Tagged: Music subscriptions

New issue of Music & Copyright with Netherlands country report

CoverThe latest issue of Music & Copyright is now available for subscribers to download. Here are some of the highlights.

Music subscription service complaints
In October, an international coalition of creators published a report calling for fairer rules and greater transparency in the distribution of digital-music royalties. The central tenet of the report was that music has been undervalued by digital music platforms with rights holders on the losing side of digital sales splits. One of the report’s recommendations was that rights holders should receive a higher share of gross revenue from streaming services than they currently do. With access services poised to become the predominant model for music consumption, the report said the remuneration paid out needs to be rebalanced in favor of rights holders and the current level of remuneration is inadequate given the dependency of these services on music content. Although the calls by the creator groups for a fairer share of the dividends from streaming are understandable given the wide publicity that some artists have received regarding streaming royalties, the report is mistaken in citing access services as the broken link in the value chain. Streaming is providing benefits to rights holders far beyond simple music consumption and paid subscription services are proving to be a particularly profitable means of music distribution for record companies and publishers.

Big quarter for SoundExchange
Performance-rights paid to record companies and performers in the US have become a very meaningful income stream in the last few years with growth in collections and distributions rising rapidly. SoundExchange, the non-profit performance-rights organization, administers performance-rights paid by statutory licensed digital broadcasters and streaming services. Since 2003, when it became an independent body, total distributions to rights holders have surpassed the $2.5bn mark with growth anticipated for the next few years at least. Continue reading

Music subscription services face a difficult balancing act between price and value

Music is unquestionably important to most people’s lives, regardless of where they are in the world. Although not everyone spends money on recorded music or buys tickets to a gig or festival, a very high percentage of people listen to music on the radio at home or in their car. Restaurants, shops, and bars use music to create a particular ambience to encourage people to either relax or feel enlivened to improve their customers’ experience.

Music is essential and important
Just how important music is to consumers was one of the many questions included in a consumer survey conducted by Music & Copyright publisher Ovum in July. Over a three-week period, 15,000+ consumers across 15 countries were asked a number of questions about their media use. In terms of importance, music was considered essential by 42% of respondents, and important by a further 43%.

Although listening to music was less important than browsing the Internet and reading the news, it was considered more essential that interacting on social media and watching TV. Only 16% of respondents said listening to music was unimportant. Continue reading

Has streaming really brought the good times back to Sweden’s recorded-music sector?

Earlier this week Sweden’s local music trade association Grammofonleverantorernas Forening (GLF) proudly reported that total trade revenues from recorded-music sales increased 5.1% last year, to SEK991.2 million (US$152.2 million), from SEK943.6 million in 2012. The rate of growth was lower than the 13.8% year-on-year increase in 2012, but higher than the 0.5% upswing in 2011. Streaming was the big winner, with record company earnings from services such as Spotify and WiMP rising to SEK705.9 million, from SEK541.6 million in 2012. Based on the latest GLF figures, streaming accounted for slightly more than 71% of total trade revenues in 2013, up from 57.4% in 2012 and just 1.5% in 2008.

Sweden sales 2000-2013

In a statement, the GLF CEO Ludvig Werner said three straight years of growth had pushed trade revenues to their highest level since 2004. However, he cautioned that record company earnings are still just 60% of the peak year of 2000.

With all the headlines about Sweden’s streaming boom, it is easy to forget how big the Swedish recorded-music market once was and how far it has fallen. Moreover, there are plenty of questions over how high streaming sales can actually go, particularly given the slowdown in the growth rate of streaming earnings (30.3% in 2013, down from 55.4% in 2012).

In just six years, sales of CDs in Sweden have more than halved, yet there is little published evidence detailing whether those CD buyers have switched to digital or are simply buying less recorded-music. In the early years of digital, falling trade revenues were a clear indicator that consumers were either switching to unauthorized services, or abandoning the recorded-music industry altogether. Download sales have never really taken hold in Sweden and so the big unknown is whether music subscription services have attracted consumers that stopped buying recorded-music, or whether the services are simply causing a redistribution of trade revenues from CDs and downloads.

Rising earnings suggests the growth has come from more than simple cannibalization, but it would be easy to gloss over the possibility that fewer Swedes are spending money on recorded-music, and that those consumers that are spending, are spending more. If that is the case then there will be a limit on how big the streaming boom will take Sweden’s recorded-music sector. No one is expecting streaming sales to keep on rising, but if streaming can’t return record company earnings to 2000 levels, then what can?

Music & Copyright
If you like this blog then Music & Copyright might be just what you are looking for. It is a fortnightly research service covering global copyright and legal issues affecting the music industry. It is unrivalled in its coverage of this complex and fascinating area of the music industry. It is also why our extensive client list includes companies and organizations from all sectors of the music industry operating all around the world. But don’t take our word for it, please get in touch and we will send you the latest issue.

Music & Copyright is published by Informa Telecoms & Media.

Spotify accounts filed with UK Companies House show decrease in revenues for 2012

spotify_logo-copy1-1According to its latest filing with Companies House in the UK, where it is based, Spotify posted a decrease in revenues, from £96.5 million in 2011, to £92.6 million in 2012. Advertising revenue increased, from £8.1 million to £9.1 million, but sales of subscriptions were down, from £72.5 million to £64.8 million. Losses after tax for 2012 totaled £10.1 million, reversing a £21 million profit in 2011.
Spotify accounts 2012

It is worth noting that the new figures are for Spotify Ltd only – the Spotify Group accounts came out in July and showed the subscription service generated revenues of €434.7 million (US$584 million) last year, up 128.3% from €190.4 million in 2011. Those accounts were filed with the registry of companies in Luxembourg by its holding company, Spotify Technology. Also worth pointing out is that during the first 5 months of 2011, global premium revenue was recognized in Spotify Ltd. But from as from June 2011 the premium service was provided locally and so the revenue was recognized in the local sales subscriptions.

The rate of growth in the wider subscription sector makes the UK figures a little misleading, particularly given the number of markets Spotify is now available in. Although the company hasn’t updated its subscriber numbers since March (6 million paying users and 24 million active users), both those totals will have increased. By how much, we will all have to wait and see.

Music & Copyright
If you like this blog then Music & Copyright might be just what you are looking for. It is a fortnightly research service covering global copyright and legal issues affecting the music industry. It is unrivalled in its coverage of this complex and fascinating area of the music industry. It is also why our extensive client list includes companies and organizations from all sectors of the music industry operating all around the world. But don’t take our word for it, please get in touch and we will send you the latest issue.

Music & Copyright is published by Informa Telecoms & Media.

Why reports on the evolution of the music industry should focus on earnings and not on format wars

For anyone interested in the recorded-music industry and where it is headed, it is difficult to escape the many articles and reports speculating on how music will be served to consumers in the coming years. For those living in Norway or Sweden the answer is already very clear with music subscription services leading the charge to a growth in sales after countless years of decline. Such has been the rise in music subscriptions in the two countries, streaming now forms part of sales charts published each week. IFPI Norway added streaming to album charts from the beginning of November. Previously, the album chart had only included physical sales and downloads. Sweden added streaming to its national album chart in October. IFPI Norway said by including streaming figures the album and singles charts reflected “the total consumption of music in Norway.” Streaming has been included in the Norwegian singles chart since the spring of 2011.

Adding streaming usage to a sales chart is a natural progression in the collation of music sales and recognition of how accessing recorded-music has changed. Excluding streaming from sales charts, particularly in a country where the majority of trade revenues now come from subscription services, would make those charts incomplete, unrepresentative and irrelevant. Continue reading

Imagine if subscribing to music services became as popular as pay-TV

Global musicMusic-subscription services are in the headlines for one reason or another on an almost daily basis. The leading services are either hailed as the savior of the recorded-music industry or are criticized for not paying artists enough for the use of their music. Arguments and differences of opinion will most likely rumble on for years to come until the next big thing emerges promising a brighter future for all.

What should be remembered is that despite the rapid rise to dominance in some northern European countries, the subscription model is still in the early stages of development. Plenty of artists initially held off from making their music available to download stores, but virtually all of the big-name holdouts have now relented. It is also worth noting that subscription services have only just scratched the surface of what they can offer. Take the latest deal between the Norwegian music-streaming service WiMP and the Olav Thon Group (OTG) announced this week. WiMP is to provide unlimited music for users of the OTG’s hotels and restaurants across Scandinavia. If that sort of deal became common elsewhere in the world then subscription revenues would start to look pretty healthy and the doomsayers just might change their minds over the benefits of streaming. Continue reading

The impact of streaming on download sales and why there is no simple answer to the question of cannibalization

sub vs dldIn the past few months the publication of detailed national digital-music sales figures has illustrated great differences between countries’ digital-music-buying habits. Published analysis of digital-music sales patterns has drawn a variety of conclusions regarding whether subscription streaming services are cannibalizing download sales. However, as subscribing to music starts to become mainstream and download sales begin leveling off, or falling, more and more people are asking whether streaming is to blame. Continue reading