Global Music Report Shows Biggest Annual Growth in 20 Years — But YouTube Remains a Huge Threat

Industry posts nearly 6 percent growth, due largely to streaming; Drake is named No. 1 global artist

Drake Billboard Music Awards Nominations

After 15 dismal years in which the global music business lost some 40 percent of its value, in 2016 the music business showed more growth than it has in two decades. And while some quarters of the business are crowing “We’re back, baby!,” the current state of the global music industry was summed up in a tempered and quintessentially British way by Frances Moore, chief executive of the International Federation of the Phonographic Industry (IFPI), whose annual Global Music Report was released Tuesday (see the full report here).

“The global recording industry is seeing modest growth after more than a decade of significant decline,” she wrote. “Years of investment and innovation have begun to reward an industry that has shifted from adapting to the digital age, to driving it.”

Still, Moore’s cautiously worded statement belies the fact that 2016 represented the biggest year of growth since the IFPI began following the market in 1997; it was also the second consecutive year of growth. Global recorded music revenues increased by 5.9 percent to $15.7 billion, of which digital income now accounts for an even 50 percent. Streaming revenue was up 60.4 percent, driven by some 112 million users of paid streaming services (that number rises to 212 million including users of ad-supported, i.e. free, services); digital revenue is up 17.7 percent. That growth more than compensated for plummeting download sales, which were down 20.5 percent and physical sales, which dropped 7.6 percent in revenue. China, India and Mexico were singled out as countries which have seen significant revenue growth in streaming, marking increases of 20.3 percent, 26.2 percent and 23.6 percent respectively.

The report also makes no bones about the biggest threat to continued growth, and calls out the main culprit by name: “The value gap, [which is] the growing mismatch between the value that user upload services, such as YouTube, extract from music, and the revenue returned to those who are creating and investing in music.”

Piracy also remains an enormous problem: IFPI and related groups identified some “19.2 million URLs as hosting infringing content in 2016 and issued 339 million requests to Google requiring it to ‘delist’ infringing sites,” the report says.

Elsewhere in the report, according to the IFPI’s figures, Drake was the No. 1 global recording artist for 2016, and Beyonce’s “Lemonade” was the top album with 2.5 million sales (a figure that excludes streaming numbers and is based on physical and digital sales — which shows just how much streaming has risen in importance).

Geographically, the U.S. market showed an enormous uptick in growth, rising by 7.6 percent compared with 2015’s one-percent rise, and streaming income soared more than 80 percent. Europe was up four percent and Latin America showed the largest growth with a 12 percent lift.

Yet the giant “value gap” represented by user upload video streaming services such as YouTube, which are protected by safe harbor laws, is thrown into stark relief by these figures: Based on the IFPI’s “conservative estimate,” some 900 million people use such services and pay around $553 million to rights holders in revenue. By contrast, the much smaller base of 212 million users of licensed audio subscription services (both paid and ad-supported) such as Spotify and Apple Music paid more than $3.9 million.

In the report, Moore said, “Music’s potential is limitless, but for this growth to become sustainable – for investment in artists to be maintained and for the market to continue to evolve and develop – more must be done to safeguard the value of music and to reward creativity. The whole music community is uniting in its effort to campaign for a legislative fix to the value gap and we are calling on policymakers to do this. For music to thrive in a digital world, there must be a fair digital marketplace.”

Top 10 Global Recording Artists, according to the IFPI’s 2017 report:
1. Drake
2. David Bowie
3. Coldplay
4. Adele
5. Justin Bieber
6. Twenty One Pilots
7. Beyonce
8. Rihanna
9. Prince
10. The Weeknd

Global Top 10 Albums (physical and digital sales; excluding streams):
1. Beyonce “Lemonade” 2.5 million units sold
2. Adele “25” 2.4 million
3. Drake “Views” 2.3 million
4. Metallica “Hardwires… to Self-Destruct” 2.1 million
5. David Bowie “Blackstar” 1.9 million
6. The Rolling Stones “Blue & Lonesome” 1.8 million
7. Bruno Mars “24k Magic” 1.7 million
8. Twenty One Pilots “Blurryface” 1.5 million
9. Coldplay “A Head Full of Dreams” 1.4 million
10. Pentatonix “A Pentatonix Christmas” 1.4 million

Global Top 10 Digital Singles (single-track downloads and track-equivalent streams):
1. Drake “One Dance” 12.5 million units
2. Justin Bieber “Love Yourself” 11.7 million
3. The Chainsmokers featuring Halsey “Closer” 11.7 million
4. Sia “Cheap Thrills” 11.1 million
5. Justin Bieber “Sorry” 10.8 million
6. Rihanna “Work” 10.6 million
7. Lukas Graham “7 Years” 10.4 million
8. The Chainsmokers featuring Daya and Konshens “Don’t Let Me Down” 10.2 million
9. Mike Posner “I Took a Pill in Ibiza” 10 million
10. Twenty One Pilots “Stressed Out” 9.9 million