Although it has a cheery, optimistic disposition, there's a lot of bad news in the IFPI's new, meticulous annual report. Countries with stable revenues have faltered, for example, and digital growth has seriously stalled.
But it's not all bad. Performance royalties are growing even though there's much room for improvement. And even though physical sales are falling and digital growth is rather disappointing, there are many new legal stores and services upon which to build for the future.
If you get a copy, the IFPI's 98-page Recording Industry in Numbers 2011 report, like its predecessors, is worth reading and worth keeping on the book shelf. It has a wealth of data and makes for a great resource.
Here are some of the more notable facts and trends in the report:
-- Markets that once looked relatively stable are now faltering. The U.K. dropped from #3 to the #4 market behind the U.S., Japan and now Germany. Its market sank 11% after rising 1.9% in 2009. France dropped 5.1% after turning in a relatively solid 2.4% decline the previous year. Norway, which has legal digital services such as Spotify and WiMP, dropped 7.5% last year after falling just 0.7% in 2009. Sweden, where Spotify and anti-piracy laws were supposed to be growing the market, was down 7.1% after rising 11.9% in 2009. And Australia was down 12.4% after being up 4.3% last year.
-- At this point, having relatively strong CD sales means you have something to lose. The "resilience" of Germany's physical sector is being hailed this year, for example, but the country will not escape the larger trend away from more valuable physical sales and toward less valuable digital sales. Hold on tight, Germany. The fall will come eventually.
-- Digital growth simply isn't living up to expectations, folks. Digital revenue was up just 5.3% in 2010 after rising 11.7% in 2009 and 37.2% in 2008. So even though digital trade revenues have grown 116% from 2006, growth has slowed significantly.
-- Performance rights increased only $38 million, or 4.6%, to $851 million. But this is a handicapped segment of the industry that has more potential. Once better reporting and collecting infrastructure are in place, expect to see this segment perform better.
-- Physical revenues dropped 14.2% after dropping 11% in 2009, 13.8% in 2008 and 13.4% in 2007. Since 2006, physical revenues are down 43%. But the annual loss is getting smaller: $1.7 billion in 2010 compared to $2.4 billion in 2007. So the CD has not fallen off a cliff, it's had a fairly steady decline.
-- South Korea, which has tough anti-piracy laws, had 11.7% revenue growth in 2010 after 10.4% growth the year before. The country is one of the few with a physical share of revenue less than 50% -- in South Korea physical is 45% and digital is 55% of revenue. The country was more prominently featured in the 2010 report than in the latest one. But for people interested in countries with anti-piracy laws, this one is worth following.