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Global record industry revenues grow 7.4% to $21.6 billion in COVID year
By Chris Cooke | Published on Wednesday 24 March 2021
The International Federation Of The Phonographic Industry yesterday confirmed that, thanks to the ongoing streaming boom, the global recorded music market continued to grow last year, despite sync and public performance revenues taking a hit as a result of COVID-19. According to the IFPI’s new ‘Global Music Report’, revenues for the worldwide record industry rose 7.4% year-on-year to $21.6 billion.
While the live industry was in shutdown for much of 2020, and some music rights revenues were also negatively impacted by the pandemic, premium streaming proved to be a business model that was pretty much COVID-proof. And with premium streaming services already the biggest revenue generator for the record industry, that put the recorded side of the music industry in a strong position to weather the COVID storm, even though shutdown did negatively impact some revenues, and certainly initially forced a rethink of release schedules and marketing campaigns.
The record industry’s income from the broadcast and public performance of music – a growth revenue stream for many years now – was down 10.1% in 2020 as a direct result of the pandemic. Sync also took a hit as TV and movie studios paused their productions and ad agencies put campaigns on hold, resulting in a 9.4% decline for labels and artists. Revenues from physical media sales continued to decline too, down 4.7%, though the rate of decline slowed despite COVID forcing many high street retailers to close at various points. And the vinyl revival continued, with global income from that format up 23.5%.
However, all those declines were compensated for by streaming, with total income from all the different streaming platforms up 19.9% to $13.4 billion. As noted during the launch of the new ‘Global Music Report’ yesterday, an increasingly diverse range of digital platforms now fall under the steaming category, with user-generated content and video-sharing apps, and gaming, fitness and livestreaming services that make use of music, all contributing to that $13.4 billion. Although, for now, it’s still really premium music services like Spotify and Apple Music that bring in the serious cash.
When you break down all the money by revenue stream, streaming at large accounts for 62.1%. Though, if you want a little more detail, ad-supported streams bring in 16.2% of the money, while premium streams generated 46%. Then it goes physical (19.5%), performance rights (10.6%), downloads (5.8%) and sync (2%).
As well bigging up the new kinds of streaming services that are slowly bringing in more income for the record industry, the panel discussion that accompanied the launch also focused heavily on emerging markets. The biggest regions remain US/Canada and Europe, though the significant market growth is found in Asia and Latin America. If you take mature music market Japan out of the maths, the Asian region saw revenues rise by 29.9%, with China and South Korea key in all that. Latin America, meanwhile, saw 15.9% growth.
Another growth region is Africa and the Middle East, markets that have become an increasingly big talking point in recent years, with the majors all investing heavily in that part of the world. In revenue terms, it is still very much early days, and while total revenues were up 8.4%, the Middle East and North Africa accounted for a lot of that growth. Indeed, MENA and South Africa together currently account for 86.7% of revenues from this region. However, everyone seems certain that there is significant growth potential in a number of African markets in the next decade.
As for the lobbying priorities that also appear in the IFPI’s annual stats pack, continued safe harbour reform and the expansion of performing rights for sound recordings in those countries where those still don’t exist remain priorities for the global trade group.
The ‘Global Music Report’ also urges lawmakers to keep copyright exceptions to the minimum, those exceptions having become a big part of the safe harbour debate in Germany in particular. There is then a small section dedicated to the still-going-on-but-less-talked-about battle against online piracy, with web-blocking promoted as an anti-piracy tactic of choice.
The report doesn’t really get itself involved in the big debate around the economics of streaming that has become much more high profile in the last year as many artists saw their live revenues collapse and started to question why, in many cases, they get only a minority share of the one COVID-proof revenue stream.
That debate only came up during the report’s launch once it got to the Q&A. In response, IFPI boss Frances Moore offered what has generally become the standard response from the record industry – and certainly the majors – to all that: basically “look at all the competition!”
First, competition in the talent market place. Artists now have so much choice when picking business partners to work with on their recordings, Moore stressed, meaning each artist could seek and choose whatever they consider to be the best and fairest deal. And secondly, competition on the streaming platforms. Maybe the reason many artists are struggling to make a living from their recorded music, she proposed, is the sheer quantity of tracks being uploaded to the streaming services every single week.
Both of those statements are valid points, of course, though only address some of the issues raised during the big streaming debate that has taken place over the last year. In particular, it ignores the increased value to the record industry of catalogue, and the fact that many of the artists behind that catalogue are stuck in 20th century life of copyright record deals that possibly pay out-dated royalty rates, and provide no opportunity to seek an alternative business approach or business partner.
One of the more interesting lobbying positions in the report does possibly link in to the economics of streaming debate though. It urges lawmakers to respect “the freedom of contract”. It states: “In a fair and functioning marketplace, parties should be free to agree the terms of their licensing arrangements”.
There are various ways the law could interfere in the deals done within the music industry, all of which the labels would likely oppose. But that might also include interventions that seek to increase the remuneration or transparency rights of artists over their business partners.
“Interference, however well-intentioned, will distort the market, disincentivise investment and undermine the growth of the entire sector”, the report adds. “Binding the industry’s hands through static regulation – which can never evolve as fast as technology – limits the ability of record labels, artists, and platforms to find the most effective and innovative solutions to respond to an evolving marketplace”.
But hey, look at us, honing in on the politics when we’re meant to be celebrating the big numbers and rising revenues. Here’s Moore with her official statement on all that: “As the world contends with the COVID-19 pandemic, we are reminded of the enduring power of music to console, heal and lift our spirits”.
“Some things are timeless, like the power of a great song or the connection between artists and fans”, she goes on. “But some things have changed. With so much of the world in lockdown and live music shut down, in nearly every corner of the globe most fans enjoyed music via streaming. Fuelled by record companies’ ongoing investment in artists and their careers, along with innovative efforts to help artists bring music to fans in new ways, recorded music revenues grew globally for the sixth consecutive year, driven by subscription streaming”.
“As record companies continue to expand their geographical footprint and cultural reach, music has become more globally connected today, than ever before and this growth has spread across all regions around the globe. With many impacted by the pandemic, and concerned with growing social injustices, record companies have worked hard to make a meaningful, lasting contribution to the world we want to live in”.
