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German and US industries see record sale revenue slip, despite booming digital sector

By | Published on Thursday 28 March 2013

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In 2011 Germany was one of the few markets that bucked the trend of decline in the global record industry by scoring a 0.1% increase in revenue. But following the news that record industry revenues worldwide were up 0.3% in 2012, contrary Germany has posted a 3.2% decline.

Which probably tells us very little in terms of the big picture, though all those people who got very excited last month about the first worldwide record industry growth since Napster will be hoping global figures don’t follow Germany’s lead and slip back 3% this year.

A further slide in CD sales in the German market was behind the overall decrease in 2012 revenues, such declines having a sizable impact because physical product still accounts for nearly three quarters of record sale income in the country. Though the German digital music market – despite being some way behind that in many other key European territories – is now gaining momentum.

8.4 million Germans downloaded music from legit digital stores last year according to the latest stats from the country’s record industry trade body BVMI. Over half of those purchases were of digital albums, with downloads generating about 250 million euros in revenue, up 24.4% on the previous year. Streaming services are also gaining traction in Germany (many arriving late in the market, mainly because of the hard bargaining of publishing rights collecting society GEMA), and generated about 36 million euros in revenue last year, a 40% increase on 2011.

Despite the overall decline, Berlin-based Universal man Frank Briegmann, who heads up the mega-major’s Central Europe operations, managed to be upbeat when speaking to Billboard, remarking that: “It will still take some time for a genuine economic turnaround to emerge in the market as a whole. Even so, an important turnaround has occurred in people’s heads; we are in a completely new climate, music is back in. There is hardly a technology provider or platform operator which can afford not to have an attractive range of music. And the fact that the two global players, Apple and Microsoft, are placing store on music content clearly demonstrates the potential in this market. Content is king again”.

The US recorded music market also saw a slip in 2012, according to stats released this week by the Recording Industry Association Of America, with a 1% decline overall, despite substantial digital growth, especially in the streaming and subscription service space.

And while digital still only accounts for 29% of revenues in Germany, it now brings in 59% of the US record industry’s recorded music income, the American market having been at the 50/50 point in terms of digital v physical in 2011.

Download service revenue grew by $235 million, a more substantial increase than the previous year, so that it totalled $2.8 billion. Which puts it someway ahead of the money being made from ad-funded and subscription-based streaming services, though that is where the most growth occurred. In fact streaming service revenue was up 58% to $571 million.

Which is all fab, though the decline of CD sale revenue quickened in 2012, resulting in a 17% fall, meaning the digital boom didn’t compensate for the physical sale slide Stateside last year. Though it’s not far off.