The French Riddle: Is Streaming Killing This Recording Industry?

Early data in America suggests that paid downloads are already declining, thanks to rapid ramps in streaming.  But the question is whether streaming is merely eating downloads, or the entire recording industry lunch.

Which brings us to France, where ‘bad guys’ like P2P and cyberlockers are plunging, at least according to French industry group SNEP.  But then again, so are paid downloads, CDs, and even streaming revenues.  Which raises the obvious question: why is basically everything suddenly sliding downhill?

(abonnements = subscription; numerique = digital)

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SNEP is blaming recent streaming declines on some ‘unusual’ events, like a temporarily-suspended YouTube deal that is now resuming.  That may explain a lot, though there’s also the possibility that streaming simply isn’t growing at a meteoric rate anymore.  And, still eroding paid downloads in the process.

All of which would be bad news for this bigger picture…

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This above seems typical of many countries: breadwinning CDs are tanking, while digital and streaming are growing.  The problem is that this freefall suddenly includes both physical and digital, particularly downloads on the digital side.  In the latest period in France, for example, single downloads dropped 21 percent.

That pronounced slide offers another big strike against a seriously-flawed, three-strikes initiative, and suggests that streaming is playing a far stronger role in this ecosystem.  Earlier, French major labels pointed to solid results from HADOPI, and a tendency for file-swappers to stop swapping after just one letter.   But the growing question is whether this is a gigantic causality misread: sure, some threatening letters may be cooling some file-swapping, but the more likely explanation is that a lot of streaming is cooling a lot of downloading (free and paid).

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Which brings to the romantic notion that streaming — ad-supported, paid, or otherwise — somehow complements and boosts paid downloading.  Or, at least replaces lost revenues from free downloading.  Perhaps that’s working in Sweden, but not working so well in countries like the US and France.

18 Responses

  1. Champion

    There’s a lot of material competing for people’s attention these days. Music is less popular overall than it used to be.

  2. Richard

    So streaming is killing French music, even though streaming is going down? Nice logic.
    Ever considered that music is a luxury item for many and the French economy is struggling?

    • Old Guy

      Try reading the article, it really helps sometimes.

      • Jaime

        I don’t understand the logic either, and I’ve read the post twice.
        Why is streaming to blame in this situation?

    • Champion

      Great comment. Fewer cars are being sold in France right now too. Is this the death of the automobile? Clearly the manufacturers need to start windowing…

    • hippydog

      Quote Jaime :” Why is streaming to blame in this situation?”
      Well, one its hard to blame streaming anyways as there is simply not enough data or usage to show a definite trend
      when you looked at the same plot in america showing just digital VS physical revenue (pre streaming). It did seem to indicate then that even though total revenue was dropping, (most likely due to the economy and piracy) the digital seemed to at least be close to a 1to1 replacement.. So digital “canabalized” physical but total revenue was close to the same..
      Where as streaming (with what little information can now be garnered).. DOES NOT show a 1 to 1 replacement. So for every ‘unit’ not purchased, its not showing a corresponding uptick in streaming..

  3. HansH

    There is a crisis going on in France and a lot of other European countries, people spend less and not just on music.
    Written while listening to the new Vampire Weekend album that is available on Spotify and Napster (In The Netherlands at least)

  4. David

    It’s difficult to interpret the data as they cover three different time periods.
    The Table at the top shows the change between 1st quarter of 2012 and 1st quarter of 2013. This shows a decline in all revenue categories, including streaming. There is no figure for ‘pirated’ music over this period, so no way of knowing what effect piracy has had on revenue.
    The first Graph, if correctly drawn, covers the period beginning-2002 to end-2011 and appears to show a steady fall in physical revenue partially offset by a rise in digital. (But I suspect it is not correctly drawn, but is in fact based on total annual data points for years 2002-2012 inclusive.)
    The second graph covers beginning-2009 to end-2011 and shows rising revenue from streaming and declining P2P usage (which is not the entirety of piracy but a large part of it). On the face of it, the graph suggests that Hadopi accelerated an existing trend away from P2P, which may plausibly be partly due to the growth of streaming in this limited period.
    Before drawing any conclusions about the decline in revenue over the past year we would need some evidence about trends in piracy. After the initial impact of Hadopi did people just go back to their pirating ways? If so, this would be good evidence that piracy really does impact on revenue. If not, we would have to look for other explanations

      • David

        That’s what I suspected, but as it is drawn it ends at the beginning of 2012. If the data points are annual totals, it would be better to present it as a bar chart.

        • Paul Resnikoff

          Yes, to confirm, the graph does include all of 2012 (so, most updated on a yearly basis).

    • Paul Resnikoff

      Good point on the graph, you convinced me that the last graph doesn’t match up time-wise, and also focuses on P2P (instead of paid). Check the update.

  5. Visitor

    Really, really, really bad news if this is true. Music industry should probably just shoot itself in the face and put itself out of its misery at this point.

  6. Yves Villeneuve

    How about this simple and most plausible scenario:
    There is less demand in downloads, legal and illegal, because increasingly more people have already downloaded most of what they wanted. When you have all the music you could ever want there is not much else to download. From an illegal download standpoint, it’s called raping the music industry and leaving it naked behind.

    • Paula Wertheim

      So many choices, so little time…I think Yves hit the nail on the head by noting,”people have already downloaded most of what they wanted.”
      Thank God I’m not a kid today! Back in the dayz we had either classical, country, pop, lounge, rock or jazz. Now, before they even get down to choosing a song, just figuring out the genre is complicated enough to send me to bed with a migraine.
      This is going to sound strange from someone in the music biz, but many people (including yours truly) who were teenagers in the 60’s and 70’s remember that period producing some of the greatest composers, lyricists and performers the music world has ever known. As far as we’re concerned, by time the Millenium rolled around the world’s real musical talent and creativety had been long gone-never to return.
      So I hope you’ll understand why we pass on 99% of that “great” new stuff in favor of trying to get that darned Beatle’s “White” album to play backward (for the nine millionth time) instead…

  7. hippydog

    If the graphs were normalized or weighted? VS GNP (gross national product), I think it might be a little clearer on what is happening and the point Paul is trying to present..
    There would still be a downward trend, but at least the effects of the economy could be eased out somewhat..

  8. Ju'Ju

    Its really, really simple.
    More streaming = less downloading (p2p, bittorrent or iTunes). In the U.S. it’s also happening (this article is correct on that point).
    Then at At a certain point streaming revs taper off.