Just one year ago we published  our IFPI Digital Music Report under the headline “optimism justified, complacency not accepted.” One year on, the optimism does not seem to have been misplaced. The music industry has achieved its best year-on-year performance since 1998. The direction of travel towards growth is clear. For the global music business, it is hard to remember a year that has begun with such a palpable buzz in the air.
There is plenty of good news for our business going into 2013. First, our expansion has gone truly global. The new digital services developed and licensed over recent years are moving rapidly into new markets across the world. Just two years ago, the largest international digital services, such as iTunes, Spotify and Deezer, were present in just over 20 countries. Today, they are in more than 100. These include fast-growing emerging markets, such as Brazil, India and Russia with the potential to drive future growth.
Record companies’ strategies of proactively licensing across different revenue channels are paying dividends, too. Digital revenue streams – downloads, subscription, advertising-supported, video – are growing. In some markets, such as India, Norway, Sweden and the US, digital has outstripped physical revenues, and more will follow. This has helped nearly half of our top 20 markets achieve growth in 2012.
There is good news for music fans too. As the Ipsos MediaCT consumer research cited in this report illustrates, consumers like the offerings our industry is providing. Today's legitimate services are a compelling alternative to piracy – not just for the industry, but for the consumer too.
These are hard-won successes for an industry that has innovated, battled and transformed itself over a decade. They show the music industry has adapted to the Internet world, learned how to meet the needs of consumers and monetized the digital marketplace.
There is another key theme to this report. Music has not only adapted to the Internet -- it is at the very heart of its development. Music is driving technology, helping sell devices, fuelling economic growth with a ripple effect far beyond the limits of the recorded music market. It is helping drive online search and social networking, as well as demand for fast broadband connections. Music is creating economic value at virtually every level of life. It is an engine of the digital ecosystem.
Despite the optimism, there remain enormous challenges. First, our markets remain rigged by illegal free music. We can make a huge difference to this situation if we have more cooperation from advertisers, search engines and other intermediaries. These companies are not only helping direct consumer traffic and advertising revenues to illegal sites -- they are themselves financially benefitting from piracy.
In 2012, we saw an encouraging commitment on the part of search engines to prioritize legal music sites; however, little in reality has changed to date, and in 2013 we look for tangible results in this area.
We will also look to make 2013 the turning point in our cooperation with the advertising sector. Major brands must no longer consider it acceptable to help fund illegal music sites that tarnish their own reputation, as well as helping rig the music market.
Second, a crucial debate is looming in many centers of governments around the issue of copyright reform. Copyright rules have provided the foundation for our industry to reinvent itself in the digital world. Any suggestion of change should be based on rigorous evidence that there is in fact a problem. A weakening of copyright rules would set back the music industry at the very moment when it is on the path to recovery. The real priority, in our view, should be to make sure existing copyright rules are properly enforced.
This year’s Digital Music Report reflects the growing optimism felt across the music business internationally. We are on the path to recovery and driving the digital economy. These are hard-won achievements -- we will be pushing to build on them in 2013.