Highlights From the IFPI (International Federation of the Phonographic Industry Report):
- Digital music revenues now on a par with physical globally
- Global industry revenues down 0.4 per cent to US$14.97 billion in 2014
- Subscription services at the heart of the music portfolio business
Revenues from digital music services match those from physical format sales for the first time, according to IFPI’s Digital Music Report, published [yesterday].
Digital revenues rose 6.9 per cent to US$6.9 billion, representing 46 per cent of all global music sales and underlining the deep transformation of the global music industry over recent years. The industry’s overall global revenues in 2014 were largely unchanged, falling just 0.4 per cent to US$14.97 billion (US$15.03 billion).
The new report shows an industry in continuing transition, with consumers embracing the music access models of streaming and subscription. Another steep increase in subscription revenues (+39.0%) offset declining download sales (-8.0%) to drive overall digital revenues, while the number of paying users of subscription services rose 46.4 per cent to an estimated 41 million.
Subscription services are now at the heart of the music industry’s portfolio of businesses, representing 23 per cent of the digital market and generating US$1.6 billion in trade revenues. The industry sees substantial further growth potential in the subscription sector, with new services advancing in 2015 led by three major global players: YouTube’s Music Key, Jay Z’s TIDAL and Apple’s expected subscription service.
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The global recording industry is a portfolio business of different consumer channels and business models. This is underlined by the enduring nature of the physical format, still 46 per cent of the market, and the still substantial share of digital revenues (52%) accounted for by downloads. Physical sales still dominate in a number of key worldwide markets including France (57%), Germany (70%) and Japan (78%).
Within the physical business, vinyl sales continue to revive with revenues increasing 54.7 per cent and now accounting for 2 per cent of global revenues. This underlines the industry’s commitment to consumer choice and to delivering music to fans in the widest possible range of formats.
Elsewhere in the industry, performance rights income increased by 8.3 per cent and now accounts for 6 per cent of total industry revenues or US$948 million. Synchronisation revenues increased by 8.4 per cent in 2014 to represent 2 per cent of the market, with big gains in markets such as France (+46.6%), Germany (+30.4%) and Japan (+33.5%).
Note: In the reporting of IFPI’s 2014 global market data, there has been a reclassification of SoundExchange revenues in the US from “performance rights” to “digital”. This has resulted in an upward adjustment in digital revenues and growth, and an equivalent downward adjustment in performance rights revenues and growth.
Key Trends In Digital Music
Consumers engage with licensed services. Exclusive IFPI-commissioned research demonstrates consumer engagement with licensed digital music services is high. The study, undertaken by Ipsos across 13 of the world’s leading music markets in 2015, shows 69 per cent of internet users accessed a licensed digital music service in the last six months. Significantly more people say that they use these types of services more than they did 12 months ago, compared to those who say that they use them less.
Awareness of licensed services, such as iTunes, Spotify and YouTube, is high and some 38 per cent of respondents agree strongly or agree a little that they are happy to access music online, rather than own a CD or digital file.
However, IFPI estimates (based on comScore/Nielsen data) that 20 per cent of internet users (down from 26 per cent in 2013) still regularly access unlicensed services such as P2P file-sharing networks, cyberlockers and aggregators.
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