Global digital music sales surpass physical formats for the first time in 2015, a new report from International Federation of the Phonographic Industry (IFPI) reveals.
Total global music industry revenues grew 3.2 per cent to $15 billion, the market’s first significant annual growth in nearly two decades.
According to the trade group’s 2016 global music report, digital music revenue rose by 10.2 percent to $6.7 billion, which is 45 percent of the industry’s revenues overtaking physical sales which has 39 percent share.
Streaming remains the industry’s fastest-growing revenue source as revenues increased 45.2 per cent to US$ 2.9 billion and, over the five year period up to 2015, have grown more than four-fold.
Helped by the spread of smartphones, increased availability of high-quality subscription services and connected fans migrating onto licensed music services, streaming has grown to represent 19 per cent of global industry revenues, up from 14 per cent in 2014.
Streaming now accounts for 43 per cent of digital revenues and is close to overtaking downloads (45 per cent) to become the industry’s primary digital revenue stream.
Subscription services have witnessed a dramatic growth as an estimated 68 million people were paying for a music subscription in 2015, compared to 41 million a year earlier. [quote font=”georgia” font_size=”22″ font_style=”italic” align=”right” bgcolor=”#” color=”#” bcolor=”#” arrow=”yes”]According to Frances Moore, Chief Executive of IFPI, “After two decades of almost uninterrupted decline, 2015 witnessed key milestones for recorded music: measurable revenue growth globally; consumption of music exploding everywhere; and digital revenues overtaking income from physical formats for the first time. They reflect an industry that has adapted to the digital age and emerged stronger and smarter.’’[/quote]
Meanwhile, downloads remain a significant offering, accounting for just 20 per cent of industry revenues even as it went down 10.5 percent to $3 billion in 2015. Performance rights revenue increased by 4.4 percent to USD 2.1 billion in 2015.
However, IFPI says the explosion in music consumption is not returning a fair remuneration to artists and record label, and identified a market distortion which it calls ‘’value gap’’ as depriving artists and labels fair return.
According to Frances Moore, Chief Executive of IFPI, “After two decades of almost uninterrupted decline, 2015 witnessed key milestones for recorded music: measurable revenue growth globally; consumption of music exploding everywhere; and digital revenues overtaking income from physical formats for the first time. They reflect an industry that has adapted to the digital age and emerged stronger and smarter.’’
Moore says that, “this should be great news for music creators, investors and consumers. But there is good reason why the celebrations are muted: it is simply that the revenues, vital in funding future investment, are not being fairly returned to rights holders.
”The message is clear and it comes from a united music community: the value gap is the biggest constraint to revenue growth for artists, record labels and all music rights holders. Change is needed – and it is to policy makers that the music sector looks to effect change”, he adds.