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Business News Digital Retail
Subscription services account for more than 60% of UK recorded music revenues, as fans switch from ownership to access
By Andy Malt | Published on Tuesday 5 March 2019
With the shift to streams, recorded music in the UK has now followed games and video so that the majority of its revenue comes from access services rather than ownership.
In 2018, 62.1% of music revenues came from subscription services, as opposed to 37.9% from discs and downloads. The shift was driven by a 38% increase in revenues from paid subscription music services last year, bringing in just over £829 million. We know all this because of the latest stats pack – for 2018 – from the Entertainment Retailers Association.
“This is a significant moment”, says ERA CEO Kim Bayley. “For the first time since the birth of the modern entertainment business in the late 1950s, more revenue is coming from payments for access rather than purchase in all three sectors – music, video and games. New digital services have created a ‘Generation Rent’ for whom access models seem natural. It is nothing less than a revolution in the entertainment business”.
‘Generation Rent’ is not generally a term used positively, of course, but whatever. Bayley continues: “Innovation and investment by digital services and retailers has literally proven a lifesaver for the video, games and music businesses, creating new business models and supporting jobs across the UK creative industries”.
Physical formats still remain significant, with revenues of more than £505 million, although this side of music retail is in continued decline. CD albums remain the biggest source of income from physical music, with £289.1 million. Vinyl follows at £91.3 million.
ERA notes that declines in CD sales and the ongoing vinyl revival have had differing effects on different parts of the retail market.
The supermarkets, which became a dominant force in music retail in the early 2000s, mainly by undercutting other retailers on CD sales, are now struggling in this area – although they still account for a quarter of physical music sales. Independent stores, meanwhile, are seeing a resurgence with 425 shops now operating in the UK – the highest total for more than a decade.
Still, it’s online where most of the money is coming in. Digital services account for over 76% of revenues, with sales of physical products through mail order operators like Amazon bringing the total up to 85%.
Although still seeing significantly smaller revenues than gaming and video overall, music subscription income helped to drive overall entertainment revenues from access models to over £4.5 billion. In total, UK entertainment retail revenues passed £7.5 billion last year – an all-time high, up 9.4% on 2017 – over £1.3 billion of which came from music.
