Audio streaming now represents nearly half of revenues and has replaced CDs as the largest sales segment on the German record market, reported Florian Drücke, CEO of the German Music Industry Association (BVMI) today in Berlin. Overall, the German music industry had a turnover of €727 million in the first half of 2018, marking a two percent drop in revenue compared to the same period in the previous year (first half of 2017: €742 million).
According to the findings, during the first six months of 2018, physical format sales and digital format sales have swapped places in Germany compared to the first half of 2017. Today, physical sound recordings (CDs, DVDs, vinyl LPs) come in at 41.1 percent, whereas digital sales are now at 58.9 percent. Sales measured at retail prices include value-added tax (VAT).
“Germany’s market for recorded music has crossed a major milestone,” said Drücke, who added that audio streaming jumped 35.2 percent during the first half of the year and now has a market share of 47.8 percent.
From the late 1980s on, CDs enjoyed an almost 30-year reign as the dominating format of music consumption, Drücke said. Now, the little silver discs have a market share of 34.4 percent, with sales down by 24.5 percent compared to the first half of 2017. Music downloads also continued to decline (-23.4%) and now have a market share of just 8.5 percent.
Drücke also said sales of vinyl records suffered its first loss since 2006, dropping 13.3 percent to bring its market share down to 4.4 percent. Next to audio streaming, the only other segment to show growth was video streaming, which increased by 27.2 percent and now accounts for 2.2 percent of total revenues.
“We have anticipated and prepared for this fundamental shift in music consumption — now finally also evident in the German market — for a long time and have previously implemented organisational structures and strategies to reflect this change and to be able to now seize the opportunities presented to us by the digital transformation,” said Frank Briegmann, CEO & President, Universal Music Central Europe & Deutsche Grammophon and member of the BVMI-Board in Berlin. “With Marketing Labs and across the entire organisation, we have built an agile team with a bespoke digital focus and subsequently are in a great position to seize the growth potential in streaming and to build on our position as market leader in Germany. The fact that the second-biggest growth segment is video streaming underlines the importance for European regulators to finally close the value gap and create a balanced and sustainable eco system for all parties.”
Bernd Dopp, President, Warner Music Central Europe, added: “Streaming is continuing to gain real traction in the German music market. We are experiencing short-term market decline as CD sales fall year-on-year, and there were particularly strong physically performing releases in the first half of 2017 from the likes of Die Toten Hosen and Ed Sheeran, which also impact the figures. We remain confident that streaming will drive the market forward again as we go through the transition. In the meantime, we’re pushing ahead with our strategy of investing in A&R, signing and promoting the local artists who are helping to grow the streaming market.”