It’s been a long time coming, but the global recorded music industry is finally “well on the road to recovery,” declared Frances Moore, chief executive, IFPI, at the London launch of IFPI’s annual Digital Music Report.
Business Matters: Inside the IFPI’s Digital Music Report 2013
In 2012, strong growth in digital sales and services helped fuel a 0.3% rise in global recorded music revenues – the first year of industry growth since 1999, says IFPI. Global digital revenues climbed 9%, with major licensed digital services and stores now operating in over 100 markets, as compared to 23 countries only twelve months ago.
The Digital Music Report, which was unveiled today (Feb. 26) at IFPI’s London offices, placed the total trade value of Global recorded music industry revenues in 2012 at $16.5 billion, up from $16.2 billion the previous year.
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Total digital revenues for 2012 are estimated at $5.6 billion, up 9% on 2011’s figure of $5.2 billion. Digital now accounts for more than a third of total industry revenues (34%) with digital revenues making up more than 50% of all recorded music income in Norway, Sweden and the U.S.
While the 0.3% rise in total trade value is undoubtedly significant and provides strong reason for cheer, it is worth placing in context. In 1999, the last year that the recorded music industry posted a growth in revenue, its global total trade value stood at $27.8 billion (adjusted to the 2012 exchange rate). In 2005, it’s stood at $22.9 billion, according to IFPI figures.
This year’s report also stated that:
– Download sales grew 12% in volume in 2012 to 4.3 billion units globally (combining digital singles and albums).
– In 2012, 2.3 billion single track downloads were sold worldwide, an increase of 8% on the previous year. Digital album sales rose 17% on 2011 with 207 million digital albums sold. Digital album sales grew at more than twice the pace of single track downloads.
– Subscription services saw a 44% rise in the number of fee-paying customers, with 20 million paying subscribers globally in 2012. Last year, subscription services are expected to have accounted for over 10% of total digital music revenues for the first time. In Europe, where streaming services are well established, particularly in Scandinavia, subscription revenues account for approximately 20% of total digital income.
– Despite the increasing popularity of streaming platforms, download stores, such as iTunes and services from Google, Amazon and Microsoft, represent approximately 70% of global digital revenues.
– At least 8 of the top 20 global music markets are expected to see growth in 2013, including Australia, Brazil, Canada, Japan, Mexico, Norway and Sweden.
– Globalization is opening up new markets with many countries such as Kenya, Sri Lanka and Vietnam opening their first licensed music services in 2012.
– There are now more than 500 licensed digital music services operating worldwide, offering 30 million tracks to consumers.
– Digital music consumption has become mainstream. According to consumer research by Ipsos MediaCT across 9 (unidentified) markets, 62% of internet users aged 16-64 surveyed engaged in a legitimate licensed service in the past 6 months.
– Many non-digital revenue channels are also increasing. Performance rights income increased in value by an estimated 9.2% in 2012 and now accounts for around 6% of overall industry revenues, up from 3% in 2007.
– Carly Rae Jepsen’s “Call Me Maybe” was the top-selling single of 2012 moving more than 12.5 million units worldwide. Gotye’s “Somebody That I Used to Know” featuring Kimbra was the second best-selling single of 2012, moving 11.8 million units. Psy’s “Gangnam Style” was at No. 3 with worldwide sales of 9.7 million units.
– Adele’s “21” is the first album to top the global albums chart for two consecutive years since IFPI began reporting global best-sellers in 2001. The all-conquering, Grammy-winning set sold 8.3 million units in 2012 and 18.1 million in 2011, according to IFPI. The next best-selling artist album globally was Taylor Swift’s “Red,” moving 5.2 million units worldwide. One Direction’s first two studio albums “Up All Night” and “Take Me Home” were the No. 3 and No. 4 best-selling albums of 2012 globally, selling 4.5 million units and 4.4. million, respectively.
“It’s clear that in 2012 the global recording industry has moved onto the road to recovery,” said Frances Moore, chief executive, IFPI at the report launch, which was also attended by Edgar Berger, president and CEO, International, Sony Music Entertainment and Francis Keeling, global head of digital business, Universal Music, as well as invited guests and media.
“This has not come about by accident,” Moore continued. “As an industry we have really changed and adapted our business models to meet the digital world,” she went on to say before issuing a stark warning against complacency in the years ahead.
“This is really a pivotal moment on the path to recovery for our industry, but it’s still fragile and there are many things that need to be done in order to ensure that that path to recovery continues. The main point remains that we are working in unfair market environment. 31% of internet users are still regularly accessing unlicensed services. How many other industries have to cope with a third of its potential customers being able to get copies of their own products from illegal sources? We believe that the governments should be doing more. The intermediaries can also help – whether they are advertisers, search engines, payment systems or ISPs – either via voluntary agreements, or if necessary, pressure needs to be brought by government.”
Next to speak was Edgar Berger who referred back to the previously common-held notion that the digital revolution would spell the death of the music industry.
“The reality is, digital is saving music,” Berger stated. “Last year we sat around this table and I made the statement that we were changing from a head wind to tail wind and the reality has proven right. With the wind at our back we are picking up pace and starting to [emerge] from what has been a challenging decade of transition. We are clearly on our way and I absolutely believe that this marks the start of the global growth story. The industry has every reason to be optimistic about its future.”