Germany Sees 'Real Traction' in Streaming, But Music Revenues Were Flat in 2017 as CDs & Downloads Decline
Sales figures for Germany’s music industry in 2017 have come in at nearly the same level as in 2016.
Germany’s Federal Music Industry Association (BVMI) announced today in Berlin that revenue from the sale of CDs, vinyl, DVDs and downloads, as well as from streaming services, totaled €1.588 billion ($1.94 billion) in 2017, which marks only a slight decline of 0.3 percent compared to the previous year. The digital market grew by 22.7 percent, driven once again by strong increases in audio streaming (up 42.8 percent). Although sales of physical products fell by 14.3 percent in 2017, they still account for 53.4 percent of the market. So the physical business still tops its digital counterpart, which had a share of 46.6 percent in 2017.
In a statement accompanying the figures, BVMI chairman Dr. Florian Drücke declared that the ongoing digitization of Germany’s music market is a positive development: “There continues to be a strong pull towards music streaming, which shows that the industry’s diversification strategy is spot on," he said. "However, the greater the share of the digital business gets, the more important it is to make sure that creative content can be refinanced in the digital sphere. This means that all forms of online music consumption must be linked to licenses negotiated on the market."
Drücke continued, "Studies carried out by our parent organisation, IFPI, show that almost one-half of music streamed in Germany is done on video streaming services such as YouTube, and yet these services currently contribute only 1.9 percent to revenues -- contrast that with the 34.6 percent contributed by premium and ad-financed offers from audio streaming services. This imbalance is simply unacceptable; we call it 'value gap.' So, it is absolutely necessary and to be much welcomed that the government coalition agreement between the CDU/CSU and SPD explicitly supports efforts to get online platforms to participate in the refinancing of content and intends to create a level playing field in the online sphere."
CDs remained the strongest turnover segment (45.4 percent market share), followed by audio streaming (34.6 percent market share) and downloads, which lost 19.3 percent revenue and accounted for only 9.9 percent of revenues. Vinyl continued to grow (+5.1 percent) -- albeit not as strongly as in previous years -- thus accounting for a 4.6 percent share of sales throughout the year.
Frank Briegmann, President & CEO Universal Music Central Europe and Deutsche Grammophon said that "as the digital transformation has become more dynamic and bearing in mind the increase in turnover from streaming, our strategy remains unchanged: to concentrate on the expansion of our digital distribution channels while at the same time developing new physical products, in order to reach each and every music fan with the perfect format."
Warner Music Central Europe chief Bernd Dopp also hailed the results as proof that streaming is getting "real traction" in the CD-loving market. "Dig beneath the figures and you’ll see a music revolution is taking place in Germany," he said. "Warner Music artists such as Ed Sheeran, Bausa, Rita Ora and Capo are attracting fans to streaming services and have taken their sound to the mainstream. At the same time, we have amazing artists such as Udo Lindenberg who still sell a lot physical albums. It’s by working with a broad roster of artists and appealing to a wide range of fans that Warner Music was able to increase its market share significantly for the last three years including again in 2017."