EMBARGOED UNTIL 13.00 BST, TUESDAY 14TH APRIL 2015 Market verview US$6.85 bn T The industry’s digital revenues in 2014 share oF industry revenues 2014 46% 46% Digital Physical 8% Performance Rights and Synch global digital revenues 2009–14 (US$ billion) 6.9 6.4 6.0 5.3 4.7 4.4 2009 2010 2011 2012 2013 2014 John Legend Source: IFPI photo by Matthew Williams 6 EMBARGOED UNTIL 13.00 BST, TUESDAY 14TH APRIL 2015 However, the growth of subscription and fell. Japan saw digital growth for the first YouTube alone has more than one streaming was not quite able to compen- time in five years, with a sharp rise in sub- billion users and music related content sate the two other key elements of the in- scription revenues helping digital revenues makes up a very large proportion of its use. dustry’s current transition: a global decline rise by 4.9 per cent. Overall, the Japanese Consumer research published for this report in both physical format sales (-8.1%) and market saw a decline of 5.5 per cent in 2014, by Ipsos, conducted across 13 of the world’s download sales (-8.0%). As a consequence, considerably less sharp than the 16.7 per- leading music markets in 2015, shows that overall recorded music revenues in 2014 fell cent fall in 2013. Germany painted a more 57 per cent of internet users have accessed slightly by 0.4 per cent to US$14.97 billion. positive picture, with growth in revenues music or music videos on internet video of 1.9 per cent. Physical sales remain more sites such as YouTube in the last six months, robust than elsewhere and subscription ser- compared to 38 per cent for music stream- “The music industry is vices are seeing strong advances. The top-10 ing sites such as Spotify and 26 per cent for market with the strongest overall growth download services like iTunes. The research managing the transitions was South Korea (+19.2%). finds more than a quarter of internet users (27%) listen to music on YouTube without from physical to digital, watching the video. PC to mobile and download An evolving “Music is one of the most to streaming at the same portfolio business Music continues to be a portfolio business, potent forces shaping time. In that context, I think with revenues generated from a diverse range of channels including music subscrip- culture, entertainment the industry is performing tion services, CDs, vinyl LPs, downloads and performance rights licensing. and technology. We are remarkably well and with Within this portfolio, the key drivers of change in 2014 were the rise of stream- committed to forging new a paid subscription model, ing and the decline of physical and down- load revenues. Combined ad-supported business models, delivering we are building a business and subscription streaming revenues now account for 32 per cent of global digital maximum value for artists that is here to stay.” revenues, up from 25 per cent in 2013. This sector is fast catching up on downloads as and building a bright future edgar Berger, chairman & ceO, the industry’s main digital revenue source: in internatiOnal, SOny Music no fewer than 37 markets (including South for our industry.” entertainment Korea, Sweden and Mexico) streaming rev- enues have overtaken download income. StU Bergen, preSident, internatiOnal, Behind the global figures, a markedly mixed Revenues from streaming sub-divide Warner recOrded Music picture is apparent among the world’s major into subscription services and ad-sup- music markets. The US saw overall revenues ported streaming. The latter revenues are increase by 2.1 per cent in 2014, as increasing seeing accelerating growth globally – up by digital income offset the fall in physical for- 38.6 per cent in 2014, a significantly higher mat sales. Subscription rose sharply, while growth rate than the 16.6 per cent increase both download and physical format sales in 2013. global digital revenues by sector (2014) 3% 39.0% Mobile 9% subscription growth personalisation Michael Bublé Ad-supported photo courtesy of WMG streams income 12% 52% Other permanent 41m Downloads 23% people using Subscription subscription services streams income 7 EMBARGOED UNTIL 13.00 BST, TUESDAY 14TH APRIL 2015 Downloads still account for the Performance rights revenue – in- bulk of global digital revenues (52%), but come from the use of recorded music by declined by 8.0 per cent in 2014. Single broadcasters and public venues – increased track downloads declined by 10.9 per cent by 8.3 per cent and now accounts for 6 per in 2014, while digital albums also saw rev- cent of total industry revenues or US$948 enues down 4.2 per cent. Download sales million, including some one-off revenues declined in virtually all established mar- as a result of litigation cases (see note on kets, but continue to grow in some emerg- methodology). ing markets. The global decline was driven Synchronisation revenues – income by a variety of factors, including the sharp from the use of music in advertising, film, growth of Android smartphones and tab- games and television programmes – in- lets orientated to streaming services creased by 8.4 per cent in 2014 with big rather than downloads. This has combined gains in markets such as France (+46.6%), with a certain amount of substitution as Germany (+30.4%) and Japan (+33.5%). consumers move from download to stream- ing services. Note: IFPI has amended the methodology and scope of its Global music industry revenues coverage of performance rights revenues globally and in the US for 2014. from physical formats accounted for less Globally, performance rights revenues now refer to than half of total industry revenues (46%). distributions made to record companies (including non-recurring distributions) in the same year they reach record company Nonetheless there is a marked format di- accounts. Previously, IFPI reported performance revenues, versity between different countries, with a excluding non-recurring distributions, one year in arrears. In the US IFPI has for the first time reported SoundExchange robust physical market share still recorded distributions under ‘Other Digital’ and included artists share in the in countries such as Austria (65%), France reported revenue. The change aligns IFPI’s worldwide reporting with the RIAA reporting practice for the US. It reflects the fact (57%), Germany (70%), Japan (78%), Poland that a significant proportion of SoundExchange revenues comes (71%) and South Africa (62%). Vinyl remains from personalised streaming services (such as Pandora) that are Downloads still account elsewhere reported directly by the companies inclusive of artists a niche product, accounting for 2 per cent share. In the light of this change, US performance rights now have of global revenues, but the format contin- a nil value. for the bulk of global Historical performance rights revenues have now been ues to revive with sales increasing 54.7 per restated to reflect these changes and to provide equivalent year- cent in 2014. on-year comparisons. digital revenues (52%). Permanent downloads and subscriPtion streams Permanent downloads as a % oF total digital revenues 2014 Subscription streams income 92 91 88 82 83 75 70 55 24 14 12 11 12 8 5 5 Sweden South Korea Norway Finland USA Germany Australia Canada Source: IFPI 8 EMBARGOED UNTIL 13.00 BST, TUESDAY 14TH APRIL 2015 Asia saw revenues fall by 3.6 per Regional picture cent. There was strong growth in South “The strength of the industry Korea (+19.2%) and some smaller markets Music markets are moving at different such as China (+5.6%), Indonesia (+16.3%), today is seen in the wide- speeds with diverse trends in different and Singapore (+4.7%). Japan saw digital countries. In North America, the US mar- revenues increase by 4.9 per cent, driven by ranging portfolio of diverse ket increased in value by 2.1 per cent. Digital strong subscription revenues, but the mar- revenues topped US$3.5 billion in 2014 and ket declined by 5.5 per cent overall. India businesses operating in the now account for nearly three-quarters of continues to underperform, with a market the recorded music market (71%). Revenues decline of 10.1 per cent. market. The consumer is now collected by SoundExchange, the music Europe saw a market decline of 0.2 licensing company, from personalised per cent, but the picture across its various being offered an incredible streaming services such as Pandora are now countries was highly diverse. The largest reported as digital revenues rather than market Germany saw growth of 1.9 per cent, array of music experiences performance rights income (see note on helped by streaming gains and a slower- page 8). The company reported the royalty than-average fall in physical sales. Other and artists have more payments it made increased in value by 31.0 large markets, including France (-3.4%), Italy per cent in 2014 to US$773.4 million. Overall (-4.1%) and the UK (-2.8%) saw declines. opportunities to reach the subscription income increased by 33.5 per There was growth in Spain (+15.2%) and a cent and advertising-supported streaming number of smaller European markets in- widest possible audience.” income was up 21.4 per cent. There was a cluding Czech Republic (+4.6%), Denmark 7.2 per cent drop in the value of downloads, (+2.0%), Hungary (+7.8%), Iceland (+0.7%), franciS Keeling, glOBal head Of digital which account for 55 per cent of the digital Ireland (+8.5%) and Slovakia (+13.5%). Business, UniverSal Music grOUp market. In Canada, the overall market fell by 11.3 per cent, with physical (-20.8%) and digital (-3.9%) posting declines.