The push from digital and live music

Blog article
Bruno ZAMBARDINO

Social_Media_Music_Streaming_BrandsVery positive signals from the music business. According to data released by IFPI in its Global Music Report 2016 for the first time in two decades of progressive decline in sales, 2015 is a nice plus sign (3.2%) year-on-year, an increase that translates into absolute values of about 15 billion dollars.

Well, now almost half (45%) of these resources come from digital sales that exceed (again for the first time) the physical ones related to CDs and classic vinyls. The growth was driven by a 45.2% increase in streaming services such as Spotify, Apple Music, TIMmusic, Google Play and Deezer, a consumer that travels more and more on the move and has increased fivefold in five years, reaching a turnover of 3 billion dollars, or 20% of total revenues. To get an idea of the acceleration in progress just think that the launch of Apple Music dates back just a year and with a pricing aligned with the other competitors (9.99 euros per month) already has to its credit 10 million subscribers, a third of those of the market leader, the Swedish Spotify active for about 10 years.

Looking at the development of the individual countries, we find very varied situations. In the United States, for example, streaming is travelling at an ever-increasing pace, making it the primary source of revenue in the face of downloading and selling on physical media. The record market also grew robustly in 2015 in our country: According to the main fiMI industry association, the growth rate was 21%, reaching a turnover of 148 million euros. More than 40% of the market is now based on the digital use of paid legal services. Streaming services are up 63% (down 5% on downloads). Surprising, because in contrast to other markets, is the strong recovery also recorded in sales of CDs, which generated revenues of more than 88 million euros and an increase of 17%. Vinyl sales were as high as 56%.

Another encouraging sign pointing in the right direction towards the recovery of the domestic market comes from the dynamic live music segment demonstrating that the growth of streaming music and its subscriptions to premium services does not generate a "cannibalization" effect compared to live enjoyment. As recently reported in by La Repubblica , since the decline of recorded music began, concerts have become the beating heart of the music market, the center of big investments and an important source of revenue for artists. According to Assomusica on Siae data, 2015 ended with 6.9 million viewers, 12% more than the previous year. The number of events is also growing strongly (up 8%) approaching 4,000. The real boom is in receipts, at 260.5 million,000 or 17.7%. The most important segment is that of light music concerts weighing about 230 million euros, an increase of 28.6%, according to the italian press. Both the big players and the 11,000 pmi in the sector employ something like 400,000 people, demonstrating how strong the relationship that binds artists to the public and how functional social media is to build and feed live events. A lively and passionate audience that in the meantime is much more attentive and demanding thanks to the greater ease of access to streaming services but that does not hinder it from physical contact with traditional places of aggregation and sharing.

Analysts say the prolonged phase of the great crisis is now behind us. This is not to say that the market has achieved its full balance in terms of business models and the rules of the game. Looking at the international market and the driving function of digital platforms, we often overlook the fact that alongside the 3 or 4 players that dominate the market, in this new business strand operate about 400 companies, most of which offer free music and is not able to adequately remunerate artists and producers. According to IFPI, compared to 900 million users who consume advertising-funded music that brought in revenues of 634 million dollars, there are 68 million subscribers to paid services capable of generating as much as 2 billion. A greater effort should be directed – even in our country – to modernize the rules in the direction of greater competition between the various players in the field from record companies to users through to intermediaries who collect the rights and without neglecting the needs of end consumers. Rules that should lead to a fairer (re)distribution of revenues among artists especially emerging ones. More generally, there is a strong need for a new legal system (similar to what is being done in the film and audiovisual sector) which points to greater penetration on international markets and which can serve as a driver to the development potential of the sector.