The music industry breathed a collective sigh of relief this week, when the IFPI released their positive statistics in their Digital Music Report 2013 showing that global sales had experienced its first growth in more than a decade; IFPI chief executive Frances Moore declaring that the “global recording industry has moved onto the road to recovery.”
The upswing demonstrates that digital sales have been the key contributing factor to an overall 0.3% rise in global recorded music revenues, with global digital revenue growing by 9%, placing the total global revenue at $16.5 billion in 2012, up from $16.2 billion the previous year.
“The reality is, digital is saving music,” was how Edgar Berger, President and CEO International of Sony Music Entertainment, succinctly put it. Demonstrating that the new digital business models – particularly the ongoing success of subscription based music services and a wider availability of digital music stores – were helping meet demands of consumers, while helping offset the steady decline of physical sales in CDs and other physical media.
Closer to home, the IFPI’s Digital Music Report demonstrated that 2012 sales were up 4% in Australia, named as one of 8 of the top 20 global music markets that are expected to see growth in 2013 (alongside Brazil, Canada, Japan, Mexico, Norway and Sweden), reflecting ARIA’s recent reports that Australia had experienced its first growth in 3 years thanks to digital sales.
Meanwhile, as previously reported, Gotye’s Kimbra-featuring smash hit ‘Somebody That I Used To Know’ was spotlighted as one of the highest selling singles of 2012, shifting 11.8 million units via downloads and other digital services.
Despite the good news for the Australian music industry however, the IFPI report also pointed out a cautionary warning; Frances Moore specifically noting that digital piracy was still a primary concern Down Under.“If more action isn’t taken by the government and ISPs to curb piracy levels the NBN could have disastrous results for the local industry.” – IFPI Report
“Australia does not have a legislative ‘graduated response’ process, not does it have a process to facilitate site blocking,” said Moore, something that will remain an issue when 90% of Australia’s population are gifted high speed broadband internet in the next two years as part of the Federal Governmnet’s roll out of the NBN.
A study last year by stats tracker MusicMetrics revealed that Australians were the worst downloaders per capita of illegal music, and in a bizarre twist of patriotism, Aussie hip hop pioneers Hilltop Hoods was Australia’s illegal music target of choice. Especially worrying given that the Adelaide trio annually support the arts with their own grant, designed to give Aussie hip hop acts a leg up in the industry.
As The Age points out, the IFPI’s warning is that if current levels of music piracy are not controlled, the problem will get much worse by 2015 with the roll-out of the NBN, providing households with super-fast, fibre optic cables by 2020 and faster access.
“If more action isn’t taken by the government and ISPs to curb piracy levels the NBN could have disastrous results for the local industry,” stated IFPI’s Digital Music Report 2013.
ARIA CEO Dan Rosen shared the IFPI’s concerns, saying that if consumers continued to flaunt music piracy, it wasn’t just the music industry that would feel the ill affects; “it’s all Australian content industries,” said Mr Rosen.
He emphasised that copyright protection and the interests of artists needed to reman priority, estimating that “between 30 and 40 per cent” of internet users were still accessing “unauthorised websites,” over legitimate music sources such as iTunes or streaming services like Spotify and Deezer. Adding that the shift was necessary “so that the money from sales flows back to the people who created the work and not unauthorised websites.”
In a more positive light however, figures from ARIA’s 2012 industry report showed that over 46% of the Australian market’s value came from digital products in 2012, which was marked increase from 36.7% in last year’s results, which follows the recent prediction that digital music sales are set to overtake physical in the very near future.
The ARIA report sated that over 110,000,000 digital tracks were purchased in 2012, nearly doubling 2011′s figures, while the download of digital albums rose from around 4,000 last year to over 6,800,000 in the last twelve months. Streaming services also saw a big leap in market share, with ad supported models – such as the recently Ausralian launched Pandora – more than doubling their figures, with market leader Spotify growing from just 637,712 users in 2011 to a whopping 2,119,462 in 2012.ARIA CEO Dan Rosen estimated that “between 30 and 40 per cent” of internet users were still accessing “unauthorised websites.”
“It is very pleasing to see the Industry achieve growth in 2012,” said ARIA Chairman Denis Handlin of the positive results. “The Record Industry has revolutionised over the past decade and has led the way in new business models, in particular licensing digital services, whilst strongly supporting traditional CD retailers.”
Mr Handlin also noted that work with Government and ISPs “to ensure artists and their record labels are properly rewarded for their creative efforts is still far from finished,” with the trade body emphasising that music piracy was still threatening local industry, but adding “the demand for music is as strong as ever and Australian music fans are embracing the many legitimate platforms.”
ARIA’s statistics demonstrate that music streaming services and digital sales are taking back from music piracy and digital downloads, something that reports from America continue to reflect, showing a steady drop in illegal downloading.
As The Australian reports, the latest figures from stats trackers NPD Group demonstrate that the number of internet consumers using P2P services to download music experienced a decline of 17% in 2012, while the volume of illegally downloaded music went down 26%, and according to NPD Group, of those surveyed most had stopped using illegal services to access music – instead switching to the convenience of streaming services and other digital providers.
Massive legal problems aside, Napster’s legacy lives on more than 10 years later in the ad-supported, free business models of Spotify, Deezer, and the streaming service boom“For the music industry, which has been battling digital piracy for over a decade, last year was a year of progress,” said Russ Crupnick, senior vice president at NPD. “Among other factors, the increased use of legal and licensed streaming services has proven to be an alternative for music fans who formerly used P2P networks to obtain music.”
Its an issue of convenience that stems back as far as the days of P2P forefather Napster, launched in 1999 which coincidentally was the last time the music industry experienced a growth, peaking at global sales of $38 billion according to the recent Digital Music Report 2013 released by IFPI this week.
Napster provided a world of content, via other users absolutely free of charge, in an easy-to-use, convenient interface. Massive legal problems aside, Napster’s legacy lives on more than 10 years later in the ad-supported, free business models of Spotify, Deezer, and the streaming service boom. Showing that if record labels and music makers meet the demands of consumers – and their need for convenience – they can still find ways to make money and thrive.
“If there is a lesson to take away, it is probably that the earlier you can embrace new business models and services, the better,” Paul Brindley, chief executive of consulting firm Music Ally, remarked of the IFPI’s positive upturn on the state of the industry, slow to adapt to the digital revolution after being initially spooked at the turn of the century that it would kill the music industry.
Despite the silver lining provided in the global music industry’s growth, there remain concerns that other authorities can be doing more to help stem music piracy and illegal downloading. “We believe that the governments should be doing more,” stated IFPI Chief Executive Frances Moore. “The intermediaries can also help – whether they are advertisers, search engines, payment systems or ISPs – either via voluntary agreements, or if necessary, pressure needs to be brought by government.”
