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Wednesday, April 15, 2015
 Digital Music Revenues On Par With Physical
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Message Text: Revenues from digital music services match those from physical format sales for the first time, according to IFPI’s Digital Music Report.

Digital revenues rose 6.9 per cent to US$6.9 billion, representing 46 per cent of all global music sales and underlining the deep transformation of the global music industry over recent years. The industry’s overall global revenues in 2014 were largely unchanged, falling just 0.4 per cent to US$14.97 billion (US$15.03 billion).

The new report shows an industry in continuing transition, with consumers embracing the music access models of streaming and subscription. Another steep increase in subscription revenues (+39.0%) offset declining download sales (-8.0%) to drive overall digital revenues, while the number of paying users of subscription services rose 46.4 per cent to an estimated 41 million.

Subscription services are now at the heart of the music industry’s portfolio of businesses, representing 23 per cent of the digital market and generating US$1.6 billion in trade revenues. The industry sees substantial further growth potential in the subscription sector, with new services advancing in 2015 led by three major global players: YouTube’s Music Key, Jay Z’s TIDAL and Apple’s expected subscription service.

The global recording industry is a portfolio business of different consumer channels and business models. This is underlined by the enduring nature of the physical format, still 46 per cent of the market, and the still substantial share of digital revenues (52%) accounted for by downloads. Physical sales still dominate in a number of key worldwide markets including France (57%), Germany (70%) and Japan (78%).

Within the physical business, vinyl sales continue to revive with revenues increasing 54.7 per cent and now accounting for 2 per cent of global revenues.

Elsewhere in the industry, performance rights income increased by 8.3 per cent and now accounts for 6 per cent of total industry revenues or US$948 million. Synchronisation revenues increased by 8.4 per cent in 2014 to represent 2 per cent of the market, with big gains in markets such as France (+46.6%), Germany (+30.4%) and Japan (+33.5%).

Consumers engage with licensed services. FPI-commissioned research shows 69 per cent of internet users accessed a licensed digital music service in the last six months. Significantly more people say that they use these types of services more than they did 12 months ago, compared to those who say that they use them less.

Awareness of licensed services, such as iTunes, Spotify and YouTube, is high and some 38 per cent of respondents agree strongly or agree a little that they are happy to access music online, rather than own a CD or digital file.

However, IFPI estimates (based on comScore/Nielsen data) that 20 per cent of internet users (down from 26 per cent in 2013) still regularly access unlicensed services such as P2P file-sharing networks, cyberlockers and aggregators.

The defining positive characteristic of international music markets in early 2015 is the continued surge in consumer uptake of streaming services. Much of this is driven by young consumers with little or no experience of owning music and, therefore, less geared to traditional ownership models.

Leading telecoms companies are now offering bundled music services to their customers as standard. These partnerships combine the marketing muscle and billing infrastructure of the telcos with the catalogue and curation of digital music services. Such offerings are playing a significant role in opening up emerging markets.

Digital services are increasingly tailoring their offerings to reach different segments of consumers. At one end of the spectrum, UK service MTV Trax offers users access to up 100 tracks for £1 (US$1.49) a week, while at the other Deezer Elite offers users a high quality audio experience for US$20 a month.

GLOBAL CHARTS: Frozen, Pharrell and Taylor come out top

The soundtrack to the motion picture Frozen was ranked top of the IFPI global album chart, published by IFPI for the first time today. The album topped the charts worldwide, in countries from Argentina to Japan, and sold around four million copies in the US alone.

The Academy Award-nominated Happy, the lead single from Pharrell Williams’ album GIRL and which also featured on the Despicable Me 2 soundtrack, was ranked in the top slot of the IFPI 2014 global digital singles chart.

Taylor Swift became the second recipient of the IFPI’s Global Recording Artist award in 2014. The chart aggregates sales and streams of artists’ catalogue across a range of formats from CD sales to YouTube video streams.

 
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