Wednesday, March 19, 2014

CDs Refuse To Die, And That’s Bad For The Music Business

IFPI Digital Music Report image
The 2013 global music industry revenue numbers are in courtesy of the IFPI (International Federation of the Phonograph Industry - an outdated name if there ever was one), and streaming is now a huge part of not only digital sales, but all music sales. According to its latest Digital Music Report, streaming and subscription services climbed 51% last year, which accounted for $1 billion, over 27% of the total digital music revenue. When downloads are taken into consideration, digital music totaled $5.87 billion in 2013, up from $5.63 billion the previous year, despite download revenues dropping 2.1%.

While streaming and subscription appear to be the immediate destiny of the music business, the physical product side of the business refuses to die. Despite predictions that the CD format would be just a memory by now, physical sales of $7.73 billion still made up 51.4% of the total global revenue. Granted, that amount was down 11.7% from the previous year, but a $7+ billion business segment is still substantial by any measurement you want to use. In fact, it’s decreasing at a much slower rate than anyone ever predicted, and actually even grew by 0.8% in France.

All that said, total global music revenue fell by 3.9% last year to $15 billion, most of which was due to a stagnant and slowly changing Japanese music economy, the second largest music market in the world. Japan still centers mainly around physical product, which took a big sales hit last year, while its digital sales have yet to gain much traction. Japan, along with South Korea, was dominated by local artists, who held the top 10 sales positions for the year. It’s not known if that might somehow be a factor in the 16.7% sales slump that occurred in 2013, but it does show that Japanese music consumers are beginning to exhibit their preference for other types of music delivery. Read more on Forbes.

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Tom said...

The most impactful thing about this shift is that the artists receive virtually no revenue from streaming/subscription services. How will it effect the musical landscape if artists aren't incentivized to make quality recordings?

Fred Decker said...


I think poor people still pay cash for music, including alot of young people -- wouldn't you agree? Aren't cash consumers going to favor buying physical CD's from a brick and mortar store?

I'm not sure I understand why cash purchasers are bad for the music business.



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