We’ve already seen strong recorded-music revenue growth in the 2017 figures from a number of countries, but Germany isn’t among them. Stats published yesterday by industry body BVMI revealed that recorded music generated €1.59bn (around $1.94bn) in Germany last year, down 0.3% on the previous year.
This is perhaps not a surprise, given the continued importance (and thus, the impact of its decline on overall industry revenues) of physical formats in Germany. Physical sales were down 14.3% in 2017, but still accounted for 53.4% of overall revenues. A 22.7% rise in digital music revenues, including a 42.8% spike in audio streaming, couldn’t quite outweigh the physical decline.
Stop us if you saw a ‘value gap’ reference coming. BVMI chairman Dr Florian Drücke celebrated the underlying growth in streaming revenues – “There continues to be a strong pull towards music streaming, which shows that the industry’s diversification strategy is spot on” – while training his sights on YouTube’s impact on the German market.
“According to research by our umbrella organisation IFPI, almost half of the music-streaming in Germany currently takes place on video-streaming services such as YouTube, which together currently contribute only 1.9% of revenues. Compare that to the 34.6% contributed by the premium and ad-supported offerings of the audio-streaming services. This is an unacceptable imbalance.”
Tensions between the German music industry and YouTube are nothing new: 2017 was the first full year for some time of unblocked YouTube music videos there, after the service resolved its long-running legal dispute with collecting society GEMA. With Germany needing streaming revenues to swing upwards as fast as possible to counter that physical decline, any fears about YouTube’s potential impact on subscription conversions for the audio-streaming services will be sharper in this market.
We’ll be interested to see how early Germany gets YouTube’s new music subscription service, when it launches later this year: could that turn the tide of criticism around? Or perhaps, as Drücke suggests, a resolution to the debates around safe harbour and the ‘value gap’ is what’s needed to truly reset the relationship. 2018 is also, of course, the year when we’ll find out which way European politicians are leaning when it comes to actual legislation on safe-harbour modernisation.