Midyear recorded-music sales roundup

Of all the countries that have reported midyear sales figures, it is the US that has provided the most optimism. For the first six months of this year, album-unit sales rose 1% compared with same period of 2010, according to Nielsen SoundScan. This represented the first time that album sales had increased since 2004. Including track-equivalent albums (10 digital tracks equal one album), the growth figure was higher, at 3.7%. Digital-album sales were reported by Nielsen SoundScan to have increased 10% year-on-year, with digital-track sales rising 11%. Recent figures from Nielsen SoundScan, for the year to Aug. 21, published in the trade magazine Billboard, suggest that the situation has improved slightly, with album sales up 2.4% compared with the same period in 2010 and album sales including track equivalents rising 4.8%.

Nielsen SoundScan figures are clearly different from the annual trade figures published by the global trade association the IFPI and so should be used as a guide only. But included in the IFPI figures are performance-rights revenues. Although these are paid only by digital-music services in the US, US performance-rights collection society SoundExchange has reported impressive growth for the first half of this year, with collections up 94% compared with 1H10. Total trade revenues from recorded-music sales might not return to growth this year, but the inclusion of performance-rights collections could result in the first increase in total US trade revenues in six years.

Earlier this month the trade association in Japan the RIAJ said the production of physical recorded music in the first eight months of this year was unchanged compared with the same period of 2010. Although the volume and value of audio units produced was down 6%, for music DVDs the volume of units produced was up 26% and the value of those units up 24%. For digital sales, the position was not so good, with total trade revenues in the first six months of 2011 down 13% year-on-year and digital unit sales were down 12%.

The next big three
Earlier this month the German trade association BVMI reported that total sales of physical recorded-music formats were down 5% in 1H11. CD sales decreased 4.2%. Although vinyl sales rose 17.4%, the format accounted for less than 1% of total recorded-music trade revenues. For digital the position is much more promising. BVMI said revenues from online subscription services, such Napster, Simfy Premium and Musicload Nonstop, increased 21.4% in 1H11 compared with 1H10. Even more impressive was the rise in revenues from advertising-supported streaming services, such as MyVideo and Clipfish, which were up 64.8%. However, the largest share of digital revenues still comes from downloads, which BVMI said accounted for 83.8% of the digital total in 1H11.

The UK, which was overtaken by Germany last year, had a reasonably good first half of this year. According to estimates provided to Music & Copyright by the Entertainment Retailers Association (ERA), total recorded-music unit sales were down just 1.7% compared with 1H10. The rate of decrease in physical-album sales in the first six months of this year was, at 8.8%, almost identical to the same period in 2010. Although the rise in digital-album sales slowed from 36.3% to 25.4%, the total rate of decline in album sales slowed to 2.4%. ERA said retail sales of recorded music have performed better this year than both video and games.

New figures published by the French music-trade association SNEP show that trade revenues from recorded-music sales fell 5.7% in the first six months of this year. The rate of decline, which was slightly higher than the full-year 2010 figure of 5.1%, may well be a disappointment to the local industry, but the sharp rise in subscription revenues provides some cause for optimism. The steady demise of physical sales continued unabated, with total physical trade revenues down 12%. A big fall in trade revenues from music videos, especially in the second quarter of this year, exaggerated the overall physical decline, with album sales in the six-month period down 7%. Digital sales continued to rise and the 22.7% increase meant that digital accounted for 23.5% of total trade revenues in the six-month period. Of the total digital trade revenues, Internet downloads accounted for 51.3%. The star of the six month period was online subscriptions. According to SNEP, trade revenues from online subscriptions increased 237%. Online-streaming revenues also experienced a good six months, with trade revenues in the period up almost 50%.

A mixed performance elsewhere
Italy has not yet reported midyear sales figures, and the Dutch, Belgian and Australian trade associations are not reporting half-year figures at all. Spain’s Promusicae said in late July that the trade value of Spanish recorded-music sales was down 18.7% in 1H11. Although trade revenues from streaming increased more than 300%, the value of Internet-download sales was down 19.7% year-on-year, and mobile download sales fell more than 50%. Trade revenues from physical recorded-music sales dropped 30.5%.

In Sweden, trade association GLF said the value of recorded-music sales fell to SEK342.9 million (US$53.9 million) in the first six months of this year. Although trade revenues from physical sales fell by a third, the strength of digital sales, particularly streaming, lessened the overall decrease to just 6%. For the first time, trade revenues from digital sales overtook physical, and the continued growth in the popularity of streaming in Sweden meant that streaming revenues accounted for 41.1% of the total, just behind physical albums, which took a 45.9% share.

The dream of global growth
The markets that have announced sales details or provided some guidance accounted for 70% of global recorded-music sales last year, and their performance therefore has a large bearing on the performance of recorded-music sales globally. Of course, a good number of countries have provided no midyear figures, and therefore making any assumptions on the global position is highly speculative. Moreover, an assessment of the global trade-revenue picture must also take into account performance-rights collections, and few collection societies are in a position to offer any guidance on their financial position for this year. However, Music & Copyright has calculated that if the performance in the markets that have published midyear sales figures continues through the end of the year, trade revenues from recorded-music sales for the top 10 markets as a whole will decrease only around 1-2%.

Forecasting the performance of global sales has become much more difficult, because there is little uniformity in developed markets. In the 1990s, favorable economic times often resulted in rising music sales. Of course, the 1990s benefited from the transition from analog formats to the CD, but there were much fewer influencing factors and less unpredictability for music companies to account for when planning release schedules. But with digital now dominant in a number of markets and nearing dominance in several others, greater stability in the recorded-music sector might not be that far off, and the chaos of the past 10 years just might be nearing an end.

Music & Copyright
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