GLOBAL MUSIC REPORT 2017 ANNUAL STATE OF THE INDUSTRY
Global top 10 recording artists of 2016 Never stop playing. GLOBAL MUSIC REPORT 2017: ANNUAL STATE OF THE INDUSTRY 3 WELCOME
he IFPI Global Music Report tells a positive story of music being enjoyed by more people in more ways than ever before. At the heart of this story T are incredible artists, supported by the invest- ment and innovation from record companies and other partners that is helping them to share their music with the world. We are now in an exciting era in which streaming is making the depth and richness of every kind of music available to hundreds of millions of people, with artists Plácido Domingo connecting more directly and more quickly with their Chairman, IFPI audiences. Challenges remain, however, and the fair remunera- tion of those that create and invest in music must be a priority in this increasingly digital world. The whole community is uniting in its efforts to ensure that music is properly valued so that artists and their work can thrive. UNLOCK THE GLOBAL POWER OF NIELSEN MUSIC YOUR KEY TO THE BEST DATA-DRIVEN SOLUTIONS IN THE BUSINESS
GAIN ACCESS TO MUSIC CONNECT The Industry’s Most Trusted Data & Insights with Over 20 International Charts CUSTOM RESEARCH, ANALYTICS and MORE
GET THE INFORMATION YOU NEED TO GROW YOUR BUSINESS IN 2017 Contact [email protected] CONTENTS
ANNUAL STATE OF THE INDUSTRY
01. Global music market 2016 figures 6
02. Introduction – Frances Moore 7
03. Global charts 8
UNLOCK 04. Global market overview 10 THE GLOBAL POWER OF 2016 figures by format and region 12 05. The evolving market: streaming grows global revenues and rewrites the rulebook 16 NIELSEN 06. Rewarding creativity: fixing the value gap 24 0 7. Territory focus: China’s phenomenal potential unlocked by streaming 28 MUSIC 08. Territory focus: Africa – an emerging opportunity 32 09. The value of record companies 34 YOUR KEY TO THE BEST 10. Safeguarding music 37 DATA-DRIVEN SOLUTIONS 11. Working with artists 39 IN THE BUSINESS
GAIN ACCESS TO MUSIC CONNECT The Industry’s Most Trusted Data & Insights with Over 20 International Charts CUSTOM RESEARCH, ANALYTICS and MORE See www.ifpi.org for details of the full Global Music Report 2017 including a premium 'Data and Analysis' section.
www.ifpi.org © IFPI 2017 @IFPI_org All data, copy and images are subject to copyright and may not be reproduced, GET THE INFORMATION YOU NEED TO GROW YOUR BUSINESS IN 2017 Designed by Studiomade transmitted or made available without permission from IFPI. Contact [email protected] 6 Global music market 2016 figures GLOBAL MUSIC REPORT 2017: ANNUAL STATE OF THE INDUSTRY
GLOBAL MUSIC MARKET 2016 IN NUMBERS
+5.9% 50% GLOBAL REVENUE GROWTH DIGITAL SHARE OF GLOBAL REVENUES
+17.7% +60.4% DIGITAL REVENUE GROWTH GROWTH IN STREAMING REVENUE
–7.6% –20.5% PHYSICAL REVENUE DOWNLOAD REVENUE GLOBAL MUSIC REPORT 2017: ANNUAL STATE OF THE INDUSTRY INTRODUCTION 7 INTRODUCTION
Modest growth, limitless potential.
Frances Moore CEO, IFPI
he global recording industry is see- The transformation has created an in some territories around the world, in- ing modest growth after more than enormously exciting environment for mu- cluding in Europe where the European a decade of significant decline. sic fans, who are benefitting from new and Commission has recognised the existence T Years of investment and innovation evolving services and accessing more mu- of a value gap and begun working towards have begun to reward an industry that has sic than ever before. In turn, artists have legislation. However, this is a global prob- shifted from adapting to the digital age, to more ways to connect with their fans and lem that requires legislative solutions driving it. more opportunities to share their work in across the globe. The industry continues to The story of the recorded music in- diverse and creative ways. If the digital fight worldwide for a level playing field for dustry over the last two decades is one of market continues to grow, so too will the fairly licensed digital services. transformation: from physical to digital; overall level of remuneration to artists, Copyright infringement, in a variety of downloads to streaming; ownership to ac- as will the levels of overall investment re- guises, remains a major issue, with the cess. The industry is now working with its quired to create new music whilst helping growing practice of ‘stream ripping’ now partners on another, ongoing transforma- to drive digital innovation. very much part of the challenge facing our tion: from years of decline to sustainable However, this is far from ‘mission ac- industry. With an unprecedented amount growth. complished’. Instead, as the market con- of licensed music now available to fans, While physical sales remain significant tinues to evolve at a pace never before these practices have no place in the music in certain territories and for certain artists, seen, the industry is seizing the moment, world, today or tomorrow. there is no doubt that streaming is the key driving further innovation and exploring The global music business is changing driver of growth, with the number of users ever-expanding new ways of engaging with more significantly – and quickly – than of paid subscriptions having broken the fans around the world. ever before, but the fundamental role of 100 million mark and continuing to rise. Realistically, for this growth to become a record company remains the same: to Fans are engaged with music in an amaz- sustainable, for investment in artists to discover, nurture, support and promote ing variety of formats, from the vinyl revival be maintained and for the market to con- artists and to make their music accessible to the phenomenon of musical.ly, but the tinue to evolve and develop, more must be around the world. growth story is centred on services which done to safeguard the value of music and are widening streaming’s demographic to reward creativity. For music to thrive in appeal. Record companies and their distri- a digital world, there must be a fair digital bution partners have been instrumental in marketplace. this, licensing more than 40 million tracks Artists and creators have spoken about to hundreds of digital services worldwide the global ‘value gap’, whereby ‘safe har- and developing the high performance bour’ legislation dating from the Internet’s systems that allow music to be accessed early days is being abused by user upload around the world. Their approach has been services such as YouTube, who are not li- global in scope and yet local in execution, censing music on a fair basis. Gradually, adapting their practices to open up legal policymakers are beginning to listen and digital markets for music. legislation is being examined or proposed 8 Global charts GLOBAL MUSIC REPORT 2017: ANNUAL STATE OF THE INDUSTRY GLOBAL CHARTS
Most popular artists and best sellers of 2016.
TOP 10 RECORDING ARTISTS
DRAKE DAVID BOWIE COLDPLAY
ADELE JUSTIN BIEBER TWENTY ONE PILOTS
BEYONCÉ RIHANNA PRINCE
2015 top 10 list:
1 ADELE 6 COLDPLAY 2 ED SHEERAN 7 MAROON 5 3 TAYLOR SWIFT 8 SAM SMITH 4 JUSTIN BIEBER 9 DRAKE 5 ONE DIRECTION 10 THE WEEKND THE WEEKND
Source: IFPI. The compilation of the IFPI top artist chart has been independently verified through certain agreed procedures by BDO LLP. BDO LLP has verified that IFPI has compiled the chart correctly in line with the outlined procedures. GLOBAL MUSIC REPORT 2017: ANNUAL STATE OF THE INDUSTRY Global charts 9
GLOBAL TOP 10 ALBUMS OF 2016 GLOBAL TOP 10 DIGITAL SINGLES OF 2016
Units Units Title and artist (m) Title and artist (m)
Lemonade One Dance 2.5 12.5 1 BEYONCÉ 1 DRAKE
25 Love Yourself 2.4 11.7 2 ADELE 2 JUSTIN BIEBER
Closer Views 2.3 3 THE CHAINSMOKERS 11.7 3 DRAKE FEAT. HALSEY
Hardwired...to Cheap Thrills 11.1 4 Self-destruct 2.1 4 SIA METALLICA
Blackstar Sorry 1.9 10.8 5 DAVID BOWIE 5 JUSTIN BIEBER
Blue & Lonesome Work 1.8 10.6 6 THE ROLLING STONES 6 RIHANNA
24k Magic 7 Years 1.7 10.4 7 BRUNO MARS 7 LUKAS GRAHAM
Don’t Let Me Down Blurryface THE CHAINSMOKERS 1.5 10.2 8 TWENTY ONE PILOTS 8 FEAT. DAYA & KONSHENS
A Head Full I Took A Pill 9 Of Dreams 1.4 9 In Ibiza 10.0 COLDPLAY MIKE POSNER
A Pentatonix Stressed Out 9.9 10 Christmas 1.4 10 TWENTY ONE PILOTS PENTATONIX
Source: IFPI. Physical and digital albums included. Streams excluded. Source: IFPI. Units include single-track downloads and track-equivalent streams. For full top 50 global albums and top 20 digital singles, please see the Data and Analysis section of the full report. 10 Global market overview GLOBAL MUSIC REPORT 2017: ANNUAL STATE OF THE INDUSTRY GLOBAL MARKET OVERVIEW
Growth driven by investment and innovation.
n 2016, the global recorded music mar- for bespoke, local approaches to develop ket grew by 5.9%, the fastest rate of new and emerging markets. GLOBAL GROWTH growth since IFPI began tracking the The global digital market is now seeing IN MUSIC I market in 1997. This was a second con- unprecedented competition, with stream- secutive year of global growth for the in- ing services developing and extending dustry, with revenue increasing in the vast their offerings around the world. Rather majority of markets, including nine of the than cannibalising the existing streaming top ten. This growth, however, should be base, these developments are expanding � 5.9% viewed in the context of the industry losing it, providing fans with a more varied, richer Global recorded nearly 40% of its revenues in the preced- experience and bringing streaming to new music market growth. ing 15 years. audiences and new territories. Streaming has been the clear driver Far from being the conclusion of a of this growth, with revenues surging by long-term transition, however, record com- 60.4%. With more than 100 million users panies see this moment as the start of a 50% of paid subscriptions globally, streaming new chapter in recorded music, albeit one Digital music share has passed a crucial milestone. It makes that is underpinned by a continuing com- of global revenue. up the majority of digital revenue, which, mitment to invest in music and develop in turn, now accounts for 50% of total re- artists, and driven by the need to deliver corded music revenues. their music to fans in ever more varied and Record companies are driving this digi- exciting ways. tal evolution. Even through more than a Crucially, the industry is also working decade of market decline, they continued to convert the positive revenue trend cur- their central mission to discover, nur- rently being experienced into sustainable ture and promote artists and their music. growth. To achieve this, music must be Alongside this, record companies have properly protected in an increasingly digi- built the systems and infrastructure that tal marketplace. The market flaw known has enabled the widespread licensing as the ‘value gap’ must be fixed (see page of digital music services and supported 24) and fair revenue must return to those their development. They have engaged on who invest in and create music. a global scale, while recognising the need GLOBAL MUSIC REPORT 2017: ANNUAL STATE OF THE INDUSTRY Global market overview 11
GLOBAL RECORDED MUSIC INDUSTRY REVENUES 1999–2016 (US$ BILLIONS)
2 0 0 Source: IFPI 0 7 0 0 20 0 0 0 1 0 1 1 1 2 2 1 1 0 2 1 0 0 1 0 0 0 0 0 1 2 2 7 1 1 1 7 2 0 1 1 2 2 2 0 21 10 0 1 7 1 2 17 0 7 1 1 1 11 0 10 2 7 1
0 0 1 2000 2001 2002 200 200 200 200 2007 200 200 2010 2011 2012 201 201 201 201
T 2 2 2 22 1 20 20 20 0 1 1 2 1 1 1 1 1 1 1 1 1 7
Physical Digital Performance rights Synchronisation
GLOBAL RECORDED MUSIC REVENUES Before seeing a return to BY SEGMENT 2016 growth in 2015, the global recording industry lost nearly 40% in revenues from 14% 1999 to 2014. 2%
50% 34%
Performance rights Physical Synchronisation Digital
IMAGES LEFT TO RIGHT: TOVE LO PHOTO BY MATT JONES, STAN VAN SAMANG PHOTO BY NOORTJE PALMERS 12 Global market overview GLOBAL MUSIC REPORT 2017: ANNUAL STATE OF THE INDUSTRY
2016 FIGURES BY FORMAT
In 2016, global recorded music revenues totalled US$15.7billion. They rose by 5.9% on 2015, improving on the previous year’s growth of 3.6% and marking the largest growth the industry has seen since IFPI began tracking industry sales in 1997.
PHYSICAL FORMAT revenues PERFORMANCE RIGHTS – the mance rates in Germany and ob- declined by 7.6%, a higher rate revenue generated by the use of taining full performance rights in than the previous year, which recorded music by broadcasters Japan, China and the US. saw a decline of 3.9%. The and public venues – grew by Addressing the shortcomings physical sector still accounts for 7.0% to US$2.2 billion in 2016. in performance rights legislation 34% of the global market and is This revenue stream accounts for worldwide becomes even more particularly significant in leading 14% of the market but remains pressing as the consumption of countries such as Japan and significantly undervalued. music is generally moving away Germany. Despite the continued growth from ownership and towards ser- of performance rights revenues vices that offer consumers access over the past few years, a study by to music. PwC has established that record- Provided such fair market ing industry revenues (including conditions are achieved across DIGITAL REVENUES grew by performers’ revenue) from the ra- territories, and music licensing 17.7% to US$7.8 billion, driven by a dio broadcast sector globally cur- companies continue to drive pro- sharp 60.4% growth in streaming rently amount to only some 2% of cess efficiencies, IFPI believes revenue – the largest growth the radio industry’s income which that the global performance rights in eight years. This more than fails to fairly reflect the value of market still has significant growth offset a 20.5% decline in digital the use of the rights. IFPI believes potential. download revenue. Streaming now that the main reason for such makes up the majority (59%) of anomalies is that, in a number of digital revenues. For the first time, territories, the statutory frame- digital revenues make up 50% of work does not enable those that the share of total recorded music hold the rights to music to nego- SYNCHRONISATION industry revenues. tiate fair commercial rates with REVENUE – the revenue from In 25 markets, digital revenues broadcasters. the use of music in advertising, now account for more than half In 2016 the US, UK, and France film, games and television the recorded music market with were the three largest perfor- programmes – grew by 2.8% five further countries crossing the mance rights markets, ahead of compared to the 7.0% rise in 2015. 50% threshold last year. the relatively underperforming It maintained its 2% share of the Germany and Japan. The industry global market. is focussed on increasing perfor- mance rights revenue in these and other key markets, through obtaining adequate public perfor- GLOBAL MUSIC REPORT 2017: ANNUAL STATE OF THE INDUSTRY Global market overview 13
FIGURES AT A GLANCE
� 17.7% Growth in digital revenue.
� 60.4%
Growth in streaming THE CHAINSMO K ERS PHOTO BY RORY RAMER � revenue.
� 7.6% Decline in physical revenue.
� 7.0% Growth in performance rights revenue. COLDPLAY PHOTO BY JAMES MARCUS HANEY � 2.8% � Growth in synchronisation revenue. TAYLOR SWIFT PHOTO BY SARAH BARLOW � ifpi-print ad.pdf 1 10/03/2017 12:14
Millions of people experience Flow everyday
Deezer would like to thank our Deezer NEXT artists, our partners in the industry, Manchester United and FC Barcelona for helping us connect people to the music they love. GLOBAL MUSIC REPORT 2017: ANNUAL STATE OF THE INDUSTRY Global market overview 15
2016 FIGURES BY REGION
Within the global upward trend, each region recorded revenue growth in various ways.
ASIA AND AUSTRALASIA returned to growth LATIN AMERICA was, for the seventh consecu- in 2015 and saw revenue grow further last year tive year, the region with the highest level of growth by 5.1%. The region saw a 45.6% rise in stream- in revenue, seeing a 12.0% rise. Digital revenue grew ing income, offsetting a 9.4% decline in digi- by 31.2%, driven by a surge in streaming revenue of tal downloads and contributing to an 18.7% rise 57.0%. Mexico, the region’s second largest market, in digital revenue. Physical formats declined by grew by 23.6% and many smaller markets also saw 1.8%. The Japanese market is the largest in the growth, while the largest market, Brazil, declined by region and the second largest market globally. 2.8% last year. It grew by 1.1%, with digital growth of 12.6% offset- ting a 1.3% decline in physical sales. China grew by 20.3% and has undergone enormous change in the last few years (see case study on page 28).
EUROPE grew by 4.0% in 2016, a slightly high- NORTH AMERICA grew by 7.9%, a significant er rate than the 3.7% growth in 2015. It remains increase on last year’s growth of 1.5%. Digital rev- a highly diverse region, with markets adopt- enue was the driving force, growing by 16.5% and ing streaming formats at varying rates. In Swe- more than offsetting declining physical sales den, streaming revenue comprises 69% of the of -17.1%. Streaming revenue showed growth market, growing by 9.9%. By contrast, in Ger- of 84.1%. The US – the world’s largest recorded many, the world’s fourth largest music market, music market – continued its evolution, seeing an physical sales represent 52% of the total market. 80.5% rise in streaming income and growing by It saw streaming revenue increase by a significant 7.6% overall, a significant increase on last year’s 73.0%. The whole region saw a sharp increase 1.0% growth. in streaming revenue of 45.5%.
GROWTH FIGURES BY REGION
Asia and Europe Latin America North America Australasia �5.1% �4.0% �12.0% �7.9% 16 The Evolving Market GLOBAL MUSIC REPORT 2017: ANNUAL STATE OF THE INDUSTRY THE EVOLVING MARKET
Streaming grows global market and rewrites the rulebook.
treaming is now established as the Record companies, however, see this as thing is going to be great. The truth is, we most prevalent and significant for- encouraging, but just part of a much long- cannot be complacent.” mat in the modern music industry, er journey. The definition of what consti- Universal Music’s EVP, Digital Strategy, S fuelling growth in almost all major tutes the mainstream market is also shift- Michael Nash, says: “My perspective on markets and starting to unlock the phe- ing, due to factors such as more flexible 100 million is, that’s great, it sounds really nomenal potential within developing ter- pricing, and technology such as voice con- great, it feels really great and it’s definitely ritories. Physical sales trol that could place an expression of a very significant devel- remain significant in streaming at the heart opment. But if we breathe a sigh of relief certain countries and of the home and in-car and feel that we have arrived somewhere, for certain artists, and If we breathe a sigh of relief music experience. we would be completely misreading the the vinyl revival has and feel that we have arrived Sony Music’s Presi- landscape. been a headline grab- somewhere, we would be dent, Global Digital “This is not simply another format ber, but streaming is Business & US Sales, transition, it is a fundamental transfor- completely misreading the the growth driver that Dennis Kooker, says: mation that is changing everything about is revolutionising the landscape. To raise the Mission “When we look back, the business. To raise the Mission Accom- business. Accomplished banner would 2016 may have been plished banner would be the worst mis- By the end of 2016, be the worst mistake we a tipping point for take we could make." IFPI estimates that could make. streaming and, most the number of paid importantly, for paid subscription accounts Michael Nash, EVP, Digital Strategy, subscription stream- Universal Music SUBSCRIBER reached 97 million ing. A year ago we GROWTH worldwide. With the listed driving paid sub- rapid growth of family plans, where sev- scription as the number one priority, so eral members of the same household can that has been a positive development and share a family subscription, IFPI estimates a lot of hard work went into that. that there were approximately 112 million “So, there has been good news, but I � 112m users worldwide of these 97 million paid think some people might over-read that, users of paid subscription accounts. they might think, problem solved, every- subscription accounts. GLOBAL MUSIC REPORT 2017: ANNUAL STATE OF THE INDUSTRY The Evolving Market 17
COMPETITION DRIVING GROWTH One key factor driving growth is increased ly cannibalistic of the paid consumer base competition. Spotify remains the global of the more established players in the leader in streaming and Apple Music has market.” made huge progress since its launch in Current market leader Spotify believes 2015. In China, Tencent Music Enter- competition is helping drive overall market tainment, owner of the country’s leading growth. The firm’s Director of Economics, streaming services, QQ Music, Kugou and Will Page, says: “The key development in Kuwo, is seeing its paid subscriber num- the market at the moment is competition. bers soar. Amazon, meanwhile, launched What is especially key is that it is compe- Amazon Music Unlimited, while Pandora tition based around market growing, not announced plans for an on-demand ser- market stealing. There are more big play- vice (which it has now launched) and ers - and arguably more sustainable play- iHeart introduced beta versions of iHeart- ers - than have come and gone in the past, Radio Plus (US$4.99, enhanced ad-free and it’s all about making new audiences radio listening) and iHeartRadio All Access aware of streaming and expanding the � PROJOTA PHOTO BY RAFAEL KENT (US$9.99, radio + full streaming service). market. At the moment, we are growing, Alongside that, record companies reached Apple’s growing, Amazon’s growing, and licensing agreements with Soundcloud and other services are coming on board, and many other smaller services. we’re not stealing each other’s lunch.” Warner Music’s Chief Digital Officer & Universal Music’s Nash says: “Compe- The key development in the market EVP Business Development, Ole Obermann, tition is absolutely key to advancing the at the moment is competition. says: “The market will develop so that there ecosystem right now. It spurs innovation What is especially key is that it is are a handful of global services. The good and creates a great dynamic from the competition based around market news is that they’re all trying to differenti- standpoint of artists and fans having ser- growing, not market stealing. ate themselves. If we want to attract hun- vices really focused on service and quality. dreds of millions of people to paying ser- We need to have more competition and Will Page, vices, we must recognise that music fans more innovation. Director of Economics, Spotify will have different preferences for how they “I see some people say, ‘Well, now the engage with music. The ideal scenario for business is mature, we need consolida- market development is that these global tion’. I think that is a complete misread. services all take a different approach and Where we are at now, competition is about appeal to different music fans.” expanding the consumer base, it is about Sony Music’s Kooker says: “I think com- competing to bring in the next 100 million petition was a key trigger for growth in subscribers, not competing for the existing 2016. I look at some of the new entrants 100 million. I think there is so much more and to me their consumer base isn’t huge- opportunity ahead.”
STREAMING GROWTH YEAR ON YEAR: 2012–2016