This year Apple announced that it would stop supporting the iTunes app and replace it with three separate apps: Apple Music, Apple TV and Apple Podcasts. All three of these apps will most certainly be centred around one thing – the streaming of content.
As streaming continues to grow and gain in popularity physical sales and digital downloads continue their downward slide. Paid streaming services have grown by 32.9% whilst physical revenues have shrunk by 10.1% and download revenue has also shrunk by 21.2%s as reported by IFPI. In addition streaming revenue now makes up 46.8% of global revenue.
This year’s report by global music industry body IFPI follows a now predictable trend that has seen physical sales (largely comprised of CDs) and digital downloads decline as streaming continues in its upward surge.
Some of us are lucky enough to have grown up or at least witnessed multiple different media platforms. Growing up in our household one could find cassette tapes and CDs and if one were to visit my maternal grandparents home then they would also find an antiquated collection of Vinyl records.
The change from then to now is striking and it remains to be seen what tomorrow has to bring. Only time will tell.
So according to IPFI, 51% of global music industry revenue came from physical format sales, 39% from digital channels, 7% from performance rights and 2% from synchronisation.
What’s in store for the future of the global music industry you might ask? Prosperity and growth are most certainly on the agenda.
Whilst still accounting for the vast amount of global music industry revenue, the physical format share shrunk from 60% in 2011 to 51% in 2012 and remained so in 2013
By looking closer at the overall picture we begin to see a new model taking shape. A significant part of the digital revenue came from subscription services, including free-to-consumer and paid-for services, which for the first time in 2013 exceeded the $1 billion mark after having grown by 51.3%. The overall digital market grew by 4.3% and was worth $5.9 billion that year.
As more digital music services become available and established providers maintain growth, we will continue to see a decrease in physical format revenue, and the continual growth of digital revenue streams. Upon initial analysis, this growth does not appear to be keeping up with the decrease of its physical counterpart, however, it is worth noting that in 2013, the digital channels accounted for more than a 3rd of global music industry revenue.
The total worth of the global music industry in 2013 was $15 billion. Going back to that digital channels revenue figure of $5.9 billion, we now begin to see a more complete picture. Whilst physical format sales seem to be dropping in avalanche like proportions, digital revenue continues a steady and healthy growth.
Long gone are the days of piercing pessimism, which can only mean that music industry pioneers and leaders are more focused on, or at least trying to fine tune what at first appeared to be a short term fix to music piracy, into a long term model for a newer and more sophisticated global music industry.