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Recorded music revenues grew 8.1% last year, despite the value gap

By | Published on Wednesday 25 April 2018

IFPI

The streams are booming. New technologies are creating even more opportunities. Key emerging markets offer much potential for further growth. But fuck me to the highest of all of the fucking heavens, won’t someone finally fucking do something about the fucking fucked-up value gap?

You know, just so I don’t have to fucking write about it anymore. I actually think that is now the most compelling reason for lawmakers to finally get their fucking arses into gear and collectively tell YouTube et al to fuck off. Go on lawmakers, do it, just so I don’t have to write another fucking word about the fucking value gap.

So, yes, the International Federation Of The Phonographic Industry yesterday published its annual stats pack. As expected, global record industry revenues were up in 2017 thanks to the streaming boom, by which we mean the premium streaming boom.

However, things could be so much better if it wasn’t for safe harbour dwelling websites like YouTube and the so called value gap those services create by exploiting copyright protections designed for internet services companies in order to pay lower royalties. That’s what the record companies would like you all to know, anyway.

The global recorded music market was up 8.1% last year, meaning total revenues were $17.3 billion. The streaming boom is behind the growth, of course, with the streaming sector now accounting for 38.4% of total recorded music revenue. Streaming income grew 41.1% last year, offsetting continued declines in the physical and download markets, which respectively slipped 5.4% and 20.5%.

The record industry has now been in growth for three years. The 2000s, of course, were a decade of steep decline for the recorded music sector as it struggled to adjust to the digital world. Revenues were then more or less flat from 2010 to 2015, when the streaming-fuelled growth began.

But the decade of decline means that the record industry has along way to go to return to its 1999 peak, with revenues for 2017 only 68.4% of those generated in that peak year at the end of the 1990s.

Although, of course, those are revenue figures, and digital is generally more profitable than physical. Partly because of the costs of manufacturing and distributing physical product. And partly because royalties paid to songwriters and music publishers come out of the record industry’s physical income, whereas streaming services pay those monies directly to the publishing sector.

Still, no one would begrudge the record industry wanting yet more of that lovely growth. And that means persuading more people to sign up to the streaming services. Everyone’s hoping Alexa and her voice-activated buddies can help with that. Then the music industry can focus on persuading those people still streaming for free that paid-for streams are way better.

The latter will be a particular challenge in emerging markets where free streaming services still tend to dominate. Some reckon that there is still plenty of potential to generate lots more ad income from those free services in those emerging markets, though the label reps at the launch of the IFPI report yesterday seemed more keen to try and find ways to encourage more take up for premium platforms in those countries.

Then, of course, there is the challenge of closing the value gap – the belief that free streaming services built on top of user-upload websites are skewing the market, and making it harder to persuade consumers to upgrade to paid-for options. YouTube has traditionally been the main target of the music industry’s value gap moans, although optimists at the majors hope that the Google site’s own planned move into premium streaming might address some of those issues.

Nonetheless, the record industry is still pushing for reform of the safe harbours that provide user-upload sites the kind of protection that copyright owners reckon they should never have benefited from. The focus of that campaigning remains the somehow-still-in-development European copyright directive, though IFPI boss Frances Moore yesterday admitted safe harbour was a global problem.

She said the labels had prioritised those markets where existing copyright reform offered an opportunity to reform safe harbour – such as in the European Union – but was likewise monitoring the situation across the globe, citing the recent safe harbour debate in Australia in particular. She also added that the long-awaited report form the US Copyright Office on safe harbour in America is now expected later this year.

Meanwhile, in a statement on all that campaigning, Moore added: “The industry is on a positive path of recovery but it’s very clear that the race is far from won. Record companies are continuing in their efforts to put the industry back onto a stable path and, to that end, we are continuing our campaign to fix the value gap. This is not just essential for music to thrive in today’s global market, but to create the right – fair – environment for it to do so in the future”.

Of course – a cynic might argue – if the streaming services continue to grow at their current rate (and find profitability in themselves), and if the record industry starts to see its revenues reach anything like that 1990s peak, everyone might ultimately learn to live with the value gap. After all, home taping never killed music. And that assumption may be part of the long game being played by YouTube et al.

I have no fucking time for fucking long games though. So, I repeat, please, someone, somewhere, close the fucking value gap once and for fucking all. Thanks.

In other news, for more discussion on the potential technical impact of safe harbour reform, and plenty of debates around the technologies that will dominate the next decade in music, see you at The AI Conference at The Great Escape on 17 May. And for a comprehensive beginners guide to the most key emerging market – China – now the tenth biggest recorded music market worldwide, check out The China Conference at The Great Escape on 18 May. More info here.



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