Published on April 25th, 2018 | by Alan Cross1
How streaming saved the music industry
A report this week says that global music sales increased by a healthy 8.1% in 2017, indicating that the bleak post-Napster years are a thing of the past. In fact, just the last three years have seen growth. Everything after about 2002 saw declines in sales.
What gets the credit? Revenue from streaming.
For the first time ever (and probably forevermore), streaming generated more money than the sales of CDs. According to this IFPI summary, revenue from Spotify, Apple Music, Amazon Music, Google Play Music and the rest of them (featuring some 176 million paying users) spiked up 4.1%, good enough for $6.6 billion US in revenue. Looking at it another way, that’s 38% of the global music market.
Meanwhile, CDs tanked the world over by 5.4%, bringing in $5.2 billion, which works out to 30% of the global market. Yep, this is a tipping point all right.
Another point from the report: Revenues from downloads dropped by 20.5%. Why buy a download when you access the same songs for free (or something close to it)?
The biggest growth areas for streaming? Latin America (+17.7%). Places like Mexico and Brazil are turning out to be goldmines.
Who gets streamed the most? Ed Sheeran, followed by Drake, Taylor Swift, Kendrick Lamar, and Eminem.
The Guardian has more.
It was a disaster,” said an executive called Per Sundin when asked to reflect on his career during the 00s. “A truly terrible time. I fired more than 250 people. They were dark days: we’d be invited to dinner somewhere and my wife would say to me: ‘Don’t tell anyone what you do for a living.’”
What ignoble occupation had Sundin chosen? Arms dealer? Cigarette manufacturer? CEO of Enron? Not quite: he was the head of Universal Music’s Nordic operation. The “disaster” he was talking about was working for a record label when CD sales were in decline.
Sundin’s fatalistic outlook was reflected across the music industry. Despite the fact that artists such as Adele and Rihanna were selling millions of records, music companies seemed perennially glum. As revenues declined, they lashed out, fighting legal battles with teenagers who illegally downloaded music and investing in propaganda campaigns to try to teach pesky young people the value of intellectual property. At one point, they worked with the animator Aardman to create a free iPhone game called Music Inc, where you attempt to manage a band, but always fail because of online piracy.
For decades, a job in music had been some of the most fun you could have as an adult. Labels were charging up to £20 for a CD, raking in hundreds of millions of pounds. And they typically received the lion’s share. When Guy Hands, a private equity manager, arrived at EMI in 2007, he wondered why hundreds of thousands of pounds were being spent on floral arrangements until he realised that “fruit and flowers” was accounting slang for drugs, sex workers and other items otherwise difficult to put on an expenses claim. Parties, hedonism and drug use were part of the job.
Then, in the space of a decade, the music industry essentially collapsed – in the US, music’s biggest market, annual revenues fell from $14.6bn in 1999 to $6.3bn in 2009. Some artists still did OK, particularly those who focused on live shows, merchandise and brand endorsements, but labels had to dramatically cut costs. At EMI, Hands did away with the slush fund as well as almost half the workforce. At the label Per Sundin ran, the majority of the team was laid off. The expense accounts, the marketing budgets, the joy of taking a punt on a weird band of misfits in the hope something magical might happen – it was all over. Chart music became safer; the bestselling records of the 2010s have all been by middle-of-the-road acts with lots of “nan appeal”: Adele, Ed Sheeran, Michael Bublé and Take That.
People were talking about the decline, maybe even the end, of the music business. But recently things have started to change.
It’s important that you read the rest here.