Streaming Killed Piracy In Norway. It Also Killed Recording Sales…

In Norway, nearly 80 percent of all recording revenues now come from streaming.  That’s enough to virtually kill off piracy, as well as an entire recording industry.

Here’s a graph that shows the dramatic drop in piracy in the past few years.  In 2014, ‘Digital’ was more than 95% streaming.

norwaymarket1


Now, here’s that same chart against overall recorded music sales (CDs, vinyl, downloads, everything).

norwaymarket2

 

46 Responses

  1. BK

    Please… according to this graph, recording sales are the same as they were in 2008, meanwhile streaming has increased rapidly during that time. What am I missing here?

    Reply
    • Name2

      You’re missing nothing. For two countries, now (Denmark and Sweden) DMN has published charts showing that

      1) streaming is resulting in new post-Napster revenue highs
      2) physical sales are a negligible part of the overall picture
      3) The idea that people will pay for music is far from dead
      4) streaming has kept the industry from cratering

      Reply
    • streaming is legalized piracy

      streaming is legalized piracy… the numbers prove it out…

      Reply
    • Gregg

      Well it is not rocket science to think that if you spend a lot of money and time creating something and people take it for free you won’t be able to do it very long. That is why I got ouf of the music business.

      Reply
      • Willis

        I agree with you, but piracy is an easy out. The industry is the biggest problem to itself. Times changed, but the business didn’t. Rampant spending continued. Lack of understanding and embracing of new tech was evident. Greed and ego continued to fuel the fire. Actually, one this did change. The industry hit the brakes on artist development. Instead of looking at true partnerships with artists and long term vision, they went for quick cash. With this, they took the Clive David approach and threw tons of stuff against a wall to see what would stick. The percentage of good vs bad led to reduced profits vs increased spending. What a waste.

        Reply
        • Gregg

          Well you hear these charges a lot. These are the fairy tales told by the technology companies. The music industry did not have any problem with new technology. They did have a problem with using the lawless environment this new technology operates in that completely removes the rights of creators to obtain the revenue from the work they create – which is needed to fund that very creation. To put it another way – there is no business model where property rights are not protected. Plain and simple.

          Reply
          • Johnny Gagnon

            exactly Gregg , all that is left is the oppressing and slave operating King and the Queen’s Doormen and Doorstoppers skipping like broken records saying …… pay us , Its ours , pay us , pay us ………

          • Willis

            Having worked at both tech companies in the music space and within the music industry, I can absolutely say that you are incorrect. When Ted Cohen attempts to fleece a tech company for an up-front licensing fee of astronomical amounts, it is obvious that the music industry does not understand tech or how to work with tech. When innovative technology comes out and goes against the grain of content owners, litigation is the go-to lever instead of learning how to embrace and manipulate the innovation for the good of the music industry. It is a shame, but the music industry, during the time of the dot com revolution, was run by old men with old minds. Today, it is not much different.

        • Gregg

          I suggest reading the book called “Free Ride” by Robert Levine. He clearly documents the way these parasitic tech companies found ways to use creators content without compensation. And he discusses attempts the record companies made to work in the digital world. However, any attempt to operate clean in the digital world would not work when there were multiple sites giving away people’s works without any consequence. Please tell me how you can sell anything if a shady outfit next door is giving that good away for free. We know the record companies used their position to get the most of deals – but at least they made agreements. These slimy tech companies take your work, give you nothing, and say shut up it is good for you.

          Reply
    • Gregg

      The problem with Spotify and other streaming services is that people are using it in place of purchasing. And Spotify royalties do not cover the cost of the electricity used in the recording process. So musicians can either subsidize their work or stop doing it. Since most cannot afford to subsidze their work and many are smart enough not to, we still have about 1/2 the number of professional musicians as we did in 1999.

      Reply
    • Remi Swierczek

      Nobody talks here about CD sales. The only music we have today is DIGITAL MUSIC.

      Digital music is actually the best merchandise for internet monetization!

      We just have to throw more dope in to Google and labels offices so they can converge to different stage of hallucination and envision the $100B no-brainer music industry.

      Reply
  2. Name2

    Please present numbers.

    Looks to me like 2011 was Sweden’s 2008: everything’s on basically an upswing since that point, and 2014’s “disastrous drop” is, like Sweden’s, a catastrophic, era-ending …. 0.4%

    For years and years and years, anecdotes and research told you all those ‘pirates’ were coincidentally the most attentive followers and frequent purcha$er$.

    [drops mic]

    Reply
    • Paul Resnikoff
      Paul Resnikoff

      [pics up mike, stops feedback and inspects for damage]

      For years and years and years, anecdotes and research told you all those ‘pirates’ were coincidentally the most attentive followers and frequent purcha$er$.

      Um, ok, so why aren’t they purchasing anything?

      Reply
      • Spartacus

        They’re purchasing access – isn’t that obvious? Even if they’re listening free from a subscription cost, they’re still purchasing music listening with ad listening – still a market exchange.

        Oh wow, 0.4% drop – music industry must be dead guys, let’s go home. WTF was 2000-2008?

        Stop yelling at the trains old man.

        Reply
      • Name2

        Um, ok, so why aren’t they purchasing anything?

        They’ve aged out? Moved on? Discovered that convenient does indeed compete with free??

        It’s your charts which show piracy and physical purchases jumping in a river holding hands.

        Reply
        • Paul Resnikoff
          Paul Resnikoff

          Sometimes I feel as if I’m trying to convince Christian fundamentalists that God may not exist.

          Of course, a portion of people are paying for streaming subscriptions (the graph is above zero), but I’m not sure it’s adding up substantially enough. Remember, Spotify and streaming companies have always pointed to Sweden and Norway as examples of how streaming-rich markets can resuscitate markets, and grow music markets.

          If there’s a massive hockey-stick upsurge in streaming-based revenues ahead, then that narrative holds, but if not, then we’re looking at a permanently smaller, and shrinking market. And a lot of free or near-free accounts, coupled with modest paid subscriptions and low-rent ad-based accounts that are being heavily subsidized by investors and labels.

          Remember, there was a very substantial cost involved in ‘killing piracy,’ namely a lot of free accounts. If I give you some better weed for free or near-free, in a better organized store with some ads promoting other products, that’s better than buying from the shady dealer in the alley. But who’s paying for all that?

          Reply
          • Remi Swierczek

            Subs and ads just do not have enough earning power.
            If we continue, global music revenues will max at $25B in 2025.
            If we switch the business model and convert streamers, Radio stations, restaurants, clubs or elevators to music stores we will be at $100B in 2020.

            There would be no change to anyone’s listening pleasure.

            Pandora or Spotify will only cash-in when you decide to add the tune to your playlist or take the total ownership With current streaming numbers we can have $100B music industry at just 39¢ per tune.

          • Musician Who Understands

            Ha! Holy sh|tballs!!!

            Paul Resnikoff
            “Sometimes I feel as if I’m trying to convince Christian fundamentalists that God may not exist.”

            Followed by:

            “Of course, a portion of people are paying for streaming subscriptions (the graph is above zero), but I’m not sure it’s adding up substantially enough.”

            And what is the basis of your belief that it is “not enough”???

            And what is your belief of what IS “not enough”???

            Sorry to break it to you, Paul but, as you continue to simply spout that the new – and absolutely inevitable – music business doesn’t satisfy your unilateral perception of what it ought to look like, you’re the only one clinging religiously to unsupportable notions.

            Even if that perception is based on the “reality” of the foregoing 25 years of a highly distorted market.

            As another poster said: 1995 is NEVER coming back. The music business has changed (and is continuing to change). Revenues were unavoidably set to fall – with or without Napster, piracy, iTunes or streaming services.

            The recorded music industry lost it’s monopoly hold on the vertical of the music market (recording became much cheaper, and on the other end, distribution became democratized, as well). And music, in general lost the primacy as “the” entertainment destination. It now competes with game consoles, smartphones with Facebook and Twitter and gaming apps and on-demand video.

            So, believing that the current system isn’t “enough” based on wishful thinking about bygone days makes you the biggest luddite of all.

            Example: The second graph shows that Norway’s physical music sales were in their GREATEST free-fall WELL BEFORE Spotify was even introduced.

            And that co-incident with the advent of Spotify, the sales plunge not only slowed, but sales even went positive.

            Accordingly, the headline SHOULD read “Streaming Killed Piracy In Norway. It Also Helped Curb Plummeting Recording Sales…”

            But that reality, which is plainly indicated by the obvious facts, just doesn’t fit with the narrative you have chosen to believe in, so religiously.

            Talk about trying to convert fundamentalists…

          • Charles

            “distribution became democratized,” I take it you are suggesting piracy if democratization?? So what you call democratization is when anyone can get a hold of a musical work that people spent time and money creating – and take that while providing no compensation or acknowledgment to the creator?? By that acknowledgment, if we mob raid a supermarket taking everything we want from the shelves we are democratizing distribution??? And as far as claiming music distribution was a monopoly – are you aware that there was more than one song writer? more than one record company? As a musician I really tire hearing this twisted logic justifying taking without paying. The matter is really simple. If you can get something for nothing and get away with that you would prefer that.

          • Musician Who Understands

            Charles
            “distribution became democratized,” I take it you are suggesting piracy if democratization?? So what you call democratization is when anyone can get a hold of a musical work that people spent time and money creating – and take that while providing no compensation or acknowledgment to the creator??”

            NO.

            I was referring to things like IODA and CDBaby and even a bit of DTF. The ability for recording artists to distribute their work to a broad marketplace beyond just their neighborhood relatively cheaply, without the need for a major label record deal and distribution.

            Charles
            “And as far as claiming music distribution was a monopoly – are you aware that there was more than one song writer? more than one record company? As a musician I really tire hearing this twisted logic justifying taking without paying.”

            I explicitly said “The recorded music industry” <—- that refers to the business, which was/is still dominated by a few record companies… "lost it’s monopoly hold on the vertical of the music market” <—- that would be the process of recording, manufacturing, marketing and delivering recorded music, something that was virtually the sole province of those few record companies, for decades.

            Feel free to let me know if there's anything else you completely misunderstand, before tilting at any more imaginary windmills that you seem to think are in my post.

    • Gregg

      There were many “studies” that were funded by tech companies to somehow show that pirating lead to more sales. However, one must ask the obvious question – why did sales fall lke a rock in 1999? I mean if supposedly pirating led to more sales we would see that in the statistics, right?

      Reply
  3. Remi Swierczek

    Norwegian streaming chemotherapy has shrank the business from over 1.5B korunas to just 601 million.
    It’s just 40% without inflation adjustment. With inflation Norway has maxed-out at 30% of 1999.

    Reply
    • Anonymous

      I think there might be a flaw in your logic if you think streaming started shrinking the music market in Norway in 1999. Really you have to compare it to the time that, you know, subscription streaming launched there.

      Reply
      • Remi Swierczek

        At first there was mega decline due to outright piracy and open access to music catalized by Shazam and other ID services. Then Ek’s style “streaming poison pill” generated some excitement & nerdy growth.

        NOW, NORWAY CONTINUES TO SHRINK from 30% of 1999 level.

        Sub and ad supported PIPE DREAM IS DEAD!

        Reply
  4. Jason Paul

    I’m not sure that separating streaming from sales is entirely fair. Streaming money trickles back to artists and labels the same as regular sales. A chart showing how much total money the music industry earned from both streaming and purchases from Norway in aggregate would settle the argument once and for all. If the number resembles previous good years in the music industry then maybe there’s hope for streaming. If it’s still laughably bad (as I suspect) streaming companies have a lot to answer for regarding their business model.

    Reply
    • MKB

      Streaming and sales are basically the same – because sales are just “unlimited streams” (you don’t buy the music when you buy a cd, you buy a limited license for that music). The problem isn’t streaming, the problem is the price difference between streaming and sales; streaming prices are way too low (and sales prices are often a bit too high).

      When you divert customers from overpriced “sales” to crazy-underpriced streams, yes, you lose a lot of money. But if properly priced, total revenues should even out overall long term.

      Having a preference between streams and sales is stupid, and it’s honestly not the artist’s place to have that preference – it’s the consumer’s place to decide the form of consumption that best matches his needs and preferences. It’s the artist’s job to price the various forms properly so that, in the long run, it doesn’t matter how individuals consume the content so long as they pay for whatever choose.

      This is a PRICING problem, not a streaming problem.

      Reply
  5. Name2

    Sometimes I feel as if I’m trying to convince Christian fundamentalists that God may not exist.

    Love you too, sweetums.

    1994 is not coming back. Ever. Get over it.

    If there’s a massive hockey-stick upsurge in streaming-based revenues ahead, then that narrative holds, but if not, then we’re looking at a permanently smaller, and shrinking market.

    Does ANYBODY on FSM’s green Earth believe that the future holds anything BUT an overall smaller market? That doesn’t have to mean it’s a perpetually shrinking one, and the last 7 years prove that in Sweden.

    And a lot of free or near-free accounts, coupled with modest paid subscriptions and low-rent ad-based accounts that are being heavily subsidized by investors and labels.

    Labels aren’t socialists, last time I looked. How are they “subsidizing” anything? Given that they own a piece of every streaming service out there, they get paid if I stream 0 songs in a given month (because my $10 is whipped cream on top) and they get paid if I stream 100 songs in a given month. I don’t see where “subsidy” enters into it.

    Remember, there was a very substantial cost involved in ‘killing piracy,’ namely a lot of free accounts. If I give you some better weed for free or near-free, in a better organized store with some ads promoting other products, that’s better than buying from the shady dealer in the alley. But who’s paying for all that?

    I buy my weed based on whether there’s blood on it or not, and I buy concert tickets from shady dealers in alleys, so your analogy here literally makes no sense to me.

    Reply
  6. JTVDigital

    Except that so far there is no proof of any exact correlation between decrease of physical sales and increase of digital / streaming.
    Physical sales would have decreased anyway, it’s been the market trend for years now.
    (+ to be combined with the worldwide economic crisis effects since 2008)
    People (at least the younger generations) don’t want CDs anymore, and on top of that they don’t want to pay anything for music (not only for music, they just want everything for free, period.).
    If you look at the second graph, the physical sales fall of 150% between 2000 and 2004.
    Between 2005 (when digital comes in) until now the fall from physical sales is negligible.
    At the same time piracy almost disappeared, thanks to streaming, which also mechanically slowed down the decrease of other revenue streams (physical and downloads).
    If 80% of music revenue now come from streaming in Norway it means several things:
    – thanks to streaming, the music sector did not disappear completely in Norway (which would have been the case following the trend from your second graph, before emergence of digital).
    – Norway has a mature music market that has almost achieved the transition into the digital age
    – we (rest of the world) should all be considering these trends seriously since this is where our markets are going, so as an industry we’d better be prepared for it

    Reply
    • Yep

      This is a very accurate analysis of the article.

      I have a 17 year old daughter. She has NEVER bought physical music. She has posters of album sleeves on her wall… She has bought on iTunes, maybe, twice in her entire LIFE. She rips audio off YouTube videos, (much to my dismay) and subscribes to SPOTIFY (which I pay for)

      We’re in the UK. That is the reality now, everywhere!

      Spotify is saving the music business.

      Prepare.

      Reply
      • Gregg

        No it NOT. That is why more and more musicians are pulling their work from Spotify. The problem is that Spotify does not pay enough to cover the cost of the electricity used to record. And people are using that rather than buying. People would also pull thier work from Pandora if they could. However, Pandora’s slimy but clever legal team fought and got a 1942 Consent Decree law to force musicians to hand over thier work to use at a rate so pathetically low no musician in thier right mind would agree to it.

        Reply
        • Yep

          With Spotify, you really have no idea how bad or good it is right now. Pre-internet we have no ‘listen’ or ‘stream’ data. Pre internet people did listen to recordings many times after purchase, but we just don’t know how many times.

          The physical market was definitely easier to manipulate with marketing. Release dates focused the market onto a date when they could purchase the disc. This resulted in a large % of ‘knee jerk’ purchases, that were never listened to much. Great for business, bad for music.

          Streaming makes release dates irrelevant. This is good for music. The truly great music rises up and is listened to, millions of times forever.

          This is the final format change. It is great for music. It isn’t good for business right now, but it will be.

          Reply
    • Versus

      “People (at least the younger generations) don’t want CDs anymore, and on top of that they don’t want to pay anything for music (not only for music, they just want everything for free, period.).”

      Of course. But nothing in this world is truly free. So what people “want” and what they should get are two very different things.

      Reply
    • A Musicain Who Knows

      Manny Sheehan Friday, February 6, 2015

      Are we in Washington? Slowing the rate in decline is an increase?”>

      Some may be in Washington.

      But even in Washington, they are smart enough to know that when the line representing physical record sales actually goes UP as it moves to the right, between 2010 and 2013, that’s not just slowing of the rate of decline. It’s an actual increase.

      Where are you?

      Reply
      • My names Yeff

        Just Some Info from Music Industry Books that people who study the industry write.

        #1 The iTunes
        —iTunes sales @ $0.99 a song
        —Record Company gets 70%, so $0.70
        —Artist Royalty @…10%
        —Artist gets $0.07 for the song being purchased (money goes through the record company. This happens
        because of recoupable debt that the artist goes into to get
        song recorded, mixed, mastered product produced,marketing,
        the legal conditions, management, promotion,
        (not marketing, promo deals with gigs, new
        locations, and agencies/agents which is a whole other ball
        park),
        and distributed)
        (this is via both the major and independent companys)
        —Artist makes hardly any/no profit until his royalties pay off his/her recoupable debt
        —Meanwhile artists contract may say he/she has to make new album before old one is even recouped
        –This in turn creates another recoupable debt pit next to the one from the previous album.

        #2 The Streaming (License Contract Example)
        —$5 subscription fee paid by listener
        —Streaming Service is to pay 60% of this $5 to ALL of the record companies. (a total of $3)
        —Let’s say all of the artists under the record company you are associated with generate 20% of the sites total
        streams.
        —They would then receive 20% of that $3 to equal an amount of $0.60 per subscriber
        —This $0.60 is then prorated to all of the artists under the label (all of the artists will be on their because the
        record company has control over distribution)
        —Let’s say an artists songs were streamed 200,000 times in a month, and the company’s total streams were
        equal to 1,500,000 streams
        —100,000 / 1,500,000 = 13.333333%. This is the artists percentage of streams out of all the company’s artists
        —13.333333% x $0.60 = $0.079999998 (this is the streaming income per subscriber)
        –But Wait! There’s More!
        —The artists royalty rate is 10%
        —so 10% of the $0.079999998 = 0.79999998 CENTS
        —the artist gets 0.79999998 CENTS per subscriber
        —Spotify has 15,000,000 paying members
        —The artist would receive $119,998.50
        —Back to reality…Let’s hope that one record company gets 20% of the totals streams
        —Let’s also hope that the artist makes 13.333333% of all the artists in the company…whoop, there goes gravity

        #3 The Physical Record [CD] (Run through a quick non-advanced, royalty payout on the CD)
        —CD Wholesales for $10.00 at original release price. (could drop anywhere from $8-$6)
        (some CDs can also be higher priced)
        —But..it’s $10 dollars for the example
        —Artist has 10% royalty rate
        —$10 / 10% = $1
        —Artist has $1 royalty rate. Pretty nice.
        —The artists royalty rate also goes to the recoupable debt because that has to be filled first
        —Sometimes a packaging price can be deducted at 25% that would make the artist’s royalty be $0.75
        —The record company can give away CDs at a discount to put more out that is filed under “advertisement”
        These discounted CDs will have “free” CDs. If 85 were sent at the price of $1.00 vs. 100 sent for the price of
        $0.85, the artists royalty rate will be dropped on the 100 and also may not receive royalties on some because
        it was “advertisment” not an actual sale.
        —Lots of this’s and that’s in the more advanced royalty computations that can change little nuances that can be
        detrimental to the artists livelyhood. These change depending on the differences in the contract agreed
        upon.

        —Just thinking in text, but what if the percentage number of streams (with only a single persons number of streams just counting 1) were switched with the numbers of CDs purchased. I’ve typed a lot and don’t feel like doing anymore arithmetic at the moment, but I wonder how much the profit of the artist would increase? But, I’ll save that for a later time.

        [ puts the mic back on stand ]

        Reply
  7. Anonymous

    The music magazines are marvelling at how great the Streaming business is but I said to the Shazam founders from day one that they will kill the business.
    There is no money in selling recoded music but Publishing makes money, video does, you tube can do , and live shows so there is a business but sadly recorded will be only a supermarket gimmic to get people to come to shows and buy merchendising.

    Sam

    Reply

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