26 April 2017
Reporter: Mark Dugdale

Streaming booms as value gap bites


Paid streaming contributed to significant revenue growth in the recorded music market in 2016, despite the so-called value gap between music-only services and video platforms continuing to short-change artists.

The 5.9 percent rate of growth was the highest that IFPI, also known as the International Federation of the Phonographic Industry, has seen since it began tracking global sales in 1997. Total revenues for 2016 stood at $15.7 billion.

This was in large part thanks to 112 million users of paid music streaming subscriptions driving year-on-year revenue growth of 60.4 percent, according to IFPI, with Spotify and Apple Music leading the way in compensating artists for their music.

Those 112 million users generated $3.9 billion in revenue last year, according to IFPI, making digital income responsible for half of the global recorded music industry’s annual revenue for the first time.

Growth in streaming more than offset a 20.5 percent decline in downloads and a 7.6 percent decline in physical revenue, IFPI found, suggesting that the industry has overcome the difficult transition it had to undergo when online downloads and file sharing first began to chip away at sales.

It wasn’t all good news for the music industry. The so-called value gap between music-only services and video platforms continues to leave artists out of pocket, according to IFPI.

Using the comparison of Spotify and YouTube, IFPI estimated that Spotify paid record companies $20 per user in 2015, while YouTube returned less than $1 for each music user.

Frances Moore, chief executive of IFPI, commented: “The industry’s growth follows years of investment and innovation by music companies in an effort to drive a robust and dynamic digital music market.

“Music’s potential is limitless, but for this growth to become sustainable—for investment in artists to be maintained and for the market to continue to evolve and develop—more must be done to safeguard the value of music and to reward creativity.

“The whole music community is uniting in its effort to campaign for a legislative fix to the value gap and we are calling on policymakers to do this. For music to thrive in a digital world, there must be a fair digital marketplace.”

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