'Should Be Growing Much Faster': IFPI Releases Global Report Alongside CEOs in London
Digital revenues surpassed physical globally for the first time in 2015.
Global digital revenues climbed above physical for the first time in 2015, helping overturn nearly two decades of almost consecutive falling music sales, according to the International Federation of the Phonographic Industry's (IFPI) annual "Global Music Report” -- previously known as the “Digital Music Report.”
Trade revenue generated by the global recorded music industry in 2015 was up 3.2 percent to $15.0 billion, with digital sales accounting for 45 percent of total revenues, compared to 39 percent for physical.
“2015 has been the inflection point,” stated Edgar Berger, chairman and CEO, international, Sony Music Entertainment, at the report’s launch, held at London’s Gibson Guitars Showroom. “The music industry has successfully emerged from digital disruption and the future is bright. We are growing and we are poised to reach new heights,” continued Berger.
Also present at the launch was Stu Bergen, CEO, international and global commercial services, Warner Music Group; Michael Nash, evp of digital strategy, Universal Music Group and IFPI CEO Frances Moore, who all welcomed the sales growth while taking the opportunity to call for tighter regulations around safe harbor legislation.
“We really are in the vanguards of the digital world, but we have got to the stage now where we need the help of policy makers and governments,” said Moore, citing the “gross mismatch” between music consumption and “the revenues that are being returned to artists and record companies.”
“The value gap can really only be solved by legislation,” she went on to say, calling the issue the music industry’s “biggest single priority for 2016.”
Those words were echoed by WMG’s Stu Bergen, who called for a “fair legal environment” to help the record business sustain the investment in artists and maintain its upwards mobility.
“This growth means we can invest more in local artists as well as develop our international stars. The stronger we are locally, the more powerful we are on behalf of our global artists. The more global stars we break, the more momentum there is for domestic signings. It’s a virtuous circle,” said Bergen, identifying the strong performance of markets such as China, Argentina and Sweden as key factors in the strong numbers.
According to the report’s regional breakdown, music sales in North America climbed by 1.4 percent. In Europe, they rose 2.3 percent. In Latin America, growth stood at 11.8 percent, while the market is Asia increased by 5.7 percent (monetary values were not provided).
In terms of individual countries, the U.S. remains the world’s biggest music market, growing by 1.0 percent in 2015. Japan is the second biggest, reversing last year’s 2.6 percent to fall to record 3.0 percent growth. In Europe, the United Kingdom grew by 0.6 percent to overtake Germany (down 0.3 percent) to become the third biggest world music market. The top 20 market with the biggest growth was China, where revenues climbed by over 60 percent.
In the U.S., streaming became the largest source of revenue for the first time, with digital channels now accounting for 66 percent of the market in 2015.
“There is no question that streaming is at the heart of the future of our business,” surmised Berger. “The potential for growth is huge. But while the [increased revenues are] positive it is a fact that we should be growing much faster,” he continued, adding that at the current rate of growth it will take the industry a further ten years to return to the level that it was in the late '90s, pre-digital disruption.
“The music industry is performing below its potential," warned Berger. "Music consumption is soaring, but the revenues returning to artists and rights holders are not. The reason is a distortion of the market. It’s not only fair to take action. It’s also desperately needed to secure sustainable growth.”