Global recorded music revenues grew 18.5% last year, with the industry at large generating $25.9 billion, the highest total amount since the International Federation Of The Phonographic Industry began aggregating global figures in the mid-1990s (albeit only if you don’t adjust for inflation).
Although revenues from physical products, sync deals, and the broadcast and public performance of recorded music all went up in 2021, it was – of course – the streaming boom that powered much of that growth, with streaming revenues up 24.3%.
All of this comes from the IFPI’s ‘Global Music Report’, published yesterday, which aggregates figures from markets all over the world. It confirmed that the key trends we’ve seen for several years now in the recorded music business all continue, and – crucially – those trends are happening pretty much everywhere. That being that streaming – and especially premium streaming – continues to grow, and with it the record industry grows, with double digit growth in many markets.
Revenues from premium streaming grew 21.9% in 2021 to $12.3 billion and now account for 47.3% of the industry’s total income. Although revenues from ad-funded free streaming services are growing too, partly because platforms like Instagram and TikTok also sit under this category. Free streaming services generated $4.6 billion last year and now account for 17.7% of the total.
Streaming, of course, was not affected by the COVID pandemic and the resulting shutdowns, unlike the record industry’s other revenue streams such as physical product, sync and especially broadcast and public performance. All three of those also grew last year – though part of that growth can be attributed to those revenue streams recovering from a COVID caused dip in 2020. For example, although revenues from broadcast and public performance were up 4%, the total income – $2.4 billion – is still down on the $2.6 billion generated in 2019.
However, with physical products – although the shutdown of the high-street during the peak of COVID did have a negative impact in 2020 – the 16.1% growth seen in 2021 wasn’t just about making up for the pandemic caused declines. CD and vinyl together brought in $5 billion in 2021, exceeding physical revenues for both 2018 and 2019.
Part of that is down to the ongoing vinyl revival, of course, with vinyl revenues up 51.3% last year, but CD sales were also up for the first time in more than two decades, with the IFPI reporting a particularly strong engagement with that format in Asia, including South Korea as well as Japan, ie the market where physical still dominates.
Once all that is crunched, on a global basis streaming accounts for 65% of recorded music revenues (as noted, 47.3% premium streaming, 17.7% free streaming), while the rest is split between physical (19.2%), broadcast and public performance (9.4%), downloads (4.3%) and sync (2.1%).
As also noted, the growth is global. The IFPI splits the world into seven regions of which the fastest growing is Middle East and North Africa – which has now been separated from Sub-Saharan Africa for the purposes of the trade group’s stats. It saw 35% growth last year, almost exclusively down to streaming which accounts for 95.3% of income in this region.
However, this is still very much an emerging region for the record industry, meaning that 35% growth resulted in a relatively modest $89.5 million. However, it’s no secret that the record industry sees big opportunities in the longer term in this region, and also Sub-Saharan Africa, where there was 9.6% growth last year.
The other big growth region is Latin America where revenues were up 31.2%. Two markets still dominate in this region – Mexico and Brazil which account for 66.5% of the region’s revenues – although there was decent growth in other Latin American markets too, again mainly powered by the streaming boom, with streaming accounting for 85.9% of income in this part of the world.
In Asia revenues grew 16.1%, although – as usual – Japan has an impact on that total. The transition from physical to digital has occurred much slower in the Japanese market – the second biggest recorded music market in the world, behind the US – meaning that the ‘bad times’ that occurred in the middle of that transition in all mature markets has taken place in Japan several years later.
That said, the Japanese market also saw growth last year of 9.3% compared to a 2% dip in 2020. But growth is slower there than in many other big Asian markets – so much so, if you take Japan out of the figures for this region total growth is actually 24.6%.
With so many emerging markets in Africa, Latin America and Asia becoming significant revenue generators for the record industry, one theme that came up during the panel discussion that accompanied the launch of the IFPI report yesterday was the need for record companies to be simultaneously global and local.
Of course, all the double digit growth figures and general positivity within the IFPI’s report – coupled with optimism at the majors that there’s potentially a whole new strand of digital growth incoming via NFTs and the metaverse – is inevitably going to be contrasted with the doom and gloom that has been a feature of the wider music community during the COVID pandemic.
All of which feeds into the ongoing economics of streaming debate and the narrative that while the corporates of the record industry are benefiting from the streaming boom – as the IFPI’s report definitely confirms – artists and songwriters are not feeling the benefit.
That, of course, is an oversimplification, and plenty of artists are also enjoying the good times enabled by streaming. But plenty of legitimate concerns remain about how the streaming business works, how the digital pie is sliced, and the general lack of transparency around the record industry’s deals with the digital platforms, especially the newer deals in the user-generated content and emerging metaverse space.
None of that was directly addressed during the IFPI’s report launch, perhaps unsurprisingly, though there was plenty of discussion about the role record labels play in helping artists achieve their objectives and ambitions, which are increasingly global objectives and ambitions.
The implication being that labels continue to be vital business partners for ambitious artists, and that justifies labels often taking the biggest slice of the digital pie.
The panel of record industry execs chatting at the report launch did discuss the various initiatives at the majors, especially Sony, to offer more transparency and support for music-makers – including paying through royalties to unrecouped heritage artists, portals for accessing usage and royalty data, and schemes to support health and well-being.
However, a lot of the panel’s conversation was more focused on how global success needs on-the-ground teams across the globe, which artists often look to labels to provide, they reckoned.
Basically the argument goes – while in the digital age any artist can get their music to a global audience through a few clicks on the website of a DIY distributor – achieving success in new markets requires infrastructure and expertise in those other countries.
Which is why the majors are setting up offices, buying up companies and forming alliances with the big independents in all the key emerging markets. And once the majors are there, they hope, they can also discover and sign local talent and use their existing infrastructure in Europe and North America to help those artists find a worldwide audience.
All of which makes sense. And the need for on-the-ground support in key markets is definitely a reason why an artist might choose to sign with a major – and why indies look for distributors and partners that can provide them a global network. Though none of that helps heritage artists stuck in old record deals wondering why they get a CD royalty on a stream and how the hell TikTok money is being shared out. But maybe that’s a debate for another day.
Running with the ‘go global by thinking local’ talking point, IFPI boss Frances Moore told reporters, as she launched her organisation’s new report: “Around the world, record companies are engaging at a very local level, to support music cultures and bring on the development of emerging music ecosystems – championing local music and creating the opportunities for it to reach a global audience. As more markets mature, they join with and contribute to the rich, globally interconnected music world”.
“Consequently, today’s music market is the most competitive in memory”, she went on. “Fans are enjoying more music than ever and in so many different and new ways. This creates enormous opportunities for artists. Those who choose to partner with a record company do so to benefit from the support of agile, highly responsive global teams of experts dedicated to helping them achieve creative and commercial success and build their long-term careers”.
You can access the IFPI’s ‘Global Music Report’ here.
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