (70%). However, tracks dipped 1% in Norway (60%).
In all, the IFPI’s report listed the track sales of 21 markets. The report did not break out subscription revenue for all markets. I assumed subscription revenue share was under 10% of the market’s “other” category of digital revenue was near or below 10%.
The rise of subscription services has come with increased concerns that these services will harm countries' download sales that make up the majority of most countries' digital revenue. But countries have had all sorts of different digital sales growth rates. The digital sales of Belgium and Ireland were mixed last year. Italy posted strong sales. Australia, which got Spotify just last year, had very strong download sales.
A greater disparity existed in digital album sales growth rates. Digital album sales grew 27% in 10 markets were subscription services account for less than 10% of revenue -- that's about equal to their average growth rate for track sales. But in six markets where subscriptions account for more than 10% of digital revenue, digital album sales grew on average of 7%. (The report did not have digital album sales data for all 21 markets used in the track sales calculations.)
Sweden and Finland had no growth in digital album sales. Sales of digital albums were also flat in Denmark, where subscriptions account for 29% of digital revenues. But there isn't a rule that countries with high subscription adoption are doomed to have low rate of growth for digital albums. Digital albums grew a healthy 17% in France, where subscriptions account for 27% of digital revenue. Tracks grew 35% in Spain, where subscriptions account for 24% of digital revenue.
But Sweden and Finland have seen their digital sales grow well over the last four years. Sweden's track sales and digital album sales have increased 42% and 25%, respectively. Finland's digital sales are up 77% and 50%. Those are higher growth rates than seen in the U.S. (15% for tracks, 54% for digital albums) even though Spotify didn't launch in the country until mid-2011.
Overall, the data shows a lack of themes that ties together all the data. Subscriptions and downloads have grown side-by-side in some countries. In other places download growth is low while subscription adoption is relatively high. Many people believe subscriptions and downloads will be able to live together well into the future. Although the data lacks clear themes, it does suggest markets can support more than one business model.