US dollars money

The global music industry made $26.2bn from recorded music in 2022, according to the IFPI. That’s up 9% year-on-year.

The figures are from the industry body’s annual Global Music Report, which was published this afternoon.

It also reveals an 11.5% growth in music streaming revenues to $17.5bn, with streaming now accounting for more than two thirds (67%) of the global recorded music market. That’s up slightly from 65% in 2021.

Meanwhile, revenues from audio-streaming subscriptions grew by 10.3% to $12.7bn in 2022. 589 million people were using paid subscriptions at the end of the year, up from 523 million at the end of 2021.

Physical music sales grew by 4% to $4.6bn in 2022, accounting for 17.5% of the overall market.

Before we dig in, a reminder that these figures are total trade revenues (what the industry earned) for recorded music only. They do not include music publishing or live music revenues.

You can also read our separate report here on what major labels had to say about the figures in the IFPI’s press conference this morning.

A slowdown in growth – but don’t panic yet

For anyone who was part of the recorded music industry during its decade-plus of decline, growth is always worth celebrating. 2022 was the eighth consecutive year of growth.

However, we can’t (and shouldn’t) dodge the fact that this growth slowed down considerably last year.

In fact, the overall revenues more than halved from the 18.5% increase in 2021, with that year also seeing 24.3% growth in streaming, and a 21.9% upswing in audio-streaming subscription revenues.

2021’s stonktacular spikes were partly a bounceback from the initial impact of the Covid-19 pandemic in 2020 though.

In 2019, the last full pre-pandemic year (in terms of its impact on the music industry) overall recorded music revenues grew by 8% – $1.4bn more than 2018’s total.

2022’s figures (9% and $2.2bn respectively) are bigger, then, from a higher base. As for streaming, that increased by 21.6% in 2019 with $1.9bn of extra revenue, compared to 11.5% growth and $1.8bn of extra revenue in 2022.

In short, the sharp year-on-year growth slowdown in 2022 isn’t a reason for the music industry to run around panicking about the sky falling in.

But the longer-term trend is an important spur for the industry to think about where the next wave of growth is coming from –from ‘high-potential’ emerging markets to new licensing partners beyond the established streaming services.

All eyes on high-potential markets

The IFPI’s new report offers some helpful data on the first of those. Sub-Saharan Africa was the fastest-growing recorded music region in 2022 in percentage terms, with 34.7% growth.

Latin America (25.9%) and the Middle East and North Africa (23.8%) were the second and third regions for growth. North America (5%) and Europe (7.5%) were slower, but obviously still much larger in terms of actual revenues.

Meanwhile, China was the fifth largest recorded music market in the world in 2022 by the IFPI’s calculations. It’s the first time it’s broken into the top five.

The top four remain (in order) the US, Japan, UK and Germany, with France, South Korea, Canada, Brazil and Australia rounding out the top 10.

Let’s go back to that ‘589 million people using paid subscriptions at the end of 2022’ figure, because it’s worth a number-crunch.

The language is specific: this isn’t people paying for music subscriptions, it’s people using them – for example the people in family plans who aren’t paying the bill.

589 million means that the industry added 66 million of these uses in 2022. That’s down from 80 million net new subscribers in 2021; 102 million in 2020 (a Covid-19 lockdowns-assisted spike); and 86 million in 2019.

66 million is still impressive double-digit growth – 12.6% – so again this is less a reason to panic, but still a spur to redouble efforts to find the next generation of subscribers.

Labels return to the theme of AI’s potential… and risks

The IFPI doesn’t publish its full Global Music Report – the one that breaks down all the numbers by individual country – for free. It will be sold from the organisation’s website.

However, a free cut-down version is released every year, and alongside the obligatory ‘Labels are brilliant! They’re investing in artists and exploring new technologies!’ articles you also get a sense of what’s on the IFPI’s list of policy priorities.

Once upon a time, piracy was the key topic here. Then there was a period when YouTube, safe harbours and the ‘value gap’ took prominence.

And now? We note with interest a page devoted to artificial intelligence, with senior executives from Sony Music (Dennis Kooker) and Universal Music (Michael Nash) welcoming AI’s potential in areas like marketing and technical production, but issuing their latest warnings about generative (creative) AI’s potential misuse.

Kooker expresses “serious concerns about the potential for AI-synthesized voice technology to be used at scale to cover songs and attempt to replace artists” for example. Meanwhile, Nash trains his focus on the way musical AIs are trained.

“Most of these AI systems acquire the essential base of knowledge from which they develop their ‘own’ IP by essentially training on vast quantities of copyrighted content. And they’re not providing any compensation to the people who produce that indispensable source material,” says Nash in the piece.

“The bottom line is, a lot of AI developers are just ignoring the ethics of ingesting the creative work of others, or they’re simply justifying it with what we view as a dangerous distortion of the idea of fair use, that is absolutely not going to hold up.”

In a recent interview with Music Ally, the CEO of AI-music startup Endel offered a different view, telling us that he thinks most startups have been training their AIs on stock music and session-musician stems rather than commercial (copyrighted) catalogues, precisely to avoid incurring the wrath of labels. He said that licensing partnerships would improve the quality of AI music significantly.

Both views lead ultimately to the same goal: proper licensing deals that give the startups access to a better, fuller spread of music, while ensuring that the creators and rightsholders of that music give permission and get paid.

Local markets and the value of music

Two more rune-reading thoughts from the free Global Music Report. A big section on ‘Local Cultures Driving Music’s Global Growth’ offers the views of senior execs at the three global major labels on what’s happening in those high-potential territories.

It’s a genuinely interesting read, because the majors have been working hard in these territories: opening offices, building their teams, signing artists and making plans to break them globally. However, it also (understandably, given the source) offers a picture that places the majors at the centre of all this.

The full story of growth in these markets will, however, also be about what local independent labels do and how they grow, and in some territories (China, notably) also about how the big streaming services work directly with independent artists.

In that sense, the emphasis placed on these territories is a signal that the global majors know they cannot take their success for granted in these places. Maybe they will take as big a share in these territories as they do in the west, but it’s not guaranteed just yet.

Meanwhile, in the free report’s final section, there’s a meaningful nod in the direction of the new tech sectors who labels think may be tempted not to value music as highly as its rightsholders do.

“Online operators – including those operating virtual metaverse platforms or content sharing networks running on Web3 technology – must negotiate licences for the music they make available on their services,” as the report puts it.

For old times’ sake there are also references to safe harbours and piracy sites, and a bit addressing the ongoing discussion around labels’ dealmaking with artists.

It’s a brief run-through of the labels’ key arguments in the ‘Broken Record’ debate: that artists have more choice than ever in how to release their music; and that labels offer them lots of benefits; a claim from an IFPI study showing that “record companies’ payments to their artists have increased by 96% between 2016 and 2021”.

As for calls for new regulation and/or legislation covering labels, artists and the streaming economy? That gets its own paragraph.

“Since artists’ incomes come from multiple sources, policymakers should support a competitive marketplace where artists and their commercial partners are free to develop new partnerships, to the benefit of all parties and without unnecessary regulatory interference.”

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