Digital music is worth more than physical in France for the first time ever

CDs are becoming a thing of the past as more and more each year digital music replaces the way we used to listen.

France certainly aren’t strangers to music online, being the homeland of popular music streaming service Deezer. Their love for music streaming and downloads means that digital music is now worth more than their entire physical market of CDs, vinyls and all other music you get in a shop.

The latest figures from the SNEP show that for the music industry, digital revenues now account for 57% of the market (€335 million). The entire recorded music market grew by 1.8% in 2018, their 3rd year of growth in a row.

Physical music still makes up a large chunk of the industry in France, CDs represent over a third of all music revenues in France. The physical market made $265 million for the year, still a significant amount but a lot less than digital.

The SNEP say that despite the shift in platforms, physical music is still doing better in France than in many other places that are switching to digital music. They say this is thanks to a “unique distribution network of more than 4,000 sales outlets across French territory”.

Whilst overall market growth was good, at 1.8%, it is music streaming where the growth is really happening. Both free and Premium streaming revenues grew by 23% with paid subscriptions making up 41% of the income. That’s incredible growth for paid streaming which only accounted for 8% five years ago.

There were 57.7 billion audio streams recorded by the people of France in 2018. That’s up 35% on the prior year. Weekly listening figures peaked at 1.3 billion at the end of December.

SNEP’s general manager, Alexandre Lasch says: “In a recovering market, we are particularly proud of the spectacular success of the Made in France artists, who featured in 19 of the 20 best-selling albums of 2018, as well as 80% of the Top 200.

“Record producers are hardwired to discover and accompany artists in their careers. One very significant performance indicator in 2018 which highlighted their commitment was the wealth of new talent in the best-performing albums of the year: out of the top 200 best-selling albums of last year, 48 were debut albums, 40 of which were produced in France.”

Spotify want songwriters to be paid more but they’re appealing against royalty increases

Spotify have appealed against the Copyright Royalty Boards new rates but they say they support the increased streaming rates.

The US Copyright Royalty Board (CRB) have defined the new royalty rate that services will legally be required to pay out for music. The amendment to rates, which was finalised last month, will see mechanical royalties paid out to songwriters grow by at least 44% in the US between 2018 and 2022.

The rise in rates would affect all on-demand streaming services in paying out more per stream. But many of the biggest streaming services in the US have appealed against the decision, including; Spotify, Amazon, Google, and Pandora.

So why are music streaming services against artists and publishers getting paid more per stream in an industry that has quickly become the primary source of music for their country? In a new blog post Spotify have outlined their position to try and clarify why they are appealing against the decision.

Spotify insist that despite their appeal they do want songwriters to be paid more, saying: “The industry needs to continue evolving to ensure that the people who create the music we all love – artists and songwriters – can earn a living. The question is how best to achieve that goal.”

So why are they appealing? Spotify say that the CRB structure is “complex and there were significant flaws in how it was set”. Their particular concern, according to their statements, is that it will be apparently “very difficult” for music services to offer ‘bundles’ of music and non-music offerings. They insist that this is a key element in acquiring new subscribers to “keep growing the revenue pie for everyone”.

They have given vague terms on when they will be willing to support the increase in songwriter royalties.

“Music services, artists, songwriters and all other rightsholders share the same revenue stream, and it’s natural for everyone to want a bigger piece of that pie. But that cannot come at the expense of continuing to grow the industry via streaming. The CRB judges set the new publishing rates by assuming that record labels would react by reducing their licensing rates, but their assumption is incorrect. However, we are willing to support an increase in songwriter royalties provides the license encompasses the right scope of publishing rights.”

However, referring to the assumption that record labels would reduce their licensing rates, the NMPA president and CEO has refuted that as “one giant lie”. Speaking to Music Business Worldwide, David Israelite said: “I’m sure a PR team spent a great deal of time and energy crafting a statement to try to deceive artists and songwriters. They must think artists and songwriters are stupid. They are not.”

He continues: “The CRB ordered a rate increase for songwriters. Spotify is against it. It really is that simple.” Apple Music are the most notable service who seem to have accepted the decision and not made an appeal.

Israelite congratulated them, saying: “We thank Apple Music for accepting the CRB decision and continuing its practice of being a friend to songwriters. While Spotify and Amazon surely hope this will play out in quiet appellate courtroom, every songwriter and every fan of music should stand up and take notice. We will fight with every available resource to protect the CRB’s decision.”

Spotify bizarrely claim that the National Music Publishers Association have also appealed against the CRB’s new royalty rates. We will see how the appeals of major streaming services plays out over the coming weeks. It looks like it might get messy.

Music streaming made up two-thirds of the US music industry last year

Last year music streaming made up 75% of the recorded music revenue in the US showing just how popular streaming has become.

As the US music industry reports double-digit growth for the third year in a row, streaming is leading the way. A new report from the Recording Industry Association of America (RIAA) shows that last year music streaming revenues increased by 30% to $7.4 billion which accounts for 75% of the US’ total recorded music revenues.

The RIAA even said that in 2018 music streaming accounted “for virtually all revenue growth”. Overall, the US music industry grew by 12% last year propelled in large part thanks to the continued significant growth of music streaming.

The growth in music streaming is being pushed by the surge in subscriptions as people move more to paid subscriptions from ad-supported services like Spotify free. Last year paid subscription made over half of all revenues for the first time ever rising 32% for a total of $5.4 billion.

South Korea loves music streaming with over 8.5 million subscribers

South Korea may be small but they are one of the world leaders when it comes to streaming music online.

South Korea have become one of the major players for music in the world thanks largely to the global boom surrounding K-Pop music. New figures show that their digital music industry is also seeing significant success with roughly 8.5 million subscribers at the end of 2018.

Warner Music Korea’s CEO Clayton Jin says: “There were approximately 8.5 million subscribers towards the end of 2018, which is a sizeable increase from 2017. Streaming continues to grow, and unlike in most other markets, the price of subscriptions has increased to reflect inflation.” This is referring to the rise in rightsholders’ royalty shares from digital music that were put in place earlier this year.

South Korea is home to a variety of it’s own native music streaming services like Melon, Naver Music, Bugs and many more. The country has adopted music streaming as happily as the rest of the world has taken K-Pop into their lives starting with the worldwide viral success of South Korean artist Psy with his hit Gangnam Style.

South Korea’s recorded-music business has seen a long-term upwards trend. It completely doubled between 2013 and 2017 and became the sixth-biggest global market for music according to the IFPI. 86% of their stratospheric 45.8% rise in overall revenue in those 5 years came from streaming music.

Music Ally have compiled a market report on South Korea’s rocketing music industry which you can read here.

Music streaming grew US music revenues 12% in 2018

The US record industry revenues grew to $9.8 billion in 2018 thanks to the continuing boom of music streaming services.

The Recording Industry Association of America (RIAA) have released their annual report for 2018’s music industry in the US. It showed that music streaming continues to bring reinvigorated life to the music with 12% overall growth thanks mostly to streaming revenues.

Free music streaming helped music streaming to become mainstream and as the services offering music streaming get more popular free streaming is slowly being phased out. Last year was the first time that paid subscriptions represented over half of all revenues accounting for $5.4 billion and rising 32 percent.

All forms of music streaming combined accounted for 75% of the total revenues, roughly $7.4 billion. Digitally downloaded music from services like iTunes and Amazon accounted for 11% of the revenues. Surprisingly physical music sales like CDs and records accounted for 12% of the revenues despite their downward trend in recent years.

Ad-supported streaming like Spotify free and YouTube saw $760 million of revenues with 15% in growth. Digital radio services represent a large part of the US music industry in 2018 with services like Pandora growing 32% for total revenues up to $1.2 billion.

Spotify are making a profit for the first time in 13 years

Spotify have been leading the music streaming revolution for 10+ years and at last the company has turned a profit for the first time.

Spotify have revealed their quarterly report for Q4 2018 and it shows the company is continuing their great growth. In addition the streaming service has a positive Operating Income, Net Income, and Free Cash Flow for the first time in the company’s history.

The report shows that their overall Q4 revenue stood at €1,495 million, a 30% year-on-year increase. They reported their first every quarterly Operating profit for Q4 2018, with an Operating Profit of €94 million, around $107 million, helped by operating expenses dropping 17% year-on-year.

Although they’ve seen great quarter the company are expecting a loss of €50 to €100 million (roughly $57 to $113 million) in the next quarter. For the year of 2019 the company predicts a €200 to €360 million loss (roughly $227 to $409 million).

Although Spotify are incredibly successful and are only forecast to see yet more growth this year, the company is more focused on expansion than profiting. As they take a new focus on podcasts they have acquired two giant podcasting producers; Anchor and Gimlet. In addition they expect to spend $400-$500 million on multiple acquisitions throughout 2019.

Looking at the year ahead Spotify expect to end the year with 245-265 million total monthly active users, 117-127 million of those being Premium subscribers. They predict that they could have 100 million paying subscribers by the end of the first quarter of 2019.

Paid music streaming is almost worth more than free streaming for the first time ever

More people are heading to streaming services than ever for their music fix and now they’re paying for it more.

There is no doubt that music streaming is massive but for a long time it’s the access to unlimited music for free that made it so appealing. Now at last paid subscriptions are set to be worth even more than all the free options combined.

Experts believe that paid subscriptions on music streaming services like Spotify and Apple Music will overtake their free counterparts. Numbers from November 2018 show that 20.6% pay for music streaming as opposed to 18.3% before.

On the other hand free services like Spotify’s ad-supported tier and YouTube are slowly decreasing in popularity at 21.5% in November from 21.7% the year before. The statistics show the gap between free and paid getting rapidly closer and as of last November it is only 0.9% large.

The figures are based on a panel of 1,500 people questioned by the Entertainment Retailers Association (ERA). ERA chief executive, Kim Bayley said: “Ten or 15 years ago popular opinion had it that it was all over for the music business and people would no longer pay for music. These figures are a striking vindication of the innovation and investment of digital services.”

According to their findings men are more likely to pay for music streaming than women though the number of women using free streaming has fallen by 2.6% since 2017. Younger generations are more likely to pay for music streaming with 14.9% of those aged 55+ streaming for free compared to 7.2% paying for music streaming services.

Bayley adds: “What is all the more remarkable is that the likes of Spotify and YouTube also offer fantastic free services, funded by advertising. These figures suggest that music fans increasingly believe that the added features offered by paid-for services, and the curation which enables them to navigate literally millions of tracks, are definitely worth the money.”

HMV isn’t going anywhere as Canada saves the UK music shop

The high street is dwindling and HMV are teetering on the edge, but Canada have saved the day for the UK’s biggest music retailer.

HMV had a bad start to 2019 after a disappointing holiday period left their future uncertain. The music shop, and biggest physical entertainment retailer in the UK, went into administration at the start of January after clawing it’s way out of the same position 5 years ago.

It may represent a dying high street as online shopping becomes the norm and streaming services like Netflix and Spotify replace CDs and DVDS, but there are people who still have faith in store fronts. Canadian mogul Doug Putman has bought HMV taking over their 100 shops and protecting 1,500 jobs from uncertainty. Putman owns Sunrise Records, a Canadian music store that is seeing growth even in the times of uncertainty for physical retail.

The deal will unfortunately still see 27 HMV stores closing immediately, losing 455 jobs with another 122 warehouse jobs being lost in the coming weeks. However, Putman hopes his re-organisation can help the music, film, and TV retailer thrive in a competitive market that is converting to digital more-and-more every day.

Putman said in a statement: “We are delighted to acquire the most iconic music and entertainment business in the UK and add nearly 1,500 employees to our growing team. By catering to music and entertainment lovers, we are incredibly excited about the opportunity to engage customers with a diverse range of physical format content, and replicate our success in Canada”

Although physical music sales are dwindling it’s seeing a resurgence in some ways, like the boom of vinyl sales as they become more of a collectors item than a music format. On their endurance, Putman adds: “We know the physical media business is here to stay and we greatly appreciate all the support from the suppliers, landlords, employees and most importantly our customers.”

Tencent’s stock soars making it’s co-presidents billionaires

Tencent’s entry onto the New York Stock Exchange has been up and down but last weeks boost puts them in a great position.

Last month Tencent Music Entertainment made their entry on to the New York Stock Exchange (NYSE), launching a much anticipated and repeatedly delayed IPO. Tencent Music went public at $13 per share but last week the company saw stocks trading above $16 which put it’s 2 co-presidents, Xie Zhenyu and Xie Guomin’s fortunes worth just under $1 billion.

They closed the week down 4% at $15.27, still a great improvement on their entry on to the market and subsequent month. Tencent Music’s investors include, unsurprisingly, Tencent Holdings and notably also include Western streaming service Spotify who Tencent also invested back into in 2017.

The Chinese media conglomerate’s music service boasts over 800 million unique monthly average users, based on the 3rd quarter of 2018. On average each user will spend over 70 minutes a day on their platform according to the company. With their level of users and engagement Tencent Music are a serious force in digital music and now they’re on the NYSE we could see a move Westwards.

Although the bump in stock put Tencent Music’s co-presidents almost at a billion in value, Tencent Holdings Chairman is far ahead. Pony Ma (known also as Ma Huateng) is one of the world’s richest men with a fortune of $38.6 billion.

SoundCloud’s revenue nearly doubled with an 80% increase in 2017

SoundCloud have proven claims that they earned over $100m in 2017 showing a massive rise in revenue for the music streaming company.

SoundCloud offer an alternative to the streaming model that has blown up in recent years with services like Spotify and Apple Music. Whilst SoundCloud now offer an on-demand music streaming service, their platform has carved it’s niche as an open platform for all artists to upload and listen for free.

SoundCloud’s CEO, Kerry Trainor, in 2018 claimed that in 2017 they made over $100 million after getting rid of 40% of their staff to handle their losses. Having just filed their 2017 accounts with UK Companies House the numbers are confirmed as the company’s global revenues hit $102 million (€90.7 million).

It’s an impressive 80% increase on their €50.3 million in generated revenues for 2016. Subscription revenues for their artist upload services and their Go streaming services were up even higher with an 89% rise to €72.6 million ($82m) compared to €38.4 million in 2016.

The reports show clearly where engagement is at it’s highest for SoundCloud. In 2017 71% of SoundCloud’s revenues came from the United States, even more than in 2016 when 69% of their earnings were generated in the US.

SoundCloud have been making significant efforts to reduce their net losses which were reduced to €51.4 million from €70.5 million between 2016 and 2017. The year saw 173 jobs at SoundCloud lost as well as a round of funding to help push them away from their significant losses.

A spokesperson for SoundCloud speaking to Music Business Worldwide said: “SoundCloud’s 2017 Annual Report filed to Companies House reflects a pivotal year in which the company fully re-capitalized for sustainable growth, while achieving substantial revenue growth and loss reductions vs. 2016.

“While 2018 results will not be filed until later this year, we are please to report SoundCloud also surpassed its full year 2018 growth plan, building on the 2017 improvements posted today. We look forward to continuing to grow SoundCloud’s unique creator-driven platform and business in the year ahead.”