The recently published Ernst & Young study that was commissioned by the French music industry body SNEP highlights the revenue split of a premium subscription of EUR 9.99 Spotify, Deezer and other comparable music streaming services. The study’s results confirm the conclusions drawn in the blog series “Is Streaming the Next Big Thing?” that – beside the music consumers – the (major) record labels are the main beneficiaries of the current boom of music streaming. In contrast, the musicians get just a small piece of the streaming pie and the streaming services for their part have severe problems to establish a sustainable business model. In the following, I would like to highlight and to comment on the main results of the study.
Posts Tagged ‘music streaming
Tags: authors, composers, creators, Deezer, interpreters, major labels, music catalogue, music consumers, music majors, music publishers, music streaming, music streaming portal, music streaming service, music subscriber, music subscription, premium subscription, record labels, record majors, revenue share, revenue split, Spotify, streaming
Dear readers of the music business research blog,
Music streaming dominated the music business year 2014. Taylor Swift attracted global media attention when she pulled her music catalogue from Spotify music streaming service blaming the Swedish company for insufficient royalty payments. She, thus, followed the footsteps of Radiohead’s Thom Yorke and other artists who have criticized Spotify and other streaming services for poor payouts – a fact also highlighted in my blog post “Is Streaming the Next Big Thing? – The artists’ perspective”.
Nevertheless, music streaming has been a booming business model in 2014. Revenues from music streaming increased in almost all markets – e.g. in the U.S., Japan, Germany and Brazil. New services have been launched such as Amazon’s Prime Music and YouTube’s Music Key. And music subscription service Beats was part of the largest takeover in the music industry when Apple purchased Beats Electronics, but mainly for the valuable headphone line. Apple again was in the headlines when it announced that the latest U2 album “Songs of Innocence” was given away for free to all the Apple users – a US $100m marketing campaign for Apple with questionable results.
The business model of music streaming was also one of the main topics of the 5th Vienna Music Business Research Days on “How to Monetize Music in the Digital Age” (October 1-3, 2014), which were held the first time in cooperation with the Waves Vienna Festival & Conference at the University of Music and Performing Arts Vienna. A conference track day supplemented for the first time the Young Scholars’ Workshop and the invited conference day with conference papers presented by academics from Austria, Australia, Brazil, Croatia, Germany, Hungary, the Netherlands, Norway, Spain, Sweden and United Kingdom. In the course of the VMBR-Days the best paper of the Young Scholars’ Workshop was awarded for to Jordana Viotto da Cruz of University 13 Paris and to Esther Bishop of Zeppelin University Friedrichshafen. Both papers are considered for publication in the International Journal of Music Business Research (IJMBR).
Tags: Ananay Aguilar, Andy Chen, artist income, Artist Revenue Project, Beate Flath, Bettina Schasse de Araujo, Bodo Balazs, business models, Christian Handke, Daniel Nordgard, Denis Crowdy, Dennis Collopy, Diane Hughes, Elke Schüßler, Emilien Moyon, Ercilia García Álvarez, Erik Hitters, Florian Drücke, Franz Schumacher, Glaucia Peres da Silva, Guy Morrow, Joan-Josep Vallbé, Jordi López Sintas, José Maria Álvarez-Monzoncillo, Keith Harris, Kristiansand Round Table Initiative, Kristin Thomson, Marc Marot, Mark Evans, Monetizing Music, music streaming, Nives Mikelić Preradović, Patrick Waelbroeck, Paul Resnikoff, Regulatory conversation, Ronnie Gey, Sarah Keith, Sergej Lugović, Sheila Sánchez Bergara, Stephan Klingner, Vienna Music Business Research Days 2014, Werner Jauk, young scholars' workshop
The 5th Vienna Music Business Research Days were devoted to the question “How to Monetize Music in the Digital Age”? Academics and business professionals answered this questions from different perspectives. The VMBR-Days 2014 were held in cooperation with the Waves Vienna Music Festival & Conference and attracted an even larger international audience than in the years before. On Oct 3rd, a conference track day complemented the invited conference day on Oct 2nd for the first time. Academics from Austria, Australia, Brasil, Croatia, Germany, Hungary, the Netherlands, Norway, Spain, Sweden and United Kingdom presented recent findings of a wide range of music business research topics.
The Young Scholars’ Workshop gathered for the fourth time students and mentors/discussants from more than 10 countries to discuss the findings a papers derived from master and PhD theses (see also the webpage of the Young Scholars’ Workshop 2014).
For a detailed coverage of the whole conference– including most of the papers and presentation slides as well as the audio streams of all talks and discussions of Oct 2nd – please click here. Continue reading ‘5th Vienna Music Business Research Days in Retrospective’
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).
In the past few years several studies on the impact of P2P music file sharing on recorded music sales were published. They came to very different and even conflicting results, as I highlighted in a 25 part blog series. A recently published study now shifts the focus from file sharing to music video online streaming. R. Scott Hiller of Fairfield University and Jin-Hyuk Kim of University of Colorado Boulder analysed the sales displacement effect of YouTube in a paper entitled “Online Music, Sales Displacement, and Internet Search: Evidence from YouTube“. They concluded that Warner Music Group sold significantly more units of its Billboard 200 albums, when the Warner content was removed from YouTube due to a conflict on licensing fees. In addition, they found no evidence that the blackout had a negative promotional effect for Warner artists.
You can read more about this study and my assessment of the results here:
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.
Tags: album sales, CD, digital music market, digital music sales, download sales, Japan, mobile music sales, music consumption, music streaming, music subscription, physical music sales, recorded music market, Recording Industry Association of Japan, RIAJ, single track sales
Compared to other markets, the world’s second largest recorded music market is very different – at least in respect to digitization. Whereas the digital music segment is booming in other large markets, it is shrinking in Japan according to the latest report of the Recording Industry Association of Japan (RIAJ). In 2013, the total digital music sales were ¥ 41bn (EUR 290m) compared to ¥ 54bn (EUR 383m) a year before – a drop of 23 percent. The main reason for this surprising decrease is a shrinking mobile music market that lost 56.7 percent of its volume from 2012 to 2013. The drop was even more dramatic if we look back to 2008, when mobile music sales accounted for ¥ 79.9bn (EUR 566.0m) – fivefold in value than in 2013. The main driver for the sales drop was not – as might be supposed – the shrinking market for mastertones and ringback tunes, but tremendously falling single track download sales on mobile phones. Whereas mastertones and ringback tunes sales decreased by 75.9 percent and ¥ -21.8bn (EUR -154.4m) respectively from 2008 to 2013, the decline of mobile single tracks download sales was even more severe with 83.7 percent and ¥ -39.9bn (EUR -282.6m) respectively in the same period. We have to take into consideration, however, that RIAJ does not count downloads from smartphones and tablets as mobile music downloads, but as desktop downloads from the Internet, which strongly increased in the past few years. The value of single track downloads on the Internet was ¥ 14.8bn (EUR 104.8m) in 2013and Internet album download sales were at ¥ 14.8bn (EUR 104.8m) resulting in a growth of both segments of about 150 percent compared to 2008. Since the current value of Internet music downloads is much lower than the former volume of the mobile music segment, the total digital music sales have decreased in the past five years. In addition, the Japanese music streaming market is still underdeveloped. Spotify is expected to launch its service this year and other streaming services still evaluate the market potential in Japan.
Since the physical recorded music market in Japan also declines, the total music sales has been falling for more than a decade. RIAJ, however, does not report sales figures for physical music formats, but production values. Thus, we cannot assess the total music sales for Japan, but only the overall production value of CDs, vinyl discs and other physical formats such as music cassettes, SACDs and music DVDs. Thus, we can observe that the production value of physical music carriers has nearly halved since 2000.
The Japanese recorded music market, thus, is characterised by particularities which will be highlighted in the following analysis.