Global recorded-music revenues grew by 9.7% in 2018, according to industry body the IFPI. Its annual Global Music Report, which is published today, reveals that strong growth in streaming revenues more than made up for the continued decline in sales of CDs and music downloads.
The headline figure is $19.1bn: that’s the total revenue for recorded music last year, up from $17.4bn in 2017. The figure includes revenue from streaming, sales, performance rights and synchronisation income – but not the publishing or live-music sectors. It’s the fourth consecutive year of growth for recorded music globally.
Within this, global streaming revenues grew by 34% to $8.9bn in 2018, accounting for 47% of the global total. Paid streaming grew by 32.9% last year and accounted for 37% of total revenues (around $7.1bn).
According to the IFPI, there were 255 million users of paid streaming subscriptions at the end of 2018. That’s up from 176 million at the end of 2017 – 44.9% growth. Note, this is people using paid subscriptions: thanks to family plans, they’re not all actually paying for them.
What about physical music sales? They fell by 10.1% to $4.7bn, which means that since 2001 (when they were $23.3bn) the physical music market has lost nearly 80% of its value. The IFPI noted that within physical, sales of vinyl grew by 6% in 2018.
Sales of downloads and other non-streaming digital revenues fell by 21.2% in 2018, to $2.3bn. Meanwhile, performance rights revenues (covering use of recorded music by broadcasters and public venues) grew by 9.8% to 2.7bn, and sync revenues for music licensed for ads, TV shows, films and games grew by 5.2% to $0.4bn.
One thing to watch out for: a slowdown in the growth of streaming. The 44.9% growth in the number of paid-streaming users in 2018 compares to 57.1% in 2017. Meanwhile, the 34% growth in streaming revenues last year compares to 41.1% in 2017.
The IFPI broke its figures out regionally, too – although we won’t have the continent-by-continent dollar figures (let alone the country-by-country ones) until we have a copy of the full Global Music Report, rather than the abridged one given to journalists this morning.
North America remains the largest continent by recorded-music revenues, and grew by 14% in 2018. Asia/Australasia overtook Europe to take second place, on the back of 11.7% growth. Fourth-placed Latin America, meanwhile, was the fastest-growing continent with 16.8% growth.
And Europe? Europe’s recorded-music revenues grew by just 0.1% last year, with a 9.9% decline in Germany – now the fourth biggest music market in the world – helping to pull the region down. The fact that the third-placed UK only grew by 3.1% also had an impact.
Those top ten global markets in order: the US, Japan, UK, Germany, France, South Korea, China, Australia, Canada and Brazil. Since 2017, China has risen by three places; the UK has overtaken Germany; Australia has hopped over Canada; and Brazil has dropped by one place.
The global story, and particularly that of “high-potential” markets like China, India and various African countries, is something stressed in the IFPI’s report. “Treated as a group, these markets, even with modest penetration, could provide a major uplift to the global streaming population,” it notes.
At a press conference in London this morning, the emphasis from the IFPI and its key label members was on, as the body’s CEO Frances Moore put it: “Optimism, no complacency”.
“These events used to be described as ‘mournfests’ because we only had bad news to tell. [After] four years of growth, we’re much more optimistic,” she said. “That growth is being largely driven by streaming… and within that streaming, paid streaming is the real driver. It’s a particularly exciting time for the industry. Four years? That starts to look like a pattern rather than just a one-off.”
Moore also focused on the encouraging growth in Latin America and Asia / Australasia, noting that while the former remains the fastest-growing region, the latter now has four of the top 10 countries by revenue.
Inevitably, there were also references to the ‘value gap’ debate and last week’s vote in the European Parliament to approve a new copyright directive that includes stricter requirements for internet services that allow users to upload content – music included.
“We’re not complacent: it is dependent on the right environment to do business, and that music be fairly valued,” said Moore, who described the European vote as “a major step towards closing the value gap that we all talk about”.
The label executives accompanying Moore at the press conference stuck to their key talking points.
“There is definitely an air of confidence returning to the business, but that’s confidence without complacency,” said Stu Bergen, CEO, international and global commercial services at Warner Music Group.
He added that the industry growth is enabling labels to invest back into their businesses in three ways: artist signings (“We’ve increased our signing everywhere in the world, both in numbers and in dollars”); opening offices and striking partnerships in the ‘high-potential’ territories; and exploring “new models” through acquisitions and investments.
He cited WMG’s acquisitions of EMP, Songkick and Uproxx as examples of that label’s desire to be involved as artists and fans forge new connections. “None of these acquisitions would have been possible five or six years ago, before the return to growth in the business. Instead of playing defence, we’re able to drive the business forward,” said Bergen.
Universal Music Group’s EVP of market development Adam Granite also stressed the “helping artists connect with fans” aspect, while praising Asia’s emergence as the second-biggest region for recorded-music, and hailing the growth in smartphone-penetration and better payment methods in Africa and the Middle East.
“We now have foundations in place for legitimate markets in many places in the world… The rise in streaming is creating two big opportunities for the high-potential markets,” added Stu Bondell, EVP of business and legal affairs, international, at Sony Music.
“The first is a local opportunity: to continue the progress we’re making in moving customers to licensed services, and thereby growing the pie for everybody. We’ve seen great progress in places like China and Latin America, which were previously heavily under-monetised,” said Bondell.
“The second big opportunity is to be able to take a hit emerging from one of the high-potential markets, and turn it into a global hit. We’re seeing now in a streaming world that the consumer is open, much more than ever before, to non-English repertoire… You only have to look to Korea and Latin America today, as places generating hits for the world that are not in English.”
Bergen agreed, noting that Warner Music is trying to “foster artistic cultural exchange” between its artists in different parts of the world: for example, getting German DJ Robin Schulz to work with country duo Dan + Shay; or a DJ from the Netherlands to collaborate with K-Pop artist Shaun.
One subject that’s clearly exercising the IFPI and its members: the role of a label in the music-industry ecosystem, not just in 2019 but in the coming decade. In fact, six pages of the report is reserved for a feature on ‘The Value of a Label’, at a time when artists (whether emerging or global-megastar level) have more options than ever before to work outside the label system.
Glen Barros, COO of Concord Music, addressed the topic directly during the press conference. “A great deal goes in to connecting an artist’s recordings with the widest possible audience,” he said, reeling off a list ranging from data-optimisation to marketing, physical strategy and direct-to-consumer sales.
“All these services can be hired,” he admitted. “But just like a sports team, it’s not just about assembling the best athletes. It’s about having them work together as a team. That’s what I think labels do: they put together the right package.”
Bondell agreed. “We’re in a business environment now where there are virtually no barriers to entry for a DIY artist. What a record company can do is create an artist’s career, hopefully on a global basis,” he said.
“What a label can do is help artists cut through the clutter… The key is to offer highly-specialised, highly-tailored solutions for the artist. We’re no longer in a one-size fits-all relationship between the artist and the label. The key is to offer individualised service going forward.”
Bergen chimed in. “Last year, Daniel Ek said that 20,000 songs a day were being uploaded onto Spotify. We’re not in the business of the 20,000. We’re in the business of helping artists cut through. That seems like such a daunting number to confront, and that’s kinda where the labels come in, to help set apart artists from the 20,000.”
The three major labels *are* in the business of the 20,000 songs too, you could argue, through their in-house distribution divisions – ADA for WMG, Caroline for UMG and The Orchard for Sony. But another question concerns how labels plan to hang on to the artists they’ve already helped to cut through.
Taylor Swift could have gone DIY when her last contract elapsed, but she chose to sign with Universal Music – reportedly with terms giving her greater control in the long term over her master recordings.
At the IFPI event, Music Ally asked whether that’s going to be the key when other megastars’ deals come up for renewal in the future. Or will the label pitch be around breaking them in the high-potential markets, or other things?
Granite noted that Universal has signed long-term agreements with the Rolling Stones and Elton John in the last year, which in some cases “extend beyond recorded music”. And he stressed UMG’s global scale as a key part of its pitch. Bondell, Bergen and Barros kept their thoughts to themselves.
There was time for another question about Africa, with the IFPI’s director of communications John Blewett (who was moderating the event) explaining that the body is still tackling the challenge of gathering recorded-music data from Africa – the continent is still noticeably under-represented in the Global Music Report’s figures section.
Bergen said that major labels aren’t opening offices in Africa as a “token nod” to the continent’s potential. “It’s actually a pretty serious decision and investment… we’re all betting on and investing in what the business could be, as well as the creative talent that exists there currently”.
Granite agreed. “There’s a lot of development left on the continent of Africa. And remember, Africa is not a country: it’s a continent. 60 markets and thousands of languages and dialects. It’s incredibly complex.”
Now read Music Ally’s follow-up interviews with Moore, Bergen and Bondell after the main press conference.