The truth about the current state of the music industry.
Over the last few years, time and time again, we have seen and heard stories proclaiming the death of the music industry. Record companies are reporting plummeting sales and artists are lamenting lost earnings.#
So, how true is that? Is the music industry dead?
It’s true that CD sales are down and the format that many expected to replace it, downloads, is also suffering.
However, that fact alone doesn’t mean the industry is dying. The music business is more than selling music to listeners.
The basic principle of any business is supply and demand. If there is a demand, and you can provide the supply at a price that is both profitable and affordable then you have a viable business. The demand for music has not fallen, quite the opposite.
The main issue faced by the music industry was that the revenue from new formats, such as downloads and streaming, did not rise at the same rate that the revenue from traditional formats declined.
Over the last few
Globally the music industry grew by 5.9% last year (2016), the biggest growth since 2011.
The music industry in the UK contributes around £4 billion a year to the economy, again this is a figure that is rising, not falling.
In fact, it’s outperforming the UK economy itself in terms of growth. Between 2012 and 2015 the UK GDP grew by 10%. The music industry’s contribution to the GDP grew by 17% in the same period.
The money generated by streaming is also sharply rising, jumping from £168m in 2014 to £251m in 2015, in the UK alone.
As Spotify’s business model is currently to pay out a percentage of the revenue received, rather than a flat per play rate as many people think, increased subscriber revenue means better rates for the rightsholders and artists.
Does that sound like an industry that’s dead or in decline?
So why do we keep hearing and seeing stories saying it is declining?
Well, I think we have to look at who is saying this and where they are.
Most, if not all, of the stories I read come from high
What they are saying is that their own profits from music are falling. They’re comparing what they used to make to what they earn now, they’re not looking at or commenting on the industry on the whole.
They also tend to be US citizens who record in
In the UK any business, or broadcaster, using
This type of revenue makes up less than 10% of the overall earnings from neighbouring rights in the UK. So, even though neighbouring rights in
Also, the music industry in
Now just 44% of U.S. Internet users and 64% of Americans who buy digital music think that that music is worth paying for, according to Forrester.
In the UK 48% of internet users purchase music in some format. 82% of people who use streaming services also purchase downloads and physical formats.
So not only is the growth of digital outpacing the decline in other formats in the UK, the consumers seem more than happy to continue buying music even when they have streaming subscriptions.
The other factor to consider is market share. Throughout the
Only 4 of the top ten selling artists of 2016 were from