Following a 0.1% increase last year, the valuable German music market took a rather substantial downturn in 2012. Revenues from music sales decreased 3.2 percent last year, to 1.44 billion euro, from 2011's 1.67 billion euro valuation. The reasons? Another decline in brick-and-mortar business (down 7.7%) and a surprisingly weak fourth quarter.
Prof. Dieter Gorny, chairman of the Bundesverband Musikindustrie (the Association of the German Music Industry, BVMI), said on Tuesday during a press conference in Berlin: ”Unfortunately, the growth in the new digital business segments could not catch up to the losses of the physical record market. With a revenue share of nearly 80%, the physical market still is the cornerstone of the German music industry. CD sales alone were [worth] about a billion euro in 2012. Despite a decrease of 7.2%, the CD, with a share of 71 percent of the total revenues, is the unchallenged, number one media for music.”
Income from digital -- 294 million euro -- reached an overall share of 20.5% last year, a new high. Downloads are increasingly playing a central role in German music consumption: 8.4 million people in Germany purchased and downloaded music in 2012, resulting in an increase of 24.4%, to 250 million euro. 55% of those purchases were albums. “In the digital age, [albums] remain the central currency in the music-business”, said Gorny. Altogether, 112 million albums were sold in 2012. One in six were digital. There are 68 (legal) online music services available in Germany. 19 of them are subscription based streaming services. Revenues for streaming increased 40%, to 36 million euro. Streaming had a 12.1% share of digital revenues and 5% percent of total music revenue.
Frank Briegmann, president Central Europe, Universal Music International and Deutsche Grammophon, told Billboard: “It will still take some time for a genuine economic turnaround to emerge in the market as a whole. Even so, an important turnaround has occurred in people's heads; we are in a completely new climate, music is back in. There is hardly a technology provider or platform operator which can afford not to have an attractive range of music. And the fact that the two global players, Apple and Microsoft, are placing store on music content clearly demonstrates the potential in this market. Content is king again.”