Business Matters: How to Interpret Norway's 2012 Digital Gains

Led by gains in subscription revenue, Norway posted a 7% increase in total music revenue in 2012, according to IFPI Norway data. Whether or not other countries can expect similar gains will be up for debate.
 
Norway's streaming revenue grew 226% to 189.2 million kroner ($34 million), while downloads grew 6% to 88.7 million kroner ($15.9 million). Album sales, which comprised nearly all of physical revenue, declined 20% to 200.6 million kroner ($36 million). In total, revenue grew 37.1 million kroner to 545.3 million kroner ($98 million).
 
There are a couple possible ways to read these numbers:
 
1. Norway shows that other markets in Europe, and elsewhere, can use streaming services to offset losses in physical sales and grow both streaming and download markets in tandem.
 
2. Norway is a somewhat unique case that does not necessarily represent what will happen in other, larger markets in the near term. Its small population (4.95 million) and strong metrics like the number of broadband subscriptions per 100 inhabitants (35 in 2010 vs. 27.6 in the United States) make it a good country for subscription services.
 
Norway's 2012 numbers are probably a little bit of 1 and 2. Like neighboring Sweden, Norway can sometimes look like more of a best-case scenario than a typical scenario. Other markets are moving in the right direction but lack Norway and Sweden's high rate of adoption of subscription services.
 
But it's not that other countries cannot turn their markets around. The U.S. market, so big and expensive for launching a new service that Deezer has steered cleared of it, has strong subscription and solid download growth to help offset its loss of CD sales. And the Spanish market, for years plagued by piracy and poor sales, saw its recorded music market grow by 2.2% in the first half of 2012 on the back of a 115% gain in subscription revenue, according to Promuscae.
 
The main factors here are the size of the CD loss and the size of the digital gain. Some countries haven't started to suffer big CD losses yet and aren't far along in their digital transitions. Norway is a few steps ahead of them.

Questions? Comments? Let us know: @billboardbiz

Print

Tagged