IFPI – Recording Industry in Numbers Global recorded music trade revenues totalled US$ billion in. , a decline of % on While physical. The global recording industry is a portfolio business of different consumer channels and business numbers for premium music subscription. The size of the sound recording industry, the principal means by which music . somewhat smaller impact on publishing revenues than on the sales figures.
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SEPT #58 • 7. IFPI'S GLOBAL RECORDING INDUSTRY IN NUMBERS. THE IFPI HAS ISSUED ITS FULL GLOBAL SALES FIGURES FOR Music sales in China grew by % in. aided by strong digital growth. China has one of the highest digital shares in the world, with 62% of music. eBook, PDF, Print homeranking.info 26th It is 20 years since the first edition of the. 'Recording Industry in Numbers' was published .
The exploitation of IPRs is currently perhaps more important to the majors than in the past, and the recording industry has also attempted to extend the duration of copyright in sound recordings in the EU from 50 year to 95 years an extension to 70 years was agreed in September With its merger and subsequent buyout of BMG, Sony Music Entertainment has consolidated its position as the second largest major, increasing its market share from The study case is a Dutch start-up that operates two different business models aiming for indie artists to thrive in their careers. The first merger talks of the new century occurred in its first month. The Business of Music. Some of their executives were working in the industry decades before the CD was a hit and now they were seeing it becoming obsolete by a technology that would change their whole supply chain Rogers, Cases against individuals have also been brought in countries outside of the USA.
Perhaps the current turmoil is not so much a revolution as merely one of a series of evolutions in the history of the popular music industry. After all, it is always easier to make sense of the past rather than the present; the tensions and contradictions have already been smoothed out, the implications already known. Finally, I shall briefly explain why an understanding of the global industry is necessary for understanding the local industries that are the subject of this book.
What has happened to revenue in the recording industry? Trade value1 of recorded music in billions of dollars adapted from IFPI, Retail value is a less reliable indicator of income to manufacturers as it is subject to fluctuations in the price charged to customers the price of CDs has fallen in the last ten years though they are related, as explained later. This is important to note because, although this table refers to trade value, when I later offer historical comparisons I will be referring to retail value as trade value data is unavailable.
However, while not intending to dismiss this trend, there are a number of reasons to adopt a critical stance to the data. Firstly, it is important to note that these are official IFPI figures derived from data submitted by its member companies. While the IFPI data provides a snapshot of mainstream industry trends, it is always likely to produce a partial picture. A second reason to investigate this data relates to the kind of historical comparisons being made.
Making comparisons with this year may, therefore, exaggerate the downward trend experienced in the last ten years. Considering the period as an anomaly and broadening our historical comparison thus provides a somewhat different picture.
It is, however, possible to infer different trends from the available IFPI data, highlighting that the conclusions that you draw significantly depend upon your frame of reference. My comparison years of , and are significant dates in relation to the history of the CD technology, which I shall discuss below. At the same time, however, it is necessary to consider the available data at a local level to begin to understand the nature of the data. Considering the data at a national level reveals some interesting trends.
Firstly, it is clear that the major markets are being hardest hit by the decline in sales: The US in particular has been affected badly. This is significant because media reporting of the recording industry often considers just the US situation when it is not wholly representative. It is certainly worth considering how and why the decrease in sales is affecting the major markets more markedly similarly, to understand how this data reflects different aspects of musical consumption, it is worth considering how the downturn affects genres differently , but not all of the major markets have been so badly affected: There are other examples of national markets that diverge from the global trend: When considering the available data on the downturn in the recording industry it is, therefore, important to maintain a critical perspective.
It needs to be recognised that the data may not fully reflect all of the recorded music bought and sold and that it is collected and presented by an industry organisation that will want to present it in a particular way. It is, therefore, necessary to consider alternative ways of analysing the data by, for example, using different historical comparison points.
Finally, it is always worth remembering that if we want to understand how a particular music market is being affected, then we must fully investigate popular music production and consumption in that locality. Notwithstanding these points, it is clear that the value of recorded music has fallen quite considerably in the last ten years.
In the next section, I will discuss how the major labels have responded to the downturn. In the s, labels argued that piracy was a significant explanation for the decline in disc sales. After all, why would anyone purchase records when the radio was giving away their tunes for free?
Similarly, in the late s, the recording industry blamed piracy for the dramatic fall in record sales. It was not entirely unpredictable, therefore, when, in the late s, the labels insisted that the downturn in record sales could be explained by piracy. Whereas blank audio tapes had reduced audio fidelity in every generation of recording, recordable CDs were able to produce perfect clones of digital master recordings. Labels were thus quick to equate the rising number of blank CDrs sales with the declining number of official CD sales and argued in favour of, for example, a levy to be charged on recording equipment including computers and blank discs.
It was a different invention that propelled piracy into public discourse, however. The MP3 algorithm, which enabled the compression of reasonable-fidelity music into smaller data files was first patented by the Fraunhofer Institute in It soon began to be used on websites offering pirated music but its position as the de facto standard for digital music distribution depended upon the emergence of a complementary technology - peer to peer distribution P2P - and, particularly, a piece of software called Napster.
Napster was developed by a college student seeking a way of sharing music files with his friends. However, it soon expanded beyond one small social circle to become an online phenomenon. Napster launched in August and was sued by the RIAA in December that year but the publicity generated by the lawsuit facilitated an increase in Napster usage.
In the month of February , Napster had , users, which increased to 4. At its peak, users on Napster were sharing million music files King, On Napster you could find everything from the latest chart hits to obscure blues singers from the s.
Napster became a very useful, and very cool, way of accessing music. Understandably, the recording industry did not see it this way and, again, their response demonstrated historical consistency. As Simon Frith points out Thus, they sued. The first, and by far the most active country involved in prosecuting individual users was the USA, with the RIAA sending notifications of legal action to users in September By the total had reached The majority of these individuals agreed to settle the claim for a compensatory payment of a few thousand dollars, but two cases made it to trial: Cases against individuals have also been brought in countries outside of the USA.
A further tranche, this time including the UK and France, were announced in October.
October was the last time so far that the IFPI announced cases against individual users and, in late , the RIAA announced that it would no longer be pursuing actions against individuals McBride and Smith, By this time, it had sued approximately individuals Anderson, , making the total number of individuals sued by the recording industry worldwide around 31, The industry then seemingly changed strategy and began focusing on internet service providers ISPs.
Such policies are beneficial for the recording industry because they make the telecommunications industry at least partly responsible for file-sharing. In developing technological locks and aggressively pursuing rights claims in the courts, the major labels sought to delay, or even prevent, the emergence of online digital music. It certainly seems that the labels were unprepared for the online music world and reluctant to enter it, or to let anyone else enter it by, for example, refusing to license their back catalogue to new services.
They were also slow to realise the implications of the MP3 format and digital distribution. Things did not turn out this way, however. The labels were successful in stopping Napster: It did not reach an agreement with the record labels before it filed for bankruptcy in May With hindsight, however, such an outcome has so far failed to materialise. Indeed, other commentators argued that Napster represented a last chance for the major labels to dictate the terms of the online music market for example, Pareles, ; Scachtman, ; Knopper, This means that, had the labels sought to use Napster themselves, they could have provided an online music environment which they controlled.
In August , the month after Napster closed down, 3. The invention of the more efficient and even harder to prosecute Bittorrent format in also made the P2P field harder for the recording industry to counter. The genie was out of the bottle and unauthorised downloading has continued throughout the decade.
The recording industry still views this behaviour as the major explanation for declining sales. However, two simple facts suggest that piracy cannot be the sole explanation for the decline in sales experienced by the recording industry. Firstly, sales had already started to decline before CD burners and Napster emerged. Secondly, if piracy was the sole explanation for the decline in record sales then, given the number of files that have been downloaded, one would expect record sales to have dropped much further than they have.
Just because Napster and declining industry revenue occur at the same time does not mean that the two are necessarily causally linked. This resulted in the bizarre situation where one of the plaintiffs in the Napster trial was the majority owner of the defendant. Unsurprisingly, the investment was unsuccessful: The recording industry presents these arguments in a more black and white fashion than the data allows, however, and often present logically dubious conclusions in their analysis.
Later research has suggested different conclusions, however: Elsewhere, I have written in detail about the dangers of trying to quantify the effects of piracy Marshall, a, b. The fundamental problem with these surveys is that they treat a social activity as an economic one, reducing music listening to buying or not buying records Frith, They also fail to explain the underlying causes of file sharing, adopting a simplistic economic approach that assumes people download merely because it is a cheaper alternative to paying for CDs.
The first possibility is that records now exist in a much more competitive entertainment marketplace than they did previously. A second explanation for the declining retail value of recorded music which creates downward pressure on trade value is the fact that the price of CDs has fallen during the last decade.
While this downward pressure is partly driven by the emerging digital market and subsequent closure of many independent record stores, it was a trend that was already emerging beforehand.
Ultimately, however, the non-traditional retailers began to dominate the record-selling business, with Wal-Mart becoming the biggest seller of music in the US until it was usurped by iTunes in Bangeman, However, in , the US Federal Trade Commission found the major labels guilty of price-fixing because of the MAP, forcing them to pay compensation to consumers Fox, One explanation often put forward by fans and journalists, though less often by academics, is simply that the music being released by the major labels is not as good as it was for example, Lefsetz, While it is difficult to make judgements on the quality of music being released, or to make causal connections between quality and sales some really bad records have sold a lot of copies , it is perhaps plausible to argue that music means less to young people than it did in the past, though there has been no research to investigate the thesis and we should be wary of overly-nostalgic readings of the past.
What we can say with some certainty is that the recording industry benefitted from a teen-pop boom around the turn of the century Knopper, Worldwide CD sales totalled just 5.
Global CD sales rose to million in and continued to rise, passing one billion in and two billion in ibid. It is easy to gloss over figures when reading so please look at them again to recognise this extraordinary growth.
If we consider the sales trends within the recording industry in the first half of the s we are able to ascertain the effect that the introduction of the CD had on record sales revenue. Record sales then began to accelerate rapidly: Even if we assume modest growth without the invention of the CD, a significant proportion of this growth can be explained by the emergence of the new format, in two respects. Firstly, a large proportion of CD sales came not from new albums like Brothers in Arms but from people buying old albums on CD to replace their battered old vinyl copies.
Since Soundscan was introduced as a means of measuring record sales in the US , the biggest selling artist has been country star Garth Brooks. Thus, when analysing record sales in the s and s, it is possible to see that the record industry reaped the benefit not only from the sales of new releases but also from the re-sale of old releases, in effect duplicating the sales of the s and s.
As we have entered the s, however, the benefit from catalogue sales has declined, as listeners no longer have vinyl to replace. There is a second reason why the introduction of the CD had such a positive impact on record industry revenues, however, and that relates to retail price.
Because of their high-tech allure, CDs were expensive. The price of a CD carried similar premiums in Europe and Japan. It is not hard to see how, if sales remain steady, doubling the price of your primary product will improve your revenue. The changing music industry Rather than merely being the result of piracy, therefore, there are a variety of alternative explanations for the fall in recording industry revenue during the s. However, the decline in revenues cannot be entirely explained by recourse to the issues outlined in the previous section.
We also need to consider how the emergence of digital music has changed the nature of the music industry more generally and what the implications of these changes may be.
It is not merely a case of unauthorised MP3 files eating into legitimate music consumption, or of sales being displaced by competing products. Rather, some more fundamental changes are occurring, to both music production and music consumption. In this section, I will briefly outline the most significant changes. Firstly, they funded the recording of music. Recording an album is or maybe was an expensive task and beyond the reach of most musicians. Secondly, they distributed records.
Only big companies could achieve the economies of scale required to do this efficiently and so, as well as distributing the records that their own label produced, the majors would also distribute records produced by smaller labels, charging a fee to do so. Finally, labels made money from exploiting intellectual property rights IPRs. Since the s, the exploitation of IPRs has become a much more significant part of the cultural industries generally and the music industry is no exception.
Licensing recordings to things such as TV shows, films, advertisements and digital games has become a core part of record label business. With regards to production, it has been suggested that the costs of recording an album have reduced considerably in recent years, putting the price of recording an album within the reach of many bands Wikstrom, Perhaps more importantly, the emergence of social media, of the iTunes store and of sites such as Tunecore that perform many of the functions of record labels, has reduced the inherent promotion costs associated with releasing a record.
Whereas in the past the record labels gained their strength from being the only players with sufficient capital to record and publicise an album, the internet has created somewhat viable alternative options for artists seeking to release music. Despite these changes to record production, the major labels have remained significant players in the production of new music, with the majority of successful records still being released by labels van Buskirk, Changes to music distribution may have a more serious long-term affect on the majors, however.
The strong position of the major labels in the old industry arises more from their control of distribution than the records they produced, as the majors distributed not just their own releases but also those of many independent labels.
This meant that not only did they make some money on virtually every record sold, they also had significant influence over the inventory listings of independent labels Negus, The rise of online music has affected the retailing, and thus the distribution of music quite considerably. The decline in physical sales in major markets has decimated the number of independent record stores, reduced the number of record chain stores and reduced the shelf-space given to records by supermarket retailers such as Wal-Mart.
For obvious reasons, distributing digital files is less capital intensive and alternative distributors such as Tunecore and Bandcamp, as well as independent record labels, can get their releases into the major online retail stores - most notably iTunes and Amazon - without the help of the major distributors. Distribution has ceased to be the cash cow it once was, and many of the major labels have now outsourced their distribution. At the same time as these structural changes within popular music production, fascinating shifts are occurring within popular music consumption.
Invented in the late s, the 45rpm single became an important foundation in the history of popular music, providing a cheap and fairly disposable commodity that could be bought by teenagers chasing the latest pop trends. It is not unreasonable to suggest that rock and roll would not have developed in the s without the invention of the single. However, as Keightley explains, it was the development of the long playing album that proved fundamental to the sustainability of the popular music industry from the s onwards.
Not only were albums more expensive than singles, but the associated rock ideologies of the album being a more sustained artistic work and career longevity depending on creating a body of work defined in albums, meant that labels could rely on catalogue album sales to cover the investment risks of developing new artists.
The single remained important though, in genre terms put very crudely, pop is constructed around singles, rock around albums , in acting as promotion for albums Fox and Kochanowski, and, importantly for the current argument, in creating an accessible commodity to encourage children into the habit of buying music.
However, because of the profit margins associated with CD albums, several commentators argue that the major labels consciously depressed the singles market in the s to encourage young people to buy CDs instead Fairchild, The number of singles sold globally fell from million in first year of the CD to million in at the height of the teen pop boom to million in IFPI, One frequent criticism of the record industry during this period was that an individual had to buy an expensive full-length CD for one or two great tracks and lots of filler material see Samuels, , for a rather late reiteration of the complaint.
The emergence of digital music has significantly shifted this dynamic. Now that fans can select which tracks from an album to download, we are witnessing a dramatic increase in the number of individual tracks being downloaded and a decline in album sales. Since digital sales were included in IFPI numbers in , singles sales have risen from million to 1.
In the longer term, the re-emergence of the single as a cultural force may have a major impact on what kind of music gets released, with artistic careers becoming constructed around more frequent, but smaller, single or EP-style releases, rather than periodic album releases. Recorded music today is actually extremely popular: The problem for the labels is that people are choosing to consume music in smaller chunks and thus most of the transactions are actually quite small and less profitable than CD purchases.
The major label merry-go-round The emergence of online music has created a period of instability in the recording industry and this has resulted, among other things, in a period dominated by discussions of takeovers and mergers among the major labels.
At the dawn of the new century there were six major labels, but then the Big Six became the Big Five, then the Big Four and it is altogether possible that we shall see the Big Three in the not too distant future.
This gave UMG a position of market dominance entering the new century. The first merger talks of the new century occurred in its first month. Report about Recording Industry in Numbers is available here: Report about Recording Industry in Numbers states: IFPI today publishes its annual Recording Industry in Numbers, providing comprehensive data for almost 50 territories and in-depth analysis of industry and consumer trends across the global recorded music sector.
Key highlights of the edition include: Within its pages is analysis of global trends in the business and in-depth statistics covering almost 50 markets worldwide. The broad picture that emerges is of an industry that has transformed itself for the digital age, adapting its business models and licensing hundreds of services and millions of tracks for use online. To find out more about the report, including full contents list, list of key tables, sample data and how to purchase a copy please go to rin.
Recording Industry in Numbers — Revenue streams. Streaming has overtaken download revenue in no fewer than 37 markets with subscription revenue now worth 23 per cent of the total digital market. Market trends. Comprehensive data on global, regional and national music market trends, focusing both on and past years.
The overall market in was essentially flat, with revenues declining by 0. National and regional markets. Latin America is the region with the fastest digital growth in recent years, with revenues up 7.
Consumer research. The RIN features exclusive data from Ipsos across 13 of the leading music markets showing changing consumer behaviour in accessing music. Analysis of the shift from ownership to access to music, increasing consumption on mobile devices, and comparative consumption from licensed and unlicensed sources. Global charts.