IFPI Global Music Report reveals streaming is largest revenue source

IFPI Global Music Report reveals streaming is largest revenue source

Surging streaming revenues have consolidated the return to growth around the world in the recorded music market, according to the IFPI’s Global Music Report 2018. 

The global market increased revenues by 8.1% to reach $17.3 billion (£12.4bn) in 2017, a third consecutive year of growth. At today’s launch in London, IFPI CEO Frances Moore was quick to stress that is still only 68.4% of the market’s peak in 1999. 

But if 2016 was the tipping point, the latest IFPI figures suggest streaming is now mainstream consumer behaviour as it became the single largest revenue source (38.4%) of recorded music for the first time. Digital income accounted for more than half of all revenue (54.3%) for the first time (it was around 50% last year). Total digital income was up 19.1% to hit $9.4bn (£6.7bn) last year.

In 32 markets, digital revenues now account for more than half the recorded music market with six further countries passing the threshold in 2017.

The growth in the market was driven by 176 million premium subscribers – 64m of them added during 2017, an increase of 57%. Overall streaming revenues increased by 41.1% to reach $6.6bn (£4.7bn) – not quite the 68% advance in 2016 but still impressive. Crucially, there’s plenty of room for further growth as services expand internationally – smart phone penetration in India and Africa is seen as a potential source of future income for the industry. 

Streaming growth has more than offset the 5.4% decline in physical revenue at $5.2bn (£3.7bn) and a 20.5% decline in download revenue. The slightly faster rate of decline in physical revenue was reflected in the fact that major markets Japan (No.2) and Germany (No.3) both contracted in 2017 as a result of total sales still being skewed towards (declining) physical product. Germany's decline also held back European growth, which only managed 4.3% compared to 9.1% in the prior year.

However, North America surged ahead of its 2016 performance with 12.8% growth and the US retained its No.1 position.

The industry is on a positive path of recovery but it’s very clear that the race is far from won

Frances Moore

Perhaps the most striking territorial development, though, was the appearance of China in the Top 10 music markets for the first time – it’s moved 14-12-10 in the last few years and now looks set to deliver its frequently predicted revenue boost for the biz. China saw revenues grow by 35.3% as result of a 26.5% rise in streaming income.

Streaming revenues increased by 38.2% across Asia and Australasia, with particularly strong growth in India (60.8%) and South Korea (47%). Japan's market contraction was the result of a slower digital revenue rise of 8% failing to offset physical decline of 6.1%. Overall, the region's revenues grew by 5.4%.

Streaming also helped Latin American revenues grow by 17.7%. The region had the best growth performance in 2017 thanks to a 48.9% increase in streaming revenues, though the Latin American market's swift transition to digital also resulted in a 41.5% drop in physical income. Brazil bounced back with 17.9% growth after its 3% decline in 2016.

Frances Moore, chief executive, IFPI, said: “It’s been another incredibly exciting year for music. The work and investment from record companies is enabling brilliant, diverse artists to break through to fans around the world, soundtracking their lives and bringing them increasingly rich and immersive ways to enjoy the music they love. 

“The industry is on a positive path of recovery but it’s very clear that the race is far from won. Record companies are continuing in their efforts to put the industry back onto a stable path and, to that end, we are continuing our campaign to fix the value gap. This is not just essential for music to thrive in today’s global market, but to create the right – fair – environment for it to do so in the future.”

 

Hans-Holger Albrecht, CEO of Deezer, said: "The latest data from IFPI clearly shows that streaming continues to be the biggest driver of and contributor to the growth of overall recorded music revenues, despite the fact that streaming penetration is still relatively low around the world. We are proud to contribute to this positive trend.

 

“In 2017, we delivered over 35 billion streams on our platform and saw strong growth in our user base. This was supported by the increased usage of innovative features like our signature Flow and our initiatives like Deezer Next, which are focused on supporting artist growth."

Performance rights revenue for recorded music grew by 2.3% to $2.4bn (£1.7bn), though the IFPI noted the impact of the value gap on that total.

Sync revenue increased by 9.6% and maintained its 2% share of the global recorded music revenues.

As previously reported, Ed Sheeran was the No.1 global recording artist of 2017 – and he managed to do the double for Warner Music Group with IFPI's top single (Shape Of You) and album.

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