Anti-Piracy Law Lifted Music Sales

Digital Growth, Anti-Piracy Laws Lift Music Sales In One Out Of Three Top 20 Markets

The world’s two largest recorded-music markets suffered double-digit sales declines in 2009. But an annual survey of the global business shows it’s not all doom and gloom. According to IFPI’s newly published “Recording industry in Numbers” yearbook, the U.S. market’s trade value dropped 10.7% in 2009, while Japan’s dropped 10.8%. Yet no fewer than seven of IFPI’s top 20 music markets notched year-on-year gains, ranging from a tiny 0.2% uptick in Mexico to a sharp 11.9% increase in Sweden. Other growing territories include the world’s third-largest music market, the United Kingdom, and the world’s second-most populous nation, India. Billboard looks at the stories behind the statistics.

+1.9%

UNITED KINGDOM

Up 1.9% to $1.6 billion

No one’s popping champagne corks yet, but Britain’s music business just halted five years of decline, with digital growth offsetting the physical slump.

While physical sales dropped 6% to £740 million ($1.2 billion). digital revenue increased 48% to £189 million ($295 million). driving the total trade value of recorded-music sales up 1.9% to £1 billion ($1.6 billion).

Physical sales delivered 73% of trade value, down from 79% in 2008. The early 2009 demise of retailers Zavvi and Woolworths removed 1,000 stores from the U.K. market, but IFPI director of market research Gabriela Lopes suggests it also pushed music fans toward digital services.

The digital album came of age, increasing sales 56% to 16.1 million units. That represented 36% of digital revenue, while single-track downloads accounted for 44%. Digital album sales are “growing faster than single tracks,” Lopes says, “a trend we see in the major markets like the U.S.”

Download store 7digital’s CEO Ben Drury reckons a key growth driver was the recording industry’s embrace of downloads free of digital rights management restrictions, while aggressive pricing has made digital albums value-added alternatives to buying single tracks.

Digital still only generated 19% of total trade value-compared with 43% in the United States-so further growth seems certain, particularly as advertising-supported services like Spotify and We? expand. We7 had 1.2 million unique site users in April 2010. up 350% from the same period last year, according to CEO Steve Purdham. “Ad-funded is the ideal solution to create a barrier to piracy for people who can’t-or don’t-want to pay,” he says.

New ad-supported services delivered 4% of digital revenue in 2009, while subscription services saw their share dip to 6%, from 7% in the prior year. However, both categories grew in trade value, up 247% to £8.2 million ($12.8 miflion) and 37.2% to £11,8 million ($18.4 million) respectively, according to British labels group the BPI.

The United Kingdom remains the world’s biggest market for performance rights revenue, which increased 8% to £78.4 million ($122.5 million), aided by collecting society PPL’s increased number of reciprocal deals and investment in tracking systems.

In the past. PPL chairman/CEO Fran Nevrkla notes, such revenue was “the icing on the cake” for U.K. labels. But today. he says, “this is absolutely crucial bottom-line income.”

+4.3%

AUSTRALIA

Up 4.3% to 381.6 million

Although remaining cautious, Ed St. John, chairman of Australian labels group the Australian Recording Industry Assn.. says he sees “the green shoots of recovery” in the country’s first annual sales gain since 2003. The arrival fast year of Nokia‘s Comes With Music and MySpace Music helped drive the digital sector. But label sources estimate iTimes still accounted for 65% of digital trade values, which surged 40% to $88.1 million Australian ($68.8 million), raising digital’s market share to 18% in 2009, from 13% in the prior year. CD sales accounted for 78% of overall values, with volume down just 2.6% to 29.4 million units. A key factor was the opening of 19 new stores by market-leading home entertainment/consumer electronics retailer JB Hi-Fi during its financial year that ended June 30, 2009. JB estimates it accounts for 40% of the Aussie CD market.

+0.5%

BRAZIL

Up 0.5% to $203.7 million

A strong schedule of releases by established artists ranging from pop/rock veteran Roberto Carlos to singing priest Father Fabio de Melo enabled Latin America’s largest music market to enjoy its second consecutive year of stability after three years of double-digit declines. Physical music sales inched up 0.5% to 331.6 million reais ($164.6 million), but digital revenue slipped 0.7% to 53. 2 million reais ($26.6 million). IFPI’s Lopes suggests the figures might mean the decline in Brazilian music sales “has bottomed out, and we’re now looking at a period of prospect for growth-if digital manages to take off.” While piracy has restricted digital growth, several new subscription services launched in 2009, driving the format’s share of digital trade values to 35% in 2009, from 9% in the prior year.

+10.4%

SOUTH KOREA

Up 10.4% Vo $144.8 million

Sales climbed as the implementation of “three strikes”legislation in July 2009 drove Korean users toward fully licensed subscription services that had emerged in 2008, including former illegal operators Soribada and Bugs. That migration was aided by a major government campaign to publicize the new anti-piracy law. Physical sales dipped 5.9% to 82.5 billion won ($64.5 million) following sharp gains in 2008. while digital revenue surged 27% to 102.8 billion won ($80.4 mill ion) after remaining virtually fiat during the two prior years. Universal Music Korea managing director Beom-|oon Yang says the industry’s new tactic of releasing two or three mini-albums by Korean pop acts in a year, rather than one full-length album, has been particularly helpful in “stimulating consumer demand for new music.”

+11.9%

SWEDEN

Up 11.9% to $138 million

A 11.9% leap in digital sales to 156.1 million kroner ($20.4 million) lifted the sector’s share of the overall market to 15% in 2009, from 8% in the prior year. Labels say file sharing declined after the April 2009 passage of legislation requiring internet service providers to divulge the identities of copyright infringers to rights-holders. That same month, a Swedish court found the four men behind BitTorrent tracker the Pirate Bay guilty of assisting in making copyright material available. After that, Universal Music Sweden managing director Per Sundin says. “Consumers went back to buying CDs,” sales of which climbed 17.2% to 13. 6 million units. Digitally, it was the year of Spotify, which launched in October 2008 and now claims 2 million active users in Sweden (out of a population of 9.1 million). The music service received a boost in November when market-leading telecom Telia began bundling Spotify’s subscription service with its broadband and mobile service plans.

+2%

INDIA

Up 2% to $128.4 million

Demand for music in India’s booming mobile phone market boosted digital trade value 53% to 1.9 billion rupees ($39.6 million), offsetting a 20.1% drop in physical sales to 3.1 billion rupees ($64.2 million)-“a Holy Grail story,” IFPI’s Lopes says. India has more than 422 million mobile phone subscribers, according to the Cellular Operators Assn. of India, and is adding around 13 million monthly. Ringbacks delivered 83% of digital revenue, up from 62% in 2008. While piracy still blights physical sales, collecting society PPL India’s recent drive to increase performing rights revenue, particularly from the hospitality and retail sectors, is paying off. That grew a hefty 25% to 1.2 billion rupees ($24.6 million) during 2009, representing 19% of total trade value-up from 16%.

+0.2%

MEXICO

Up 0.2% to $120.9 million

Mexican music sales remained virtually flat in 2009-but that was a vast improvement over three straight years of double-digit declines. Digital sales jumped 36% to 241 million pesos ($17.8 million), while physical sales fell a modest 1.3% to 1.4 billion pesos ($102 million), helped by a strong release schedule and intensified anti-piracy efforts. The Mexican launch of Apple‘s iTunes store in August helped boost digital sales, says Fernando Hernandez, director general of labels group Amprofon. Hc adds that the attendant publicity also spurred interest in other online music outlets. However, master ringtones and streaming services remained dominant, respectively delivering 23% and 27% of the sector’s trade value, while downloads accounted for only 15% of digital revenue.

Reporting by Ahir Bhairab Borthakur, Lan Brandie, Leila Cobo, Tom Ferguson and Andre Paine. All currency conversions are based on the figures and rates IFPI used for individual markets in “Recording industry in Numbers 2010.”

Source:

Borthakur, A., Brandle, L., Cobo, L., Ferguson, T., & Paine, A. (2010). As goes South Korea? BillBoard, 122(22). Retrieved from http://proquest.umi.com.lib-proxy.fullerton.edu/pqdweb?did=2065554391&sid=2&Fmt=3&clientId=17846&RQT=309&VName=PQD&cfc=1

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