Digital music outpaced physical sales for the first time ever last year as the industry’s revenues grew for the first time in 20 years, according to a report released by the International Federation of the Phonographic Industry (IFPI).
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The recorded music industry has enjoyed its first significant growth since the dawn of the Internet age, as streaming led digital to overtake physical sales, a global trade body said on Tuesday (April 12).
Spotify, the world’s leading streaming service, was slow to enter Canada, but since its arrival in 2014, the all-you-can-listen to services have seen dramatic growth. The sector still accounts for 39 per cent of total music revenue and remains the top choice for consumers in Japan (75 per cent), Germany (60 per cent), and France (42 per cent). Despite growing revenues, however, the music industry is still unhappy with the digital music landscape.
The IFPI contends the wide disparity between consumption and revenue generated by ad-supported services like YouTube requires legislative action.
Record labels have been licensing their catalogs to YouTube for years, mostly because of an adapt-or-die mindset. With digital sales amounting to revenue of £4.7bn and streaming revenue rising to £2bn, it more than offset the continuing decline in sales of albums, in, for example, compact disc form.
IFPI says free ad-supported services like YouTube may be holding the industry back, as they don’t generate almost enough money as premium streaming services do. “It’s my opinion that music should not be free, and my prediction is that individual artists and their labels will someday decide what an album’s price point is”. “If we continue to recover at the same speed as last year, it would take us more than 10 years to reach the market level of pre-digital disruption”.
Digital revenues for the year were $6.7 billion, marking a 10.2 percent rise from the previous year. 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”, he continued.
“The value gap is the biggest constraint to revenue growth for artists, record labels and all music rights holders”. 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 percent of global industry revenues, up from 14 per cent in 2014. “I don’t think we have, as a community, really united on the issue until now”, Ms. Terrill said.
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Despite 25 only going on sale in November (15), the figure is more than five times higher than Adele’s nearest rival, Ed Sheeran, whose 2014 album X was in second place with 3.4 million units.
