Brazil is the ninth largest phonographic market in the world according to the latest IFPI report, despite the fact that the revenue from recorded music sales has decreased by 58 percent since 2000. However, the Brazilian market for recorded music is more or less stable for six years now due to relatively high music video sales and the considerable growth of the digital music segment. Thus, the digital music sales have increased by 82.2 percent from BRL 24.3m to BRL 136.7m with music streaming playing an increasingly important role in the sales mix. In the following I highlight the Brazilian recorded music market by figures reported by the Associação Brasileira dos Produtores de Discos (ABPD).
Posts Tagged ‘CD sales
The German Federal Association of Music Industry (Bundesverband Musikindustrie – BVMI) reported a slight growth of recorded music sales by 1.2 percent for 2013. The main reason for the first increase of music sales in the past 15 years were growing digital music sales by 11.7 percent from 2012 to 2013. At the same time, the physical music sales moderately declined by 1.5 percent to EUR 1.12bn. Whereas CD sales fell by 1.3 percent to EUR 1.0bn, the sales of vinyl records grew heavily by 47.2 percent to EUR 29.0m in 2013. Since the CD has still a market share of 69.8 percent, one should be cautious to speak about a turnaround of the German recorded music market. A stabilization of the physical music sales is unrealistic and the increase of digital music sales has to over-compensate the loss in the physical market segment. Although the revenue from ad-supported and subscription music services increased by 91.2 percent to EUR 68.0m, the single-track download sales fell for the first time by 4.4 percent to EUR 104.0m in 2013, which makes a turnaround scenario highly questionable.
In the following, the future development of the German recorded music market will be analysed based on the BVMI report as well as on historic empirical data.
The Recording Industry Association of America (RIAA) recently published the sales figures (shipment figures) for the recorded music market in the US for 2013. Accordingly, digital sales increased by 7.6 percent to US$ 4.36bn from 2012 to 2013. Nevertheless, overall sales (digital and physical) slightly decreased by 0.3 percent from US$ 7.016bn to US$ 6.996bn in 2013. Thus, the sales decline of 12.3 percent (US$ -325m) in the physical product (CD, vinyl, DVD, SACD) could not be compensated by the growth of the digital music market. All in all, digital music sales accounted for 64 percent of the overall recorded music sales in 2013.
The strong increase of digital music sales is fueled by the booming music streaming and subscription segment, which grew 39 percent in 2013, generating US$1.4bn in revenue. However, single track download sales shrank by 3.3 percent (US$ -54.6m) in the same period. Digital album sales have slightly increased by 2.4 percent or US$ 28.7m from 2012 to 2013. These figures seem to indicate a cannibalizing effect of music streaming on download sales, even if we consider recent price cuts by digital music distributors.
The following analysis does not only highlight the digitization process of the recorded music market in the US in past thirteen years, but also the tremendous change of the digital music market segment.
A widely discussed study on music file sharing is Felix Oberholzer-Gee’s and Koleman Strumpf’s paper ”The Effect of File Sharing on Record Sales: An Empirical Analysis”, which was originally made accessable online to the public as a Harvard Business School working paper in 2004 and was eventually published, after revisions, in the Journal of Political Economy 2007.
The study of Tanaka (2004) “Does File Sharing Reduce Music CD Sales?” was based on the the one hand on micro data of CD sales, which were collected on a weekly basis of 30 best selling CDs from June to November 2004 in Japan. On the other, download figures were obtained on each weekend in the sample period from the completely decentralized and most popular Japanese file sharing network Winny. In addition, the author also carried out a non-representative user survey among students on file sharing and CD purchases. Neither the micro data based estimation results nor the students’ survey indicated a negative impact of music file sharing on record sales. Continue reading ‘How Bad Is Music File Sharing? – Part 19′
After several revisions (Hong 2004, 2005, 2007), Hong published in July 2011 a working paper entitled “Measuring the Effect of Napster on Recorded Music Sales”, in which he tried to measure the effect of file sharing on recorded music sales. Since he did not directly observe file sharing activity, the author compared a treatment group of Internet users with a control group of non-Internet users before and after the advent of Napster in 1999 and attempted to eliminate the time effect and isolate the so-called “Napster-effect”. Continue reading ‘How Bad Is Music File Sharing? – Part 18′
Michel’s working paper is based on 4 chapters of his dissertation thesis entitled “A Theoretical and Empirical Analysis of the Impact of the Digital Age on the Music Industry”. In addition two articles in the Review of Economic Research on Copyright Issues are also based on the findings of the dissertation thesis. Michel constructed a model of interactions between artists, record labels, and consumers, which suggests that file sharing may have been undertaken by consumers who were previously not in the market for music. In order to test his model, Michel provided evidence, based on Consumer Expenditure Survey (CEX) data, that “(…) file sharing decreased CD sales by about 4 percent, though the estimate is statistically insignificant” (Michel 2005: 30). Continue reading ‘How Bad Is Music File Sharing? – Part 17′
In the article “Do Artists Benefit from Online Music Sharing?”, which is based on a 2003 working paper, Gopal et al. (2006) present a model of music file sharing to explain the impact of technological and economic incentives to sample, purchase, and pirate music. The results of the model indicate that lowering the cost of sampling by file sharing will motivate more music consumers to purchase music online. In contrast, the restriction or even prevention of sampling will hurt the music industry in the long run. Read more here: Continue reading ‘How Bad Is Music File Sharing? – Part 16′
Bounie et al. conducted an anonymous online survey in two French graduate schools in order to examine the factors that influence the probability to increase/decrease CD purchases after acquiring MP3 files. The results originally published in a 2005 working paper suggest “(…) that there exist two populations of music consumers: people who sample music a lot (explorers) and those who do not sample (the pirates)” (Bounie et al. 2005: 1). This result indicates that music fans among students prefer to sample music and, therefore, their purchases of CDs tend to increase, whereas students with little interest in music use MP3 files as direct substitute for CDs. More details you can find here. Continue reading ‘How Bad Is Music File Sharing? – Part 12′
Holland Mortimer’s and Sorensen’s working paper does not directly address the relationship between file sharing and record sales, but the authors indirectly show that file sharing affected the trade-off between sales of recorded music and concert revenues. They come to the conclusion that the advent of file sharing in 1999 appears “(…) to have eroded the profitability of selling record albums.” However, these changes “(…) may have similtaneously boosted demand for live performances. (…) For artists, the decline in revenues from recorded music after 1998 is striking, but appears to have been more than offset by a concomitant increase in concert revenue. Total industry revenues, on the other hand, have not fully recovered, despite the increasing contribution of concert revenue to the total” (Holland Mortimer and Sorensen 2005: 32).
More can be read here. Continue reading ‘How Bad Is Music File Sharing? – Part 11′