14 MusicWeek 30.03.12
BUSINESSANALYSISGLOBAL SALES EDITORIAL
Arresting the decline
THE IFPI’S 2011 WORLDWIDE NUMBERS provide the most compelling evidence yet the global music market is finally starting to turn a corner. Admittedly, overall sales were down again, but the 3.0%
drop is a marked improvement on the previous year when the annual decline was 8.9%, while in 2009 revenues fell 7.2%. In fact, 2011 provides the most positive year-on-year change since 2004 when the market was flat. Depending where you look last year’s story becomes more
or less upbeat, but it is telling that only one of the Top 10 territories (the Netherlands) posted a double-digit revenues decline, while two of the top three players – the US and Germany – were virtually flat. For the States in particular this is a remarkable turnaround, given it had endured 10%-plus declines in each of the three preceding years. And, while despondency may be setting in this year in the UK with the albums market down 12.1% at this point, we should remember where the US music market leads we usually follow. It is just going to take a bit of time. There are plenty of other positive tales, too, in the IFPI’s
Recording Industry in Numbers (RIN) to outweigh the more disappointing ones like Japan’s 7.0% fall, some coming from developing markets such as Brazil and South Korea, while Australia had a landmark year as it overtook Canada. Behind much of this growth is a digital market that is now
expanding to decent levels on two fronts: downloads and subscriptions. Some of the debate in the recent past questioned whether consumers would ultimately abandon the à-la-carte model led by iTunes and move across to subscription services, but the evidence presented by IFPI suggests the sectors are serving two different types of consumer. They really can live alongside one another. And it is welcome that the IFPI in its hefty end-of-year report
decided to devote several pages to the physical music market. Too often physical is written off by those who would wish us think all music fans have moved on to digital. That is simply not true and physical product continues to be the dominant revenue driver in most markets. Although the present situation will not last forever with the
US already a digital-dominant music economy, there is some kind of evolution happening in the physical space to ensure the CD will have a future, albeit from a smaller base. The deluxe boxed set is one such development at the more specialist end, but the industry will need to assess going forward how best it can serve a more general music consumer who still wants CDs not downloads. As a counterpoint to these positives, the RIN gives
over its usual generous space to the fight against piracy, although even here there are some encouraging things to report, including the helpful impact of Hadopi law in France and initiatives running in the likes of South Korea and New Zealand. Far more needs to happen on the piracy front, not least in
the UK, but even in the face of this ongoing battle the industry can look back on 2011 as a year when it really moved forward. Paul Williams, Head of Business Analysis
Do you have views on this column? Feel free to comment by emailing
paul.williams@intentmedia.co.uk Revenue boosts:
The US and German markets were flat during 2011 –
a marked improvement over previous, significant declines
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THE WORLD TURNS AROUND
While overall global music sales are down again, the margin of decline is much reduced – and depending where you look, the turnaround in fortunes of some markets is an extremely positive indication for the future
EXECUTIVE SUMMARY
Recorded music revenues down 3.0% in 2011 to $16.6bn (£10.5bn) Digital revenues rise 8.0% to $5,229m (£3,292m) as physical drops 8.7% to $10,170m (£6,411) US remains top music market with sales down 0.1% with Japan second (–7.0%), Germany third (–0.2%) and the UK fourth (–3.1%) Australia moves above Canada and Brazil overtakes Netherlands and Italy in global rankings Adele’s 21 is 2011’s top-selling album with 18.1 million units sold
INTERNATIONAL BY PAUL WILLIAMS
S
ubscription music services played by far their biggest role yet in global annual music sales in 2011, helping the overall recorded music
market fall by its smallest amount since 2004. Although sales were down yet again, the 3.0%
decline to $16.6bn (£10.5bn) was significant in that it was far less harsh than in previous years – the drop was 8.9% in 2010 – and within this slow- down was a significant lift in the number of music fans now paying for subscription services. According to IFPI figures revealed in its
Recording Industry in Numbers publication covering 2011, the paying subscription base rose by
65% last year to an estimated 13.4 million people. Even more encouraging is the IFPI concluding this rise has not cannibalised iTunes and other à-la-carte services, a situation it explains by the two business models attracting different types of consumers. At the same time, iTunes continued to move into new markets with launches last year in 28 territories, including Brazil. Spotify alone claimed more than three million
paying customers in 2011, more than tripling its base since the previous year, while France’s leading streaming service Deezer had 1.5 million paying subscribers. As the number of users of these services and
others rapidly grows then so does the downloads market with the one-track business expanding by around 13.3% in unit terms last year and digital albums up 25.8%. Digital revenues increased overall by 8.0% to $5,229m (£3,292m), a bigger percentage increase than the year before, although this rise was not enough to offset an overall fall in recorded music sales as digital’s increase was cancelled out by an 8.7% drop in physical sales to $10,170m (£6,411m). Even here, though, it was not all bad news as the physical market appears to be starting to level off, having fallen by a much sharper 13.8% in 2010. Performance rights income, meanwhile, was up
4.9% to $905m (£570) and the IFPI has added synchronisation revenues to its annual calculations
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