5 Takeaways From the IFPI's Country-by-Country Report on the Global Record Business

New Delhi
Daniel Berehulak/Getty Images

New Delhi, India.

Emerging markets are diverging. The Big Five didn’t pull their weight. And watch Mexico.

Dig into the IFPI’s Global Music Report and you’re likely to find reasons for optimism and concern about the global music business. Some markets are thriving and helping guide the global business into slight year-to-year growth. Other markets seem to be in jeopardy of falling behind.  

The big picture looks good. Global trade revenue (not retail spending) grew slightly, to $15 billion, from $14.5 billion in 2014. Look too far into the rear view mirror and these figures might be depressing -- even 10 years ago global revenue stood at $20 billion. But $15 billion is the highest mark since 2009 and possibly the first year of growth after bottoming out last year. At this point, growth is growth.
Aside the big picture and obvious trends, there are countless takeaways in the 128-page report. Here are five that stuck out to Billboard.
1. The biggest county in the world is showing the green shoots of legitimate recorded music markets. China’s market grew 63.8 percent to $169.7 million, enough to make it the 14th largest recorded music market in the world. Its performance, and importance to the global business, was good enough to receive a case study in the IFPI’s report. “Of all emerging markets” with a growing legitimate market, says the report, “China tops the list for record companies.”
The biggest markets don’t always have the highest per-person spending. China’s 13 cents per-capita spending is on par with the Philippines and current economic basket case Venezuela. But development in world’s largest country is working out just as the industry had hoped. Partnerships with large Internet operators and government efforts have helped reduce piracy and encourage the legal market to sprout. This is a digital-led growth, with digital sales account for 89 percent of total revenue.

2. India, another emerging market, is going the other direction. Revenue in the world’s second-largest country -- its population is still nearly four times that of the United States -- shrank 7 percent to $92.7 million, or 7 cents per capita. The culprit was a decline in physical revenue to $21.2 million from $29.5 million. Other revenue streams had middling results. Performance rights revenue fell $1.2 million. Digital grew just slightly, to $57.5 million from $55.1 million, as a fall in ringtone sales overshadowed streaming gains. The IFPI notes the “enormous potential” of developing countries like India. With its streaming sector in a good position with market-focused services like Saavn and Gaana, India appears to be in a good place.
3. The Big Five largest markets didn’t lead global growth. The combined revenues of the U.S., Japan, the U.K., Germany and France accounted for 73 percent of global revenue but just 21 percent of growth in global revenue. Germany and France slipped 0.3 percent and 2.2 percent. The U.K. eked out a 0.6-percent gain. Japan and the U.S. grew 3 percent and 1 percent, respectively.
4. Every market has its own story. Across 62 countries in the IFPI’s report, there’s no significant correlation between the individual countries’ per-capita trade revenue and digital’s share of its total revenue. On one side there’s Sweden with a 68-percent digital share and $18.60 per-capita revenue. At the other end there’s Switzerland, siting at 37 percent and $14.10, and Japan, at 18 percent and $19.28. There are indeed many developed markets, such as the United States and Norway, with both high digital shares and high per-capita trade revenue. But many countries have high digital shares, mainly because of poorly developed legal markets for physical product, but very low per-capita trade revenue. Common threads are hard to find across markets.
5. Don’t sleep on Mexico. Outside of select industry circles, people may not know how well this market is doing and how quickly it’s taken to streaming services. Although revenue from ad-supported services fell 19 percent, subscription service revenue grew 240 percent to $31 million. That improvement led to strong digital growth of 30 percent even though download revenue was flat. Per-capita trade revenue is still low at about $1.0, but Mexico already looks like a success story.