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IFPI Digital Music Report 2014

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The global music industry revenue fell 3.9% to $15 billion in 2013, which is according to the International Federation of the Phonographic Industry’s (IFPI) “Digital Music Report.” Japan, the world’s second largest music market, had a prominent decrease of revenue of 16.7%. The Digital Music Report shows Japan’s decline of music sales down $3.01 billion in 2013, falling from $3.61 billion from the year prior. The decline is due to downloads and ringtones, whereas streaming and subscription services has yet established themselves in Japan.

The global recorded music market has a declining value of 0.1%, with some territories reporting an affirmative growth. North America has seen an increase from $4.87 billion in 2012 to $4.89 billion in 2013, which is an increase of 0.5%. Europe has several increased markets: The United Kingdom, Germany, France, Italy, Netherlands and Sweden. Europe had a growth of 0.6%, bringing Europe to $5.38 billion in 2013.

According to the Digital Music Report, subscription services will be contributing in the upcoming year. IFPI has reported that global revenues from subscription and streaming services have reached $1 billion and climbed 51% in 2013. Streaming services are taking the world by storm. These services account for 27% of global digital revenues. It has been reported that there are more than 28 million digital subscribers worldwide, which is up from 20 billion in 2012. While digital sales are up, physical formats have fell drastically by 11.7%.

IFPI’s chief executive, Frances Moore stated, “Last year, in the 2013 report, the theme was road to recovery and we are continuing down that road. Why do I say that? Well, most of the major markets have stabilized. Digital continues to grow and revenues streams have diversified. In addition we have the potential of the emerging markets.” During the “Digital Music Report 2014” launch, Max Hole, chairman and CEO of Universal Music Group International, stated that 2013 was “a year of good news and bad news.” “On a high note, global growth of streaming and subscription services are streamlining in sales.” Hole also stated, “holding up much better than anyone could have predicted 5 years ago, and emergence of new business partners like Beats, iTunes radio and Google’s streaming service creating a strong portfolio business for the recorded music industry.”

The IFPI’s Digital Music Report states that we need new revenue markets to replace CD’s. They are hopeful that streaming and subscription services will fill the void and become profitable revenue for the music industry. However, I feel that streaming and music services have no sustainability and will have a hard time making a profit. There’s no future for free and everybody is doing it. It holds no value with the consumer. They say that the industry is still focused on emerging markets and looking for a better alternative distribution model. There’s no surprise there, I have addressed the need for a new distribution model for some time and have even written a blog called “Broken Distribution.” Discovery and distribution is the key to the music industry’s longevity.

 

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