The global music industry remained remarkably resilient despite a year under lockdown, according to the IFPI’s new Global Music Report.
The headline figure showed that global recorded music revenues rose 7.4% in 2020 to $21.6 billion, only slightly below 2019’s 8.2% increase. But there was also an awful lot going on underneath the surface. Variety delved deep into the report to find seven key takeaways that every exec should know about the global picture…
Frances Moore, Chief Executive of the IFPI, which represents the worldwide recorded music industry, unveiled its latest figures today, in the company of several leading execs from the global business: Sony Music’s Dennis Kooker and Shridhar Subramaniam; Universal’s Sipho Dlamini and Adam Granite; Warner’s Jess Keeley-Carter and Simon Robson; while Konrad von Löhneysen, Managing Director of leading German label, Embassy of Music, repped the indies.
And, despite the pandemic ruling out the usual coffee-and-croissants press conference in favor on an online Zoom call, the stats suggest it’s otherwise been pretty much business-as-usual for the record industry.
“You will sense the optimism through the report,” said Moore. “Despite the challenging circumstances that record companies have faced, they’ve continued to drive new, exciting experiences for fans. They’ve also worked to extend their reach around the world, driving developments in local markets and connecting them to the global network of music fans.”
Here are seven takeaways from the report:
- MUSIC HAS STAYING POWER
The 2020 figures showed a sixth consecutive year of growth for the global record industry, which restored it to its highest level since 2002 (when recorded music was worth $22.1 bn globally). These numbers came a day after a new report from analyst Will Page said the (pre-pandemic) 2019 value of music copyright (which includes publishing and CMO income) rose 7% to $31.6 bn, and on the same day as new figures from the BPI showed the value of the UK biz grew 3.8% to £1.118 bn ($1.5 bn), its highest level since 2006. COVID-19 may have devastated the live music industry but, despite much of the global industry being in lockdown for nine of the 12 months surveyed, the recorded music sector clearly continues to thrive…
- STREAMING’S BOOM HIDES AN ARPU PROBLEM
The overall growth was, naturally, driven by streaming, which grew 19.9% year-on-year to $13.4 bn and now represents 62.1% of total global revenues. Within that, the number of paid subscription accounts rose 29.9% to 443m, yet paid subscription revenues grew by only 18.5%, indicating that Average Revenue Per User remains under pressure. “Growing the number of paid subscribers has been our real key priority,” said Sony’s Kooker, who noted emerging markets generally have much lower monthly rates than more mature markets such as the US. “Getting the right balance on price points with consumers in each market remains an incredible area of focus for us.” Artists and songwriters might also question whether enough of those record streaming revenues are finding their way to the music creators. None of the panel seemed keen to answer a question about the #FixStreaming and #BrokenRecord campaigns currently gaining traction in the UK and elsewhere, leaving Frances Moore to defend the current system. “There is a misconception that artists aren’t doing well,” she said. “The best thing to do in order to help artists is to continue to help the recording industry, because the biggest investors in artists are the record companies.”
- THE POWER OF K-POP
BTS already dominated the IFPI’s global artist and sales charts and, non-coincidentally, South Korea was also the fastest-growing major music market, up 44.8% year-on-year. While South Korea remains at No.6 in the Top 10 Global Markets chart, if that rate continues it will surely break into the Top 5 soon. Indeed, the entire Top 10 remained the same as last year, but with China (No.7) the second fastest grower, changes are coming. “It’s as exciting now creatively as it’s ever been,” said Kooker. “We can see an artist from literally any market in the world have the ability to break into any other market in the world.”
- THAT SYNC-ING FEELING
Not every sector of the recorded music business escaped the pandemic unscathed, however. Revenues from synchronization dropped 9.4%, a fall blamed on TV and movie production delays caused by COVID-19. And, with so many public venues shuttered, revenue from performance rights also declined by 10.1%, derailing more than a decade of continuous growth in the sector. While streaming’s continued growth more than made up for those losses, the industry will be hoping both sectors can make a recovery in 2021.
- THE VINYL REVIVAL CONTINUES
The other slice of bad news was much more expected: revenues from physical formats fell by 4.7% — no surprise, with thousands of record stores spending most of 2020 shuttered, although it was actually a slower rate of decline than last year’s 5.3% drop, as vinyl boosted its revenues by 23.5% (actually a higher rate of increase than streaming managed, albeit from a much lower base). One of physical’s last strongholds – Germany – did become the latest market to earn more than 50% of its recorded music revenues from streaming for the first time – but, as Warner’s Robson noted, ultra-digital South Korea saw a significant rise in CD sales, as BTS and Blackpink fans shelled out for a real-world product. “Streaming is really opening up the world and making music a global marketplace,” he said. “But we shouldn’t write off physical too early. I don’t think it will be a purely streaming market in 10 years’ time, physical will still have an important part to play.”
- INTERNATIONAL RESCUE
The report clearly shows the growing importance of the international music industry. Every region grew, but the more established markets of Australasia (+3.3%), Europe (+3.5%) and North America (+7.4%) were all superseded in growth terms by Africa (making its GMR debut, +8.4%), Asia (+9.5%) and Latin America (+15.9%). Indeed, outside of Japan – the world’s No.2 market, which declined slightly – Asia grew by 29.9%, with the panel confident that a region that houses 60% of the world’s population still has a lot more potential. That, combined with the global rise in popularity of local repertoire – there were record-breaking domestic releases in the likes of Germany, Sweden and Italy last year – could eventually add up to the first threat to Anglo-American music’s powerbase since the days of Bach and Beethoven. Watch this space…
- IMMERSION THERAPY
Although current buzz sector of NFTs (non-fungible tokens) only got a couple of jokey shout-outs during the conference, both the panel and the report made considerable play of how the pandemic has accelerated interest in new ways of consuming music, be it via TikTok and exercise apps or immersive appearances in games such as Fortnite (Travis Scott) and Roblox (Lil Nas X, Ava Max). But Warner’s Keeley-Carter made the point that not everything lasts forever. “COVID has super-charged adoption,” she said. “But it’s also supercharged the speed at which trends are both spiking and then decaying. So the time that we have to jump on those trends and turn them into something is getting shorter. We have to be fully embedded in those platforms 24/7, so we can give [artists] the best possible chance or success and turn what would just be millions of views into millions of fans.”
The full IFPI Global Music Report is available from https://gmr.ifpi.org/about-the-report.