There's good news for the music industry: It appears to have finally hit bottom.
A new report by an industry lobby group says global revenues for recorded music increased 0.3 per cent last year to $16.5-billion, representing the first time sales have stopped falling since hitting a peak of $27.8-billion in 1998. (All figures U.S.)
The International Federation of the Phonographic Industry's Digital Music Report 2013 says the volume of digital downloads increased 12 per cent in 2012, and sales of downloads account for about 70 per cent of the $5.6-billion in global digital music revenues. But in a sign of how nimble the notoriously slow-footed music industry is becoming, a growing share of revenues is coming from new sources such as digital subscription services. The IFPI says more than 20 million people are now paying for subscriptions to services such as Rdio, Spotify, Slacker and Galaxie, up 44 per cent from last year; tens of millions more are using the advertising-supported versions of the services, which also pay artists for the right to play their music.
"These are hard-won successes for an industry that has innovated, battled, and transformed itself over a decade," said Frances Moore, CEO of the IFPI, in a statement.
And one that has shrunk, too: After being dominated for decades by six large record labels, a merger last year left the industry with only three large companies: Universal Music Group, Sony Music Entertainment, and Warner Music Group.
A look at how we're listening to music today:
Digital music services are exploding
Digital music consumption has "gone mainstream," says the IFPI report, citing a new study by the market research firm Ipsos MediaCT. Not only are people buying music from services such as iTunes and Amazon, 81 per cent of music fans between the ages of 16 and 24 have used a licensed digital music service in the past six months. Two years ago, the major services were operating in 23 countries; they are now in more than 100 countries.
But not so fast, iTunes
While music labels are often accused of being too slow to adapt, their audience is also largely stuck in the past: 57 per cent of the industry's revenues still come from sales of physical copies of music such as compact discs. Digital channels such as iTunes downloads and subscription services make up 34 per cent of total revenue, while performance revenues – royalties paid for music played in public places such as radio or TV – make up about 6 per cent. (About 2 per cent is made from so-called "synchronization rights," a growing area that refers to songs licensed for use in advertising.)
Fragmenting industry, fragmenting culture
The raw numbers in the report also outline a global music culture that still comes together on occasion – the song Gangnam Style by the South Korean rapper Psy has been viewed more than 1.2 billion times on YouTube alone – but rarely expresses that unified adoration with money: The bestselling record released in 2012, Taylor Swift's Red, has sold only 5.4 million copies, a far cry from the 1980s and 1990s, when big records regularly sold more than 20 million copies. (Still, last year's top seller, Adele's 21, has sold more than 20 million copies since its release in January, 2011.)
Video helps the radio star
Psy turned his video success into sales, with 9.7 million units sold. Canadian Carly Rae Jepson had the globally bestselling single with the irresistible Call Me Maybe, which sold 12.5 million units in part because of the 400-million-plus online views of her video. Gotye's Somebody That I Used to Know sold 11.8 million units on the strength of its official video, which has been seen more than 378 million times, as well as a cover version by Burlington, Ont.-based band Walk Off The Earth that has been seen more than 140 million times.
Consumers are happy, musicians are hurting
While streaming services are becoming more popular, artists aren't seeing much of that new revenue: Musicians typically receive less than half a cent when one of their songs is streamed on a service such as Rdio or Spotify. A group of more than 100 high-profile artists is currently pressing the U.S. Congress to resist attempts by the music service Pandora to reduce the royalties it pays. Katy Perry, Bryan Adams, Rush, Robert Plant, and others charge that Pandora's support of legislation, known as the Internet Radio Fairness Act, could slash their already minuscule online streaming royalties by up to 85 per cent.
Copyright is key
The IFPI, which represents music industry lobbying bodies such as the Recording Industry Association of America and its Canadian counterpart, Music Canada, used the report to argue for stronger enforcement of artists' copyright around the world.
"There is a growing digital economy built around music," opera star Placido Domingo, the IFPI chairman, said in a statement.
"It is important [policymakers] are able to ensure that copyright is respected in the digital environment, so that musicians can continue to develop as artists and the recording industry can grow and be able to invest in their careers."
Best-selling global albums in 2012
1. Adele, 21 - 8.3 million
2. Taylor Swift, Red - 5.2 million
3. One Direction, Up All Night - 4.5 million
4. One Direction, Take Me Home - 4.4 million
5. Lana Del Ray, Born To Die - 3.4 million
6. Pink, The Truth About Love - 2.6 million
7. Rod Stewart, Merry Christmas, Baby - 2.6 million
8. Rihanna, Unapologetic - 2.3 million
9. Mumford & Sons, Babel - 2.3 million
10. Maroon 5, Overexposed - 2.2 million
Best-selling global singles in 2012
1. Carly Rae Jepson, Call Me Maybe - 12.5 million
2. Gotye, Somebody That I Used To Know - 11.8 million
3. Psy, Gangnam Style - 9.7 million
4. fun., We Are Young - 9.6 million
5. Maroon 5, Payphone - 9.1 million
6. Michel Telo, Ai Se Eu Te Pego - 7.2 million
7. Nicki Minaj, Starships - 7.2 million
8. Maroon 5, One More Night - 6.9 million
9. Flo Rida, Whistle - 6.6 million
10. Flo Rida, Wild Ones - 6.5 million
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