January 6, 2016:10 things to know about the UK music market in 2015

Music industry body the BPI has published its figures for recorded music sales, streams and revenues for the UK in 2015.

Based on Music Ally’s analysis of the numbers, here are the key things you need to know, starting with the basic stats before analysing what they mean.

And when you finish, read our interview with BPI boss Geoff Taylor for his view on what the latest figures mean.

1. The key figures for 2015

– The retail value of the UK recorded music market was £1.06bn in 2015, up 3.5% from 2014’s £1.02bn. That’s the amount spent on buying albums, singles and streaming subscriptions.

– The BPI also measures consumption of music through its album equivalent sales (AES) metric, which blends unit sales with streams. AES rose 3.7% from 117.2m albums in 2014 to 121.6m in 2015.

– The number of audio streams from services like Spotify grew 81.7% from 14.8bn in 2014 to 26.8bn in 2015. But the retail value of “streams” grew 50% from £168m to £251m. More on that difference later.

– British consumers streamed 26.9bn music videos from services like YouTube and Vevo in 2015 – so 100m more than audio streams. However, in the second half of the year, audio outpaced video.

– Audio streams accounted for 22.1% of music consumption (well, AES) in the UK in 2015, up from 12.6% in 2014 and 6.2% in 2013.

– In 2015, vinyl album sales grew 64% to 2.1m units; album downloads fell 13% to 26m units; and single-track downloads dipped by 15% to 133m.

2. 52 weeks in a year? Try 53…

The BPI’s press release includes an important caveat: “The reporting year is based on the Official Charts sales data weeks 1-53 (this year ending 1 January 2016),” it explained.

“It should be noted that, as occurs every few years, the figures for 2015 reflect a 53-week Chart year, and, as such, will contribute to slightly enhanced year-on-year comparisons.”

Keep this in mind when reading everything that follows. Technically, yes, these figures cover a full calendar year – but it’s one that’s 1.9% longer than the year preceding it.

3. 2015 was a story of growth for the UK

The total retail value of albums, singles and audio streams was up 3.5% in 2015, while album equivalent sales were up 3.7%.

After a decade or more of decline in recorded music revenues, that’s reason for celebration – not least because both of these metrics fell the previous year.

In 2014, the retail value of albums, singles and audio streams fell by 2.3% in 2014 to £1.02bn, while album equivalent sales fell by 2.1% to 117.2m units. That means 2015 was an impressive turnaround for British labels.

How impressive, though? Bear in mind that we’re comparing a 53-week year with a 52-week year here. Subtract 1.9% – the extra week – of the retail value and AES figures, and you get £1.04bn and 119.3m units respectively for 2015. That’s still growth, but it’s more modest.

4. What’s a stream? That depends on the metric

If you want to understand the BPI’s numbers, you have to understand what is and isn’t included in the streaming figures.

In the volume charts – the AES metric – the 26.8m audio streams figure includes the paid AND free tiers of chart-eligible streaming services. That means that free, ad-supported Spotify streams are included, but SoundCloud streams are not.

This does not apply to the retail-value figures for streaming. The £251m of streaming revenues includes streaming subscriptions only, so NOT free ad-supported tiers of services like Spotify.

“Retail value reflects retail prices paid and subscriptions to streaming services but excludes estimated revenues from ad-supported audio streaming,” explained the BPI’s announcement, while a spokesperson clarified to Music Ally that ad-supported streams aren’t included because they are “not technically a customer spend figure”.

Three quarters of Spotify’s users globally are on its free tier, so how much money is being left out of the BPI’s retail-value figure for streaming?

In 2014, Spotify generated just over £11m from ads in the UK – around 9% of its income – although we don’t yet have these figures for 2015. Suffice to say, several million pounds of ad-supported revenue from Spotify alone is excluded from the BPI’s retail value figure (it’s also worth remembering that part of that £11m, minus Spotify’s cut, will go to publishers).

So, this is why audio-stream volumes grew 82% in the UK last year, but audio streaming’s retail value only grew 50% – it’s not all down to Spotify, but the service’s free users are included in the first figure, but excluded from the second.

5. Streaming did grow the UK music market

This won’t settle any of the arguments around how streaming benefits artists and musicians, but the BPI’s figures show that in terms of label revenues, streaming subscriptions outweighed the decline in album and single sales last year in the UK.

The retail value of streaming subscriptions increased by £83m in 2015, while the value of albums fell by £26m and singles by £21m. Subscriptions thus made up for the £47m fall in sales, while adding a further £36m on top.

This isn’t just about streaming’s growth: there’s also a story to be told about the CD album format being far from dead.

UK consumers bought 53.6m CD albums in 2015, down 3.9% year-on-year, but still accounting for 66% of all album purchases. That decline compares to a 7.9% fall in 2014, and a 20% decline in 2012.

Compare this to the fortunes of the download album: a format that peaked in 2013, but saw sales fall from 30m in 2014 to just under 26m in 2015.

To put it another way: for every download album sold last year in the UK, two CD albums were sold. The CD is still a huge part of the story here, and its slowing decline should not be forgotten when hailing the growth in streaming subscriptions.

6. There’s more to 2015 than the Adele effect

It is no surprise that Adele’s 25 was the best-selling album of 2015 in the UK: in six weeks it sold 2.5m copies – and that’s purely sales in the traditional sense (rather than album equivalent sales), because it wasn’t available to stream.

Watch out for lazy assumptions that 2015’s growth was all down to Adele, though. As staggering as her success was, she wasn’t the whole story.

Using the AES metric, there were 121.6m albums “sold” in the UK in 2015. That was up from 117.2m in 2014 – an increase of 3.75%. If we deduct the 2.5m sales of 25 from the 121.6m total, we arrive at a new total of 119.1m. Even without 25, the AES figure grew by 1.6% in 2015.

Adele’s new album alone accounted for nearly 3.1% of digital and physical album sales in the UK in 2015, and that’s a huge achievement. But when you look at the wider AES metric, the market would still have grown even if the release of 25 had slipped into 2016.

7. Don’t get carried away with the vinyl revival

With CD and download sales both down in 2015, the BPI was understandably keen to find a bright spot in the retail market: and the growth in vinyl provided that.

Some 2.1m vinyl albums were bought in 2015, up 64.2% year-on-year, and a tenfold increase since the format’s nadir in 2007 when 205k LPs were sold in the UK.

With vinyl retailing for anywhere between £15 and £30, it’s a meaningful part of the overall financial story – remember that quote by BPI boss Geoff Taylor about vinyl making more for British labels than YouTube in 2014, although there’s no news yet on whether that trend continued in 2015.

That said, just as Adele didn’t singlehandedly “save” the industry last year, neither did vinyl. There were 122m album “sales” (when we factor in streaming equivalents), so vinyl accounted for 1.7% of them. Good, but still a niche – albeit an exciting one for the artists, labels and fans involved.

8. Video overtaking audio streams? Not so fast…

The BPI doesn’t include music-video streams on services like YouTube and Vevo in its retail-value or AES statistics, but it does break them out into separate figures announced alongside those stats.

It did the same in July with its half-year figures, and cross-referencing both announcements yields a big talking point.

Music-video streams rose from 14.3bn in 2014 to 26.9bn in 2015, while audio streams rose from 14.8bn to 26.8bn – a clear story of video overtaking audio, you might think. But when we split those figures by the halves of 2015, something else emerged:

Video streams: H1 2015: 12.5bn; H2 2015: 14.4bn
Audio streams: H1 2015: 11.5bn; H2 2015: 15.3bn

Music video streams did indeed overtake audio streams in the first half of 2015, but audio streams roared back past them in the second half of the year.

Why, though? There could be an Apple Music factor at work here, given that it launched in late June. The organic growth of rivals like Spotify, which ran heavy marketing campaigns in the second half of 2015, should not be discounted either.

9. Apple Music’s impact won’t be properly felt until 2016

We’re wary of putting too much faith in The Apple Music Effect, even though the service will play an undeniably important role in the industry’s transition from a predominantly sales-based market to a predominantly streaming one.

With iTunes, Apple dominates the download market, but the company has never been shy of cannibalising its own offerings – see what the iPhone did to the iPod – and the launch of Apple Music was a clear indication of its willingness to swim with the tide.

Even so, the second half of 2015 was very much a launch period for Apple Music, with its initial free trial running until late September and its Android expansion later in the year.

We will not see the full extent of its impact until later in 2016, as Apple throws even more marketing weight behind the service, and nudges more of its download customers into the streaming world. Watch for the BPI’s half-year figures in July.

10. These numbers aren’t the whole story

It’s always important to remember what isn’t included in the BPI figures, beyond the SoundCloud / YouTube / free-Spotify omissions we’ve talked about earlier.

First, the retail-value figures focus on just that: consumer spending on music. In the modern music industry, there are other revenue streams in play for labels and artists alike.

These figures do not include spending on gig tickets, merchandise or through crowdfunding and other direct-to-fan initiatives that are not chart-eligible. They also don’t include the money spent by brands on partnerships with musicians and labels, which is a fast-growing segment of the industry.

While there is a lot of focus on these figures as a bellwether for the industry, we have to be careful not to assume they represent the whole.

Now read our Geoff Taylor interview for the BPI CEO’s take on what the figures mean.


Eamonn Forde
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