Halfway Through 2015, Recorded Music Revenues Are Looking Good

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Although limited, midyear data for a handful of countries shows positive trend.

Halfway through 2015, some countries' recorded music markets are receiving positive report cards. Mid-year revenue numbers from a handful of countries show streaming revenue drove growth in recorded music revenues, gains possible because declines in CD and download revenues were modest and manageable. Countries yet to release revenue data may not have had the same success.

Germany is the largest market thus far to report its first-half revenue numbers. (Nielsen has reported sales and streaming numbers for the United States, but the RIAA's mid-year report that includes revenues has not yet been released. More on that below.) The German market rose 4.4 percent to roughly $742 million in the first half of 2015.

The improvement was enabled by a moderate 3.3-percent decline in CD sales, an 86-percent gain in streaming revenues and a digital gain of roughly $50 million. Physical sales accounted for 67.9 percent of revenue in Germany. Digital revenue was 32.1 percent of total revenue. Streaming accounted for 39.9 percent of digital revenue and 12.8 percent of total revenue.

The importance of the strong German numbers shouldn't be understated in a global record business. First-half revenue growth of roughly $31 million is far more than the combined gains of three other countries in this article: Sweden, Norway and Italy ($18 million). While Sweden and Norway have been transformed by the success of streaming services, their amazing gains are relatively small on a global scale. Italy is larger than Scandinavian markets, but has less than 10 percent of Germany's revenues.

The three smaller markets to have reported mid-year numbers all posted gains. Italy impressed with 22.3-percent growth in the first half of the year, the largest contribution coming from a 21.5-percent gain in physical sales. Streaming revenue growth of 37.3 percent helped Italy's digital revenue grow 23.3 percent. Digital accounted for 43 percent of Italy's total revenue of $70.9 million.

Norway's revenues grew 7 percent to $37.6 million. Streaming revenue grew 12.9 percent and accounted for 92.2 percent of digital revenue and 81.3 percent of total revenue. Streaming gains were able to offset a 30.8-percent decline in download revenue

Sweden experienced growth in spite of a 12.5 percent drop in physical sales. Revenue grew 4.5 percent to $61.7 million on the strength of a 7.4-percent gain in streaming revenue. Streaming accounted for 95.4 percent of digital revenue and 81.7 percent of total revenue.

Available mid-year numbers for the United States and Canada cover sales and streaming activity -- not revenue -- from Nielsen. But what numbers are available show these two countries fared well in the first half of the year.

In the United States, album sales were down just 4 percent and digital tracks sales declined 10.4 percent. (Again, these numbers represent unit sales, not revenue.) Overall album consumption (OAC), Nielsen's comprehensive metric that includes streaming activity and converts everything into album units, rose 14.2 percent year over year.

It will be interesting to see where U.S. mid-year revenues come in. Revenues are unlikely to match the 14.2-percent increase in OAC but could be in positive territory. Perhaps 2014 can be a guide here. OAC doesn't measure revenue but should be able to indicate which way revenue is shifting. Nielsen put the decline in 2014 OAC at 2 percent while the RIAA had a 0.4.7-percent decline in the retail value of recorded music revenues (excluding sync royalties). 

In Canada, Nielsen had a 1.1-percent decline in OAC. Although CD sales dropped 8.6 percent and digital track sales fell 3 percent, digital album sales rose 9.6 percent.