In March 2010, my first blog post in the music business research blog was entitled “The CD is Dead! Long Life the Music Download?” – with a question mark. The prophecy has become partly true. In some markets, e.g. in Sweden, the CD is only a by-product such as vinyl with a combined market share 12.4 percent (IFPI 2016: 92). In other countries, e.g. Germany, the CD is still economically relevant. Physical sales in Germany accounted for 60.0 percent in 2015 – with 83.6m CD units and 7.6m other physical units sold (ibid: 81). However, the CD is on the way to insignificance and will end up as a nostalgic collectors’ item. The following economic analysis of the international CD market shed light into the dynamics of different markets and explains, why some markets are still driven by CD sales.
Archive for the 'market analysis' Category
Last year, I posted an analysis of the international music streaming for 2014 based on IFPI numbers. Since then the global streaming market was highly dynamic and therefore I updated my analysis and included also earlier data. In 2015 the global streaming revenue (subscriptions and ad-supported streaming revenue) increased by 42.5 per cent (IFPI 2016: 17) and had a volume of US $2.89bn. The music streaming market is almost as big as the music download market (US $2.97bn) (IFPI 2016: 49). Music streaming, therefore, accounts for 42 per cent of the global recorded music market. However, the market share of music streaming differs between countries. Whereas in Sweden the music streaming market share is 66.5 per cent of the overall recorded music market, in Germany just 11.4 per cent of the recorded music revenue comes from music streaming sources. And Japan, the second largest recorded music market in world, lags behind with meagre 4.6 per cent. In the following, please read an analysis of the international music streaming for the time-span from 2011-2015.
In the course of digitization new players entered the music industry changing the rules of the game. Such a player is Live Nation. Live Nation Entertainment is the result of the merger of the world’s largest music promotion company, Live Nation, and the world’s largest ticketing company, Ticketmaster, in 2010. The Ticketmaster-Live Nation merger marks the beginning of a new era in the music business, with all activities within the industry now being integrated, including live music events, venue operations, ticketing services, sponsorship and advertising sales, and artist management and services (Live Nation 2015: 4). In the following Live Nation’s business model and economic performance after the merger is portrayed and analysed.
Tags: BMG Rights Management, CISAC, collecting societies, digital revenue, EMI Music Publishing, Kobalt Music Group, Kohlberg Kravis Roberts & Co., Mechanical revenues, music licensing, music publishing market, Performance revenues, Sony/ATV, Synchronisation revenues, Universal Music Publishing, Warner/Chappell
In a Music Business World Wide article, music industry analyst Will Page calculated a value of US $11.34bn for the global music publishing market in 2014. The number comprises of US $7.55bn for the collection of performance fees, US $1.32bn for mechanical collections and US $0.35bn for private copying collections by CISAC members and US $0.42bn for non-CISAC mechanical collections (e.g. Harry Fox Agency collections). Further US $1.70bn of revenue have to be added for music directly licensed by the publishers (“grand rights” and synchronisation rights).
Figure 1: The global value of the music publishing market in 2014
Source: After Music Business World Wide, “$25 billion: The best number to happen to the global music business in a very long time”, December 10, 2015 (retrieved January 19, 2016)
The analysis highlights that music publishing is as relevant as the recorded music industry with a global market volume of about US$ 15bn. Therefore, this blog post analysis the global music publishing market in a long-term perspective and investigates economic relevance of music publishing for the music majors – Universal Music Group, Sony Music Entertainment and Warner Music Group – as well as the structure of the global music publishing market.
Tags: ad-supported music services, Deezer, freemium, IFPI, iHeartRadio, iTunes, music download sales, music streaming, music subscription, Pandora, physical music market, QQ Music, recorded music market, Recording Industry in Numbers 2014, RIN 2014, SoundExchange, Spotify, Vevo, YouTube
Music streaming is on the rise. In the recent IFPI report “Recording Industry in Numbers 2014” IFPI CEO Frances Moore is cited with “Streaming is now a mainstream part of the modern music industry.” (IFPI 2015: 5) Indeed, global subscription streaming revenue increased by 39.0 per cent and ad-supported streaming revenue by 38.6 per cent in 2014. In 2014, the global music streaming market (ad-supported as well as subscription) has a volume of US $2.2bn, which is even bigger than the single track download market (US $1.9bn) (IFPI 2015: 9). Music streaming, therefore, accounts for nearly a third of the global recorded music market. However, the market share of music streaming differs between countries. Whereas in Sweden the music streaming market share is 70 per cent of the overall recorded music market, in Germany just 6.3 per cent of the recorded music revenue comes from music streaming sources. And Japan, the second largest recorded music market in world, lags behind with meagre 3.1 per cent.
In the following I would like to highlight the economic relevance of the music streaming market segment in an international comparison.
Tags: Bundesverband Musikindustrie Deutschland, BVMI, CD market, charts, consumption behaviour, German music industry, German recorded music market, Germany, GfK Streaming study, IFPI Germany, music download market, music streaming market, phonographic market, record market
The recently published figures of the recorded music market in Germany show a picture of stability. Compared to 2013, the recorded music sales increased by 1.8 percent to EUR 1.48bn as reported by IFPI Germany (Bundesverband Musikindustrie – BVMI) in the latest Yearbook on the Recorded Music Industry in Germany (Jahrbuch zur Musikindustrie in Deutschland). The still fast growing revenues from the music streaming business are the main reason for the modest overall sales growth of 1.8 percent. The revenues from music subscription rose by 77.0 percent to EUR 108.0m compared to 2013. In the same period, however, long-play download sales (mainly digital album sales) declined for the first time – by1.4 percent to EUR 145.0m. The single track download sales again decreased – after a sales decline of 4.6 percent in 2013 – by 7.4 percent to EUR 100.0m. The physical music sales are still declining by 1.7 percent in 2014. Nevertheless physical sales are still dominant on the German recorded music market with share of 74.9 percent (without revenues from neighbouring rights collecting society GVL and from synchronisation). The CD is still the most important audio format of the recorded music market in Germany with sales of EUR 985.0m and a market share of 66.7 percent.
The details of the development of the recorded music market in Germany from 2003-2014 are highlighted in the following analysis.
Tags: Recording Industry Association of America, RIAA, SoundExchange distributions, US CD sales, US digital album sales, US digital music market, US digital single track sales, US music streaming market, US physical music sales, US recorded music market, US vinyl sales, USA
2014 seems to be the watershed year in the recorded music business in the US. According to the recently published sales figures (shipment value) of the Recording Industry Association of America (RIAA), the revenue of US $1.87bn from music streaming (SoundExchange distributions as well as subscription & ad-supported streaming) accounted for 41.4 percent of the digital music sales. Whereas music streaming revenue increased by 30 percent in 2014, digital album sales declined for the first time by 6.7 percent to US $1.16bn and digital singles’ sales by 10.2 percent to US $1.41bn. Additionally, the CD has become a by-product with a market share of just 27.4 percent (US $1.86bn). CD sales again decreased by 12.7 percent in 2014. All in all, digital music sales accounted for 66.5 percent of the US $6.78bn overall recorded music sales (except synchronization royalties). The total recorded music revenue slightly decreased by 0.4 percent compared to 2013.
In the following long-term analysis of the recorded music market in the US, the digitization process in past fourteen years is also highlighted as well as the tremendous change in the digital music market segment.