Streaming fuels strong rise in music revenue
THE recorded music industry has enjoyed its first significant growth since the dawn of the Internet age, as streaming led digital to overtake physical sales, a global trade body said on Tuesday.
Recorded music revenue expanded by 3.2 per cent last year worldwide to US$15 billion (S$20.2 billion), fuelled by an extraordinary growth in subscriptions to streaming services, said the International Federation of the Phonographic Industry.
The growth is the first uptick in the music industry at a more than marginal level since 1998, when sales grew 4.8 per cent year-on-year.
But the industry is still down by one third since the late 1990s, when Internet service became mainstream in developed countries and listeners flocked to music sites, both legal and illicit.
The rapid growth of streaming services such as Spotify - which allow unlimited, on-demand music online - led digital music to surpass sagging physical sales for the first time last year.
The industry federation estimated that 68 million people around the world had digital subscriptions, compared with just eight million in 2010 when it started keeping track.
Streaming revenue grew by 45.2 per cent in the past year alone, nearly matching sales from digital downloads on iTunes and other sites.
Yet, the industry pointed out that revenue was still far below potential.
"The value of music is still not being fully recognised. Today, there is a real spirit of optimism across our industry but we are a long way from declaring 'mission accomplished'," said Stu Bergen, chief executive for international and global commercial services at Warner Music Group.
Without singling out YouTube by name, the industry federation took aim at "user-upload platforms" as a persistent drain on the industry.
Some 900 million people essentially listen to music for free through advertising-supported sites, yet the revenue generated for the music industry is barely a quarter of that through streaming subscriptions, the annual report said.
The industry's growth came amid a spike in sales of licensed music in China, where revenue jumped nearly 64 per cent.
China has long been notorious for piracy but major labels have made inroads and tech giant Apple has rolled out its new Apple Music streaming platform in the world's most populous nation.
Edgar Berger, chairman and chief executive of international for Sony Music, said China should be one of the top markets for music consumption - as it is for movies - and not number 23 as at present.
"The biggest potential in the world for music growth is in China," he added.
The labels credited China's government with keeping its word on stepping up the legal framework against piracy.
The health of the music industry varied widely by country. Japan, the largest market after the United States, saw music sales grow by 3 per cent - reversing years of declines.
Latin America was the fastest-growing region, with revenue jumping 11.8 per cent on soaring interest in streaming.
France and Germany were major markets that saw contractions, although sales in Italy jumped by 25 per cent.
The music industry got a shot in the arm last year from British singer Adele's 25, the fastest-selling album in years.
The album, released on Nov 20, sold 17.4 million copies worldwide last year.