A 49 percent increase in streaming revenues in Latin America and the worldwide success of “Despacito” — second only to Ed Sheeran‘s “Shape of You” on the Global Top Ten Digital Singles List — made for a “double whammy” in 2017 that has resulted in “Latin American music’s big moment” around the world, according to the Global Music Report 2018, released by the International Federation of the Phonographic Industry (IFPI).
Overall revenue in Latin America rose 18 percent, well surpassing an 8.5 percent increase in 2016, according to the IFPI Report out today (April 24). The 49 percent increase in streaming revenues in 2017 helped offset a decline of 41.5 percent in physical revenues. (For the first time, streaming was the leading source of income for record companies worldwide.)
Growth was seen across the whole Latin American region, most notably in Peru (21.7 percent), Chile (14.3 percent), Colombia (10.5 percent) and Mexico (7.9 percent). The region’s largest market, Brazil, made a strong comeback, notching a 17.9 percent gain after a 3.0 percent decline in 2016. Music in Spain also hiked up 9 percent.
“After almost 17 years of continuous decline the last few years have seen steady growth in Latin America with the prospect of an even greater outlook, alongside the continuing trend for increased consumption of Latin American music around the world,” Afo Verde, Sony Music Chairman & CEO Latin America, Spain and Portugal, is quoted as saying in the report.
“If you have been surprised by recent and current trends, then believe me, the future looks even brighter,” says Verde. “I strongly believe it is down to heavy investment in talent over many years. When talent and catalogue met steaming services, the opportunity for rapid worldwide expansion became a reality.”
If streaming has created a platform for the rise of revenues in Latin America and the potential for Latin artists to reach heights never before seen, it is, of course, “Despacito” that in 2017 set the bar. By April 2018, Luis Fonsi’s original track featuring Daddy Yankee and the remix with Justin Bieber had been streamed 7.5 billion times between them, including 1.9 billion times on Spotify and 5.6 billion views on YouTube. As the IFPI report puts it: “A Spanish language urban-pop track from a Puerto Rican artist who was relatively unknown outside Spain and Latin America topped the charts in 47 countries worldwide.” The report also notes that Fonsi, a Universal Music artist for the past 15 years, was hardly an overnight success.
Amidst the euphoric tone of the IFPI report in reference to Latin America, music company executives cite continuing financial challenges, specifically the search for payment solutions for subscription services in a region where phone ownership and Internet access are still comparatively limited, and many people do not have credit cards.
“In Latin America you are seeing the explosion of usage, but, because so much of that usage is free, we are seeing the effects of the value gap here perhaps more than anywhere,” says Iñigo Zabala, President, Warner Music Latin America. “Everywhere in the world has this problem, but in Latin America it is multiplied.”
Regardless, the IFPI report makes clear that the “Despacito” effect will continue to spread.
“What we know for sure is that “Despacito” is not a one hit wonder,” Universal Music Latin America and Iberian Peninsula Chairman and CEO Jesús López says. “It is the highest profile signifier of a major trend and that trend is supported by data from all over the world.”
According to Adriana Restrepo, President of Codiscos and Chair of IFPI’s Latin America & Caribbean Regional Board, we are “witnessing Latin American music’s big moment.
“We are seeing increasing numbers of artists releasing more and more tracks each year,” she says in the report. “They are topping the charts, not just in Latin America, but around the world.”