Global recorded music revenues grew by 7.4% to $21.6bn in 2020, according to industry body the IFPI, which has published its annual Global Music Report today.
That’s a deceleration compared to 2019, when the market grew by 8.2%, but with 2020 being the year of Covid-19, labels will see the latest figures as a success nonetheless.
It’s the sixth consecutive year of growth, and the highest annual total since 2002, when global revenues were $22.1bn.
Streaming was the driver for last year’s growth. Streaming revenues for labels grew by 19.9% to $13.4bn, accounting for 62.1% of the total.
That was enough to outweigh a 4.7% decline in physical sales, a 15.7% fall in download revenues and (“largely as a result” of Covid-19) a 10.1% dip in performance rights. Production delays in the TV, film and games industries also hit sync revenues, which were down 0.4% compared to a 4.4% rise in 2019.
The IFPI says that there were 443 million users of paid streaming subscriptions at the end of 2020. That’s up from 341 million at the end of 2019, which means 29.9% year-on-year growth.
This continues a trend for the growth in the number of streaming subscribers (29.9%) to outstrip the growth in streaming revenues ($19.9%). However, the gap between the two in percentage points terms has narrowed: from 10.6 in 2019 to 10 in 2020.
In terms of the breakdown between subscription and ad-supported revenues, the summary version of the GMR report provided to journalists this morning included a graph showing that ad-supported streams – audio and video – accounted for 16.2% of total revenues, while subscription audio streams generated 46%.
That’s around $9.94bn of streaming subscription revenues and $3.5bn of ad-supported revenues by our calculations, compared to $8.5bn and $2.85bn respectively in 2019. That means ad-supported streaming revenues are actually growing a little faster in percentage terms, even if subscriptions added more dollars in 2020.
Other points from the summary report included another tough year for the world’s second biggest music market, Japan, which saw its recorded music revenues fall by 2.1% in 2020, after a 0.9% decline in 2019.
While Latin America was the IFPI’s fastest growing region overall, with 15.9% growth, Asia would have topped this if it weren’t for Japan’s struggles. Factoring that market out, Asia saw 29.9% growth last year, including a whopping 44.8% spike in South Korea, riding high on K-Pop’s global spread.
North America saw revenues grow by 7.4%, Europe by 3.5%, and Australasia by 3.3%. The IFPI says that revenues in Africa and the Middle East grew by 8.4%.
Elsewhere in the summary report it’s business as usual, with the IFPI setting out its stall for record labels as a force for good in the industry: investing in artists and helping them to build audiences across the world.
New this year is a section on social justice and Black Lives Matter, focusing on interviews with the equity, diversity and inclusion execs at the three major labels.
Meanwhile, the section on ‘creating a fair environment for music’ is largely the same as in the 2019 report, outlining the IFPI’s four key lobbying goals.
However, the third of them has been spruced up. In last year’s report it was this: “All parties should be free to agree the terms of their relationship. In a fair and functioning marketplace, parties should be free to agree the terms of their relationship. Unfair restrictions, whether over rights or contracts, distort and limit the development of music markets and result in recorded music being devalued.”
And now? “Respect freedom of contract. In a fair and functioning marketplace, parties should be free to agree the terms of their licensing arrangements. Interference, however well intentioned, will distort the market, disincentivise investment and undermine the growth of the entire sector. Binding the industry’s hands through static regulation – which can never evolve as fast as technology – limits the ability of record labels, artists, and platforms to find the most effective and innovative solutions to respond to an evolving marketplace.”
It’s hard not to see the rewrite as a response, at least in part, to the UK parliamentary inquiry into the economics of music streaming, including campaigners’ call for radio-style ‘equitable remuneration’ to be introduce for some aspects of streaming – and the arguments of labels and their representative body the BPI that this would undermine their negotiations with DSPs.
Ahead of the report’s publication this afternoon, the IFPI held a Zoom call for key label executives and journalists, and the topic of artists’ rights campaigns was the first to be raised in the Q&A section.
IFPI boss Frances Moore offered a defence that has also been made during the UK inquiry. “Artists have more choice than they’ve ever had. They have enormous choice: whether to be with a label, whether to be a do-it-yourself artist. And the competition regarding artists is enormous as these companies [labels and distributors] vie for artists,” she said.
Intriguingly, Moore cited an IFPI study which she said showed that “in actual fact, artists’ revenues are higher than the revenues coming back to the industry after costs etc”. Music Ally followed up after the event to ask if this research is public, but the IFPI told us that it is not.
“There is a misconception that artists are not doing well,” added Moore during the event, before pointing to the more than seven million artists on Spotify, and more than 60,000 new tracks every day. “There is a very big competition for attention, and some of those artists will do very well, and other of those artists will perhaps have an opportunity that they wouldn’t otherwise have had in other environments.”
Earlier, Moore had stressed the positive elements to the 2020 figures. “You will sense the optimism throughout the report. Despite the challenging circumstances that record companies have faced [with Covid-19] they have continued to drive new and exciting experiences for fans, whether it’s gaming, exercising or beyond.”
One theme of the panel was this idea of acceleration. “Many of the trends that you’re highlighting were trends that were occurring pre-pandemic. The pandemic and the situation that consumers found themselves in just accelerated some of those trends,” said Dennis Kooker, president, global digital business and US sales at Sony Music Entertainment.
He talked up the area of ‘immersive entertainment’ – “a convergence of audio, video and gaming” that for Sony has so far encompassed Travis Scott’s Fortnite performances, Lil Nas X’s Roblox concert and Madison Beer’s avatar gig on TikTok among other experiences.
Jess Keeley-Carter, senior vice president of global marketing at Warner Music Group, talked about the neeed for labels to be “totally immersed” in new technology trends: “not just looking at data and reading about trends, but living and breathing in those platforms”.
She added: “Covid has supercharged adoption and also supercharged the speeds at which trends are spiking and then decaying. The time in which we have to jump on those trends is shortening, so we have to be fully embedded in those platforms… we’re not just chasing shiny headlines, chasing the new spangly thing, but we’re thinking how we’re tying up the right artists with the right opportunities”.
“The way that trends spike and then decay [faster], that’s because when you’re locked in, things get boring quickly, and that goes across everything,” she added.
Later in the Q&A, Music Ally asked Keeley-Carter to expand on this. “It’s important to be properly, authentically connected into those platforms. it’s not enough to just sit and look at the data and look at the reports. We need to have people in our marketing teams who are living and breathing it. People who are gamers who spend all their spare time playing Fortnite, for example,” she said.
“It’s the way you identify things [opportunities for artists] before you have to wait 24 hours, or however long it is, for the data to start feeding through the systems.”
Meanwhile, the panel event also saw Sipho Diamini, CEO of Universal Music South Africa and Sub-Saharan Africa, talk of the potential Africa has for future streaming growth.
“While the African market is today proportionally small, we believe it has significant potential, especially given recent developments in the technology and the commercial environments,” he said. Smartphones and cheaper mobile data packages are key to this, as are Africa’s youthful populations.
Asia was also a focus for the briefing, with Shridhar Subramaniam, president, strategy and market development, Asia and the Middle East at Sony Music breaking the territory into three groups of countries.
First: China and South Korea, the most evolved and fastest growing markets. Second, India and some of the South East Asian countries that are growing well. And third, the countries “yet to fundamentally come online” that are nevertheless seen as ripe with potential as, like Africa, smartphones and mobile data proliferate.
“BTS is this shining beacon of what the possibilities from this region could be. What K-Pop has done over the last decade is purely just an indicator of what can possibly happen over time [for other parts of Asia],” he said.
Simon Robson, president, international, recorded music at Warner Music Group agreed. “Asia is home to almost 60% of the world’s population… so the potential in the streaming world is massive,” he said. “Ally that with long-term economic growth, and that means Asia is becoming increasingly influential for the music industry.”
Robson also suggested that Asia is driving various areas of innovation for the music business. “Livestreaming, verch [virtual merchandise], virtual gifting and tipping have been long established in Asia, and the China streaming services have great social media functionality, which just hasn’t been possible with the global DSPs to date,” he said.
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