French Music Market Continues Decline

The French wholesale music market dropped 4.4% to 589.7 million in 2012, according to initial figures released by record label trade body SNEP during last week's MIDEM conference in Cannes, France.

Physical sales dropped 11.9% to 363.7 million, while digital sales grew 13% to 125 million. Digital sales accounted for 25% of the recording market, compared with 21% in 2011. Internet downloads represented 50% of digital revenue (compared with 51% in 2011), subscription-based services 28% (23% in 2011) and ad-supported streaming services 14% (13% in 2011). Neighboring rights, which are now included in SNEP's market figures, climbed 7.5% to *101 million.

The number of albums downloaded jumped 18% to 7.6 million. According to SNEP, France is the world's second-largest market in terms of streaming penetration, far behind Sweden. France is the home of streaming champion Deezer, while Spotify was launched in Sweden.

According to a study unveiled by SNEP, 93% of 15-24 year olds access music online, through audio (25%), video (57%), streaming or downloads (11%).

"The challenge is now to transform free legal services into paid legal services", said SNEP director general David El Sayegh. Echoing French authoring rights collecting society SACEM, SNEP also denounced a "value transfer" between the creative industries and the digital industry and demanded compensation for it, targeting digital giants such as search engines, device manufacturers or Internet site hosts.

SNEP also called for the French government to maintain HADOPI, the French graduated-response law designed to combat Internet piracy. The fate of HADOPI is currently in the hands of a French Ministry of Culture commission on digital content and cultural policy, led by Pierre Lescure. The commission is expected to end in March.

Interestingly, the conference took place the day after the French Ministry of Culture, in a press conference during MIDEM, dismissed any short-term decisions to support the music market, before two government-backed missions would give their conclusions.

"The time of politics is not the time of reality," commented Pascal Nègre, CEO of Universal France, recently appointed to global head of new business for UMG worldwide.

Nègre also commented on the current dustup between YouTube and SACEM regarding contract renewal. The disagreement led YouTube to temporarily stop monetizing the SACEM repertoire in January, depriving French recording companies of revenue from their videos. If the situation continues, Nègre said French record companies would withdrew their catalogs from YouTube.

This was the last conference of David El Sayegh in his role at SNEP; in May, El Sayegh will be joining Sacem as deputy director general.