Milepost: Global Music Sales Actually Rise

On the heels of the news of iTunes' sales of songs surpassing 25 billion (6 Feb, 2013), comes a report that total global music sales actually increased in 2012 - the first increase since 1999.

  Global music industry trade group IFPI released their annual report earlier this week, showing a very modest increase in total sales revenues of 0.3%, to US$16.5 billion.  While the increase isn't huge, it is the first year-to-year gain seen in the 21st century.  In addition, while the industry has long blamed their decline on digital music, the latest report from the IFPI touts the growing contribution of digital music sector as the driving force behind the (hoped-for) recovery of the music industry.

“Digital is saving music,” said Edgar Berger, Sony Music’s international chief.

  The report puts annual growth of the digital music sector at 9 %, and being driven by a variety of revenue streams - sales of downloads, licensing to both subscription-based and advertising-based online streaming services, music video downloads and streaming.  In addition, there's been a huge increase in the expansion of digital music markets around the world.  While only 23 nations had viable (and legal) digital music marketplaces at the start of 2011, the end of 2012 saw more than a 100 nations where major digital music outlets operated.  Some quick supporting stats -

• Digital sources now account for more than a third of all global music sales.  Downloads currently account for 70% of the total.
• Licensed music streaming services saw a 44% increase in the number of subscribers.  The success of subscription music streaming services has opened up licensing fees as a major new revenue source for music labels.
• Social media is becoming an important channel for music promotion and fan engagement, as well as digital sales.
• Digital sources account for more than half of all revenues in a number of markets, including the U.S., India, Norway, and Sweden.
• Acceptance and use of digital music sources is expanding globally.  More than 100 countries have legal markets for digital music, and surveys suggest more than 60% of all Internet users have used a music subscription service in the previous six months - a number than jumps to 80% among young adults (16-24 age group).
• iTunes song sales generate about a quarter of all global music industry sales ($4.3 billion in sales generating $3.4 billion in licensing to music labels for 2012).

  The IFPI argues that this year's results, and the continuing expansion of digital music into markets around the globe, signal the return of the industry.  The report goes so far as to argue that digital music will be a major driver of the digital economy.

  It may be a bit early for for a victory lap.  The global total sales are still well below the industry's sales peak of $29 billion, as well as being well below revenues for other forms of media and digital gaming.  Still, it is a positive sign for an industry that's been having hard times.  I'm also glad to see the belated embrace of digital music and the range of new revenue streams it's been creating.

Sources -   History Shadows an Upbeat Music Sales Forecast, New York Times
IFPI publishes Digital Music Report 2013,  IFPI press release
Wednesday Apple Rumors: iTunes Music Revenue Up 10% in 2012,  Investorplace.com
IFPI Digital Music Report 2013, study report
The Digital Music Consumer - A Global Perspective, February 2013, slides for research report from Ipsos MediaCT