Swedish Music Sales, 2002-2012…

This is why Spotify thinks it can save the music industry from oblivion, even in declining markets like the US.  It’s the sales story in Sweden, Spotify’s homebase and a longtime streaming stronghold.

(data from IFPI Svenska Gruppen)  

swedishmusicsales2002-2012

And here’s the breakdown: CDs are obviously plunging, and streaming is cannibalizing downloads.  But streaming is surging, and is now the breadwinner.  The question is where this ultimately lands, and who gets paid for it.

SwedenSales2002-2012-2 (1)

23 Responses

    • Visitor
      Visitor

      “it looks like digital downloads are the winner”
      No, the winners are the thieves. They cut Swedish music sales from $249M to $151.
      And they still owe Swedish society $100M — plus a lot of jobs…

      Reply
  1. jw
    jw

    Certainly, the music industry’s transition to digital was unprecedented, & complex as it related to freedom of expression & the growth of the internet as an economic force, tying the hands of legislators who were otherwise sympathetic to the situation. And so a certain amount of contraction was inevitable. However, with the benefit of hindsight, I think we can now make some clear judgments.
    • There is no damning the flow of piracy. No matter how many civil suits are brought, no matter how many services are taken offline or consumers sued, there will always another generation of piracy enablers, & the effect on piracy overall will be negligible. Quite simply, the entertainment industry isn’t big enough to justify the legislation required to really impact online piracy.
    • Hanging onto your principles isn’t worth it if it means going down with the ship. Punishing pirates doesn’t net black numbers. It costs more money than it generates, on top of the negative PR, which many pirates use as a moral justification for their actions.
    • The solution to the piracy problem is & always has been to offer something that pirates can’t–to compete with & defeat piracy, rather than to punish it. Spotify does this handedly. This is a two step process, an ad-supported service that lures users away from piracy, & a compelling premium service that maximizes revenue.
    • It’s very interesting that the Swedish music industry has, on their way to bottomming, compressed at roughly the same rate as the US music industry, & yet our recovery isn’t looking very much like theirs at all. It seems to me that this is clearly due to their early adoption of streaming (and socialized internet access). The format breakdown graph is a roadmap of how we ought to prioritize music distribution going forward. Anyone who doesn’t see that doesn’t “get it,” & is a part of the problem plaguing the industry (ignorance, stubbornness, anti-technology sentiment, vindictiveness, self-righteousness, etc), not the solution.
    • The $9.99/mo rate is not written in stone. Sweden’s premium adoption will likely allow us to project our own premium adoption several years in advance, allowing us to adjust the price in order to return the industry to a profitable size, & distribute that across subscribers accordingly. What ought to be avoided is hiking the price in order to produce quarterly profits at the expense of longterm growth (i.e. $1.29 digital downloads). It could be that, as the premium offering grows more compelling over time (i.e. lossless streaming), the premium rate may drop below $9.99/mo in order to maxmize adoption, & therefore profits (the Wal-Mart model). This is all simple economics.
    These charts are good news.

    Reply
    • steveh
      steveh

      You are ignoring the tiny proportion of paid download sales compared to CD sales in Sweden.
      iTunes never took off in Sweden. This makes the small Swedish market very a-typical compared to the much larger US, UK, Japan etc. markets.
      You can see this in the format graph.
      Sweden’s early adoption of streaming must be seen in the context of the a-typically weak position of iTunes etc.

      Reply
      • jw
        jw

        What implications are you suggesting that has?
        Here is the Swedish sales chart overlaid on top of the US sales chart (2002-2009). It’s not exact, but close enough for conversation. (I’m assuming Paul’s graph is not adjusted for inflation or population growth, & that it’s just raw data. Paul-correct me if I’m wrong.)

        iTunes didn’t take hold in Sweden because piracy was a much bigger issue, which is clear in this graph. iTunes has always been a slow, predictable growth that never offset falling cd revenue in the U.S., whereas you see rapid growth of streaming in Sweden begining in 2008 which offsets sales immediately, & makes up for it’s own cannibalization 3 years in. That’s not the story with iTunes. So I think streaming was a missed opportunity in the US, cannibalizing iTunes or cd sales would not have been a longterm problem.
        You’re correct in implying that U.S. streaming growth is inhibited by investment in digital downloads, which wasn’t an issue in Sweden precicely because piracy was so pronounced. And so streaming may not lead to industry growth as quickly as in Sweden. Which is why Sweden never had to deal with transitional, hybrid services like iTunes Match or Google Play. But I maintain that it gives us road map.

        Reply
        • steveh
          steveh

          “But I maintain that it gives us road map.”
          How can Sweden – a tiny and a-typical market – give us a road map?
          By your own admission you agree that the position of iTunes was a-typically very weak in Sweden when Spotify came on the scene.

          Looking at the graph it seems that, as of now in Sweden, income from Spotify is about 7 times greater than income from paid downloads. When do you predict that will be the case in the US?
          This is so vastly a-typical compared to US, UK, Japan etc that it can only be seen as some bizarre curiosity.

          Reply
      • Visitor
        Visitor

        “You’re suggesting that I don’t *want* to “deal” with piracy.”
        I’m not David, but I don’t think anybody would suggest anything of the kind.
        You and Casey are appreciated as the fearless pro-pirates of this board and expected to deal with the subject at all times.

        Reply
    • David
      David

      No ‘damning the flow of piracy’?
      A Freudian slip!
      But seriously, we won’t know if it is possible to dam the flow of piracy until it is tried, which it hasn’t been – seriously – yet.
      Here are two modest measures that I suggest would greatly reduce the ‘flow’.
      a) Introduce a mandatory fine of at least $1000 for every time a business advertises on a known pirate site. Cutting off advertising killed off the offshore pirate radio stations broadcasting to the UK around 1970. If advertisers don’t want to be fined, the burden would be on them to make sure their ad funding doesn’t go to pirates.
      b) Remove safe harbor protection from search engines which continue to show search results for known pirate sites.
      Both of these measures would require ‘known pirate sites’ to be defined and identified. This would more work and detailed discussion, but if anyone tells you it is impossible, you know straight away that they really don’t *want* to deal with piracy.

      Reply
      • jw
        jw

        You’re suggesting that I don’t *want* to “deal” with piracy. I stated plainly that streaming is the most effective means of “dealing” with piracy. It seems like you’re trying to paint me as a “pirate sympathizer,” when in reality my sympathy lies with broke ass musicians who have had a distribution system that they relied on yanked out from underneath them. What I’m suggesting is being proven in Sweden to fix the problems of piracy. Look at the graph I posted, they had it worse off than the U.S. What you’re suggesting is just a giant ego trip. It’s a fool’s errend that stems from principles that no longer apply. And your ideas suggest a fundamental misunderstanding of what the internet is & does.
        Large portions of the internet are not editorial in nature, they are applications that facilitate the sharing of video game scores or recipes, the selling of handmade goods, or cross-timezone collaboration on an editorial project. Some applications, like message boards, simply facilitate communication. And some applications, like file storage websites, facilitate the backing up of & the sharing of files. These websites all have terms of service that precludes unauthorized sharing of copyrighted material.
        Let’s say I create a website that allows users to share photos. Eventually, someone is going to take copyrighted photos off of a photographer’s website & post them to my website, violating the terms of service. But how am I to know what material users do & don’t have the rights to without being omnicient? Obviously I can’t. And so, if content is found to be in violation of copyright, I’m sent a DMCA takedown request & I remove the content from my website.
        Really & truly, any website that requires a user to have the rights to distribute any content he or she contributes, so long as that website complies with DMCA takedown notices, is with the law & can not reasonably be labeled a “known pirate site.” (Obviously any website created with the intent to break the law, or that does not comply with legitimate DMCA takedown notices, deserves to be prosecuted in court.)
        The label that you’re looking for is a “website known to be abused by pirates.” It’s INCREDIBLY important to make this distinction. Because, if you do not, any website that allows users to contribute content is potentially a pirate website, or could become one once the current sites are sucked dry. “Attachment” buttons on forums become a liability. Even discussion functionality, like this comment section on DMN, could potentially host links to copyrighted material. What your suggesting would fundamentally change the way that money is spent on internet advertising, & would move dollars away from websites that promote the participation of users, & it would concentrate on editorial websites that won’t risk feedback.
        This type of thing is EXACTLY what the DMCA was designed to protect AGAINST.
        So no, your suggestions are not valid, not without having the DMCA entirely rewritten, & good luck with that. That’s a can of worms that even I wouldn’t touch.

        Reply
        • David
          David

          So now you are not saying it is impossible to take effective action against piracy, but that it would have side effects on ‘innocent’ activities.
          Of course, any definition of pirate sites would need to allow some leeway for occasional accidental infringements. The question is, how much leeway? The DMCA, as often interpreted, allows far too much leeway, and quasi-pirates like Grooveshark and Google make a mockery of it. (I think ‘mockery’ is a fair description of Google’s practice of reposting unredacted infringing links on ‘Chilling Effects’.) But that interpretation is doubtful, and a stricter application of the ‘red flag knowledge’ principle might have a big impact even without amending the DMCA.
          In any case, under my proposals ‘pirate’ sites, however defined, would not automatically be shut down, or their proprietors thrown in jail. They would just be starved of advertising revenue, and excluded from search results. Not the end of the world, or even the site. Of course, they might need to change their business model, but hey: adapt or die!

          Reply
          • Visitor
            Visitor

            The dispute is nearly 100% on how and WHERE pirate sites are defined. The tech industry wants the ITC to do it (typically the court where tech companies resolve disputes with each other), while content industry isn’t happy with that, because they think the ITC is too slow and gives the defendants too much leeway.

          • Visitor
            Visitor

            Of course, they might need to change their business model, but hey: adapt or die!
            The scary thing is, unlike the music biz, they just might do that!

    • Visitor
      Visitor

      “a) Introduce a mandatory fine of at least $1000 for every time a business advertises on a known pirate site. Cutting off advertising killed off the offshore pirate radio stations broadcasting to the UK around 1970. If advertisers don’t want to be fined, the burden would be on them to make sure their ad funding doesn’t go to pirates.
      b) Remove safe harbor protection from search engines which continue to show search results for known pirate sites.”
      Very good suggestions!
      Very relevant, too. We can’t discuss Spotify without discussing piracy.
      No piracy, no Spotify…

      Reply
    • Visitor
      Visitor

      “a) Introduce a mandatory fine of at least $1000 for every time a business advertises on a known pirate site. Cutting off advertising killed off the offshore pirate radio stations broadcasting to the UK around 1970. If advertisers don’t want to be fined, the burden would be on them to make sure their ad funding doesn’t go to pirates.
      b) Remove safe harbor protection from search engines which continue to show search results for known pirate sites.”
      Here’s a third suggestion:
      Plant anti-piracy warnings inside fake downloads.
      It’s a cheap and completely harmless measure, yet highly effective.
      Japan’s government initiated their version — Operation Decoy File — last month:
      https://torrentfreak.com/japanese-government-plants-anti-piracy-warnings-inside-fake-downloads-130205/
      Fake uploads are of course widely used already, but this educational variation is interesting.
      Here is an English translation of the Japanese text:
      “A Warning from the Organization to Raise Awareness of Copyright

      Files with the same name as this contain content which is in violation of copyright when distributed over P2P networks such as Winny or Share.

      Knowingly downloading and of course uploading files over the Internet that are protected by copyright law without the consent of the owner is illegal copyright infringement. Please stop immediately.

      Also, from 1 October 2012, downloading content which is known to be available for sale is punishable by a maximum 2-year prison sentence and/or 2,000,000 yen [US$21,000] fine.

      Our copyright organization is working to eliminate copyright infringement by file sharing software. In addition to consulting with the police to obtain the disclosure of users’ identities, we want to focus on user education.”
      Source of the Japanese text: http://www.soumu.go.jp/main_content/000196063.pdf

      Reply
  2. paul
    paul

    If anyone wants to play with this data, here’s the top-level breakdown (all formats) from 2002-2012 (SEK and USD converted).
    here.
    If you want the detailed breakdown in formats, drop a comment and let me know (that part was done locally on an xls spreadsheet, not sure how that plays in the Google Docs cloud.)
    /paul

    Reply
  3. Ed
    Ed

    More complete baloney from Spotify press-room. How much are they paying you to advertise this? Artists make NO money at all from “any” streaming rate, and the argument about “visibility and promotion from streaming” is old and worthless, hence why more and more indie labels are dropping their supply to spotify.
    No one cares about sweden, the home of Piratebay, oh yeah, and the founder of spotify Ek was the CEO of utorrent!
    Pirate turned authentic business man, running a company which increases sales and money for artists???? I THINK “NOT” SIR

    Reply

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