In about 1987 I attended a music lawyer’s seminar at the Arts Law Center in Sydney. I have never forgotten how astonished I was as the experienced music lawyer (Nina Stevenson) described Byzantine contractual complexity such as royalty-related cross-collateralisation in the 30+ page music label contract she reviewed for a rock band.
Decades later, as music business models change, mostly favouring digital formats, there has been some convergence in business models across entertainment and information markets.
From the mid-20th century the old record industry business models created a foundation for highly complex, indeed Byzantine, contractual arrangements. The wave of digital innovation is removing much of this long-standing, complex foundation. New models and new contract types are emerging, often quite simple arrangements.
Evidence of the above is present in the seven International Federation of the Phonographic Industry (“IFPI”) facts below.
- Total revenue. The total global music trade revenue earned by members of the IFPI in 2013 was US$15 billion. Japan had a huge decline. Excluding Japan, revenues globally were down by 0.1% in 2013 compared to 2012.
- Subscription revenue. Global subscription revenue for digital music streaming in 2013 was up 51.3%, reaching US$1.1 billion. There are 450 licensed subscription services, including Deezer, Spotify and iTunes Radio. There are 28 million paying subscribers for digital music streaming. The graphic below illustrates where you’ll find some. It shows that in Sweden (home of Spotify), France and Italy the number of users of streaming subscriptions are higher in 2013 than users downloading digital music.
- What is in the digital music category? Advertising-supported streaming revenue from YouTube and Vevo in 2013 was up 17.6%. As a format “digital music” includes downloads, paid subscriptions, free subscription and web or mobile device delivered streaming, such as on YouTube (which in 2013 became increasingly ad-supported having been relatively ad-free years ago).
- Global revenue by format. Sales revenue by format in 2013: physical product (including CD and vinyl) 51.4%, digital music (see definition in fact 3) 39% (US$5.9 billion, 67% of it download, and the rest of it being subscription or ad-supported), performance rights 7.4%, synchronisation 2.1%. Here’s how the global format numbers changed between 2012 and 2013.
- Australian revenue by format. Australian 2013 digital music revenues were 54.7% (streaming being 5.9% of it) of revenues earned. This exceeded physical product revenue of 45.3%. Digital album sales were in 2013 up 7.8%, physical product revenue was down 25.5%, except vinyl revenues rocketed up 77%.
- Album revenue. Globally the artists in the top 10 album sales ranked by units sold were: One Direction, Eminem, Justin Timberlake, Bruno Mars, Daft Punk, Katy Perry, Michael Buble, Imagine Dragons, Lady Gaga, Beyonce.
- Available digital tracks. In 2013 there are 37 million tracks available from leading digital music services – iTunes, Google Play, Amazon Cloud Player, Deezer, Spotify, YouTube etc. Apple iTunes, which is now integrated with iCloud, in 2012 had 190 million users.
Source of data:
All data in this article is from the IFPI, mostly drawn from the press release or full report cited below. The IFPI is an organisation registered in Switzerland. Members present in Australia are EMI Music Australia Pty Ltd, Sony Music Entertainment (Australia) Pty Ltd, Universal Music Australia Ltd and Warner Music Australia Pty Ltd.
- See its 2014 statistical report press release: http://www.ifpi.org/news/music-subscription-revenues-help-drive-growth-in-most-major-markets
- See its 2014 full report: http://www.ifpi.org/digital-music-report.php
Image credit: Alexey Lyapunov is a freelance illustrator based in Novosibirsk, Russia who specialises in illustrating musical notation.
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