What the Music Industry ‘Comeback’ Really Looks Like

IFPI: Global Recorded Music Industry Revenues 1999-2016 (Billions)
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IFPI: Global Recorded Music Industry Revenues 1999-2016 (Billions)
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(Click to enlarge)

The music industry is nowhere near its 1999 heyday.  But at least it isn’t collapsing anymore, according to data released today.

When it comes to comebacks, this isn’t exactly a New England Patriots finish.  At least not yet.  But according to data shared this morning with global industry trade group IFPI, at least things are moving in the right direction.

The IFPI — which stands for the International Federation of Phonographic Industries — is a trade group that represents the global recording industry.  Just this morning, the organization finished compiling its 2016 numbers.  As expected, digital formats (including streaming) continued to show growth.  Lucrative physical formats, principally CDs, showed continued declines.

Most importantly, streaming — now the full-blown savior of the business — is powering a second-straight year of gains.  But overall sales volumes are still at 2009 levels, itself a sharp year of decline.

Is streaming really saving the music industry?

That’s a complicated question, though the hype says ‘yes!’  But not everyone’s drinking the Kool-Aid.  Scott Borchetta, CEO of Taylor Swift’s label Big Machine Records, splashed some cold water on the ‘streaming comeback’ at Canadian Music Week, arguing that creative accounting and hype isn’t quite adding up.  “The ones that are super-performing, Drake and Ed Sheeran and others, they’re doing really well,” Borchetta explained.  “The rest of the world will catch up.”

Taylor Swift’s Label Says Streaming Isn’t Bigger Than CDs & Vinyl

Borchetta challenged claims that major labels are making more money from streaming than physical formats.  And the IFPI’s figures offer support for that criticism.

Specifically, the IFPI says 50% of all global recording revenues are from digital formats.  That includes streaming, but also downloads.

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Another question Borchetta raised is worth pondering.  Sure, streaming is powering a comeback for the major labels, but it isn’t quite trickling down to everyone else.  “So then [the major labels] say, ‘hey, ‘we’re up in the number of ‘X’,” Borchetta continued.  “But it hasn’t worked its way down to the median yet.”

I’m Warning You, Universal Music Group. Don’t Make This Stupid Mistake…

That stated, streaming is certainly exploding.  And downloading certainly isn’t.  Here’s a quick breakdown that highlights that disparity.

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Just to isolate streaming out a bit, here’s a graph showing gains from 2012 (again, worldwide):

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Looks peachy, except that the industry is starting to get really, really concerned about free streaming users.  That starts with YouTube, which pays a relative pittance for playing music videos and refuses to modify its rates.  But the problem also extends to Spotify, which has recently been forced by Universal Music Group and indie labels to start restricting content to paid tiers.

Basically, paying subscribers are powering a major comeback.  Free users aren’t (unless they become paid users).

On that note, the IFPI blamed ‘safe harbor’ loopholes for the massive disparities.  “User upload video streaming services, benefitting from the misapplication of ‘safe harbors,’ comprise the world’s largest on-demand music audience, conservatively estimated at more than 900 million users,” the group states.

“The revenue returning to rights holders through these services in 2016 amounted to US$553 million.By contrast, a much smaller user base of 212 million users of audio subscription services (both paid and ad-supported),that have negotiated licenses on fair terms, contributed over US$3.9 billion.”

All of which leads us to this per-user analysis, based on IFPI estimates.  We’ll just leave it right here.

You can check out the full IFPI 2017 report here.

16 Responses

  1. Nick

    I don’t think streaming is necessarily saving the music industry, I think it’s just the music industries inevitable transition into the new form of consumption that fans want. It’s following the rest of the world into the pay-per-use/access economy.

    • Faza (TCM)

      I must point out that current streaming services aren’t pay-per-use, but all-you-can-eat. That is a problem that’s going to bite us hard in the longer term, but right now everyone is so hyped about seeing some growth that they aren’t paying attention.

      Give it some time, though…

    • Hanna Subcrinico

      I don’t you are necessarily saving the music industry.

    • Sebastian Portillo (Recording Artist)

      I agree with this except for the last sentence. The interesting thing is that the growth is not really doing any good to artists but to the big companies who provide the streaming services. Regulations are needed (internationally) to force by law those companies to follow certain rules – like setting a minimum revenue for streaming that has to be paid out to the artist or restricting the number of artists that can be streamed for a membership. Without such regulations – even with a considerable growth of revenue – it will not do any good to keep the industry healthy.

      • Sebastian Portillo (Recording Artist)

        PS: I was referring to the comment of Nik in my comment.

  2. Versus

    It’s some progress.
    But something has to be done about the freeloaders such as YouTube. Why doesn’t the industry as a whole, or large masses of concerned musicians at least, pull their music off YouTube en masse?
    Perhaps launch their own video services?

    Also, what is being done about piracy? It’s still a problem and nothing is being done about it.

    • Anonymous

      If it was easy to pull stuff off of YouTube, don’t you think people would have already done it? That’s a lot of moles to whack….

      • Sebrina Casco

        Really what does six strikes even mean fake namer

    • GetLitt

      If you knew what you were talking about, you’d know that music piracy is practically dead. The industries are definitely wasting a ton of money trying to stop all kinds of piracy, but what’s really affecting it is the streaming services.

      Sites like youtube and soundcloud are basically used for marketing. With them, you can reach a much bigger audience than other services because that’s how social networks work.

  3. Piracy + Advertising Business Model

    Youtube IS full of piracy. ‘Pink Floyd full album’ , ‘Bob Marley Legend’ + Flashdownloader etc.
    ……Unless ‘Awesome 5 Year Old Drummer’, or ‘Unsigned Indie Band’ is used as proof of the opposite.

  4. Anonymous

    The music industry is dead. Get over it.

    If you look at Trance or Vocal Trance, you see we get like 1 or 2 new songs a year.
    If you look at what online radio stations play, you see mostly its songs up to only 2013/2014, after that you simple dont get new songs anymore.

    We all can lie about it as much as you like, but we have to admit this has to do with Mass Integration of negros and muslims in europe.

    In the past the Whites had endless of money to waste, they could spend it on good movie actors, and white female singers.
    But now the government needs most the money to help negros and muslims, there simple does’nt remain enough to pay all the artists and movie actors.

    Now afcourse we get websites like this to tell ”oohh, its not all bad, its going great”.

    Man, just look at the level of TV and movies that being released and go fuck off, go lie to your mother, your father, your family, but not to me.

    You want to help your negros and muslims with your taxmoney, this is the end result. – Bye.

  5. Anonymous

    All YouTube would have to do is pay artists 100% of the income the first 3 months.

    Then after 3 months YouTube just pays the artists what they think they deserve.

    That way artists have a fair time to make good money, and after the 3 months YouTube can still play the music for cheaper to its users.

    Then we all could be happy. But that is not what the rich want. They want to go to the level of TV, all commercials, crap shows, overhyping every fucking washed out actor,
    making people believe the golden age of Europe will return.

    Man. it will first take a ww3, but you people to sentimental and weak and nerdish already to even see what’s going on.
    then we finally can stop wasting our taxmoney on criminal outsiders, and finally pay the artists and movie actors fair money again to entertain us.

    Would you cook for strange people if they dont pay you? – No, why should music singers, they have their pride, and they dont care about you as a single fan.
    Money is the motivator, YouTube fucked it up.

    And now all we can do is overhype a bunch of negros making gangster music because they have lower copyrights as Whites (duh). But go lie about that too.

  6. Anonymous

    100% for every track a artist creates, so if singer makes a new song, he gets 3 months to make 100% of that song, and then less until he makes a NEW song.

    That way we all keep eachother sharp, and that way old washed out singers dont keep getting tax money for only their name of the past.

    It would give new singers a much bigger chance. And also a motivation to make new songs, because with every new song they get 3 months to make 100%

    (im almost fed up with the music industry anyway, ive heard every vocal trance song already, 2017 we didnt even get new vocal trance) – Yeah, just a little fat kids making some stupid ”instrumental only” crap that being overhyped by indi people that rate everything ”this is great”.

  7. Anonymous

    as you can hear, im getting mad, i need white female singers to sing me songs to stay happy while im working. But i can’t listen to the same ones for to long, they get repeative.

    All i was looking for at Google is ”music industry collapsed 2017” and this was the only result of a few that showed up.
    All the other results didnt even came close to what i was looking for.
    Even AI will not make this any better for Google. They would just learn the AI to hide everything you would be looking for, for answers. And only show you overhyped news.

  8. Anonymous

    I feel better now, thanks my boys, for allowing me to post my sorrows/suffering on your website – And a happy 2018!