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US industry set for modest growth, but led by live
By Chris Cooke | Published on Friday 7 June 2013
The American music industry is set to grow by about 1% a year through to 2017 according to new predictions from PricewaterhouseCoopers, though that is in no small part aided by predicted growth in the live sector, with the music rights side of the industry still likely to see some declines overall.
According to the report published this week, PwC analysts reckon that the US concert business, which experienced a bit of a wobble three years back after a decade of growth, will continue to expand, with a ‘compound annual growth rate’ of 3%, meaning the sector would be worth in the region of $10 billion a year by 2017.
On the music rights side, PwC is optimistic that digital revenues will continue to grow, despite various signs that the download market may have peaked in the US, and the prospect of the American streaming services (of the Pandora variety) forcing more favourable rates out of the record labels and music publishers. Nevertheless, says the PwC report, the music rights owners could see digital revenues increase 5.1% per year across the board, which would equate to $4.6 billion a year by 2017.
Of course, that is countered by the ongoing decline in CD sales, the format now being in “terminal decline”, according to the report. Decline in physical product revenues will continue, at between 11% and 16%, according to PwC. That would mean the physical product market, which includes all physical formats, would be worth just $1.4 billion by 2017.
Which will make for sobering reading for the record labels which still provide much of the investment that goes into new talent and which – despite all the talk of “360 degree deals” for years now – still only see nominal kick backs from the boom in live. Though with newer artist deals, labels are now often earning off other revenue streams too like merchandise and brand partnerships, plus there is always the growth occurring in various emerging markets, which helped global record sales grow, very slightly, for the first time in over a decade last year.
It’s been a busy week for music industry stats, some upbeat and some less so. Stats from French record industry trade group SNEP seemed pretty gloomy, with a top line figure that revealed recorded music sales were down 6.7% year-on-year for the first quarter of 2013.
Though, perhaps more worrying at first glance was the revelation that not only were CD sales down 7.3% in the quarter, which you’d likely expect, but digital revenues had also dropped, for the first time since such a revenue began, down 5.2%. Though SNEP said that that was due to some anomalies caused by shifts in certain licensing arrangements in the French market, and that without said shifts digital income would have been stable.
Though stability isn’t growth. And while iTunes-style download revenues haven’t actually peaked yet in most territories, many commentators now seem to think that future digital growth will primarily come from the rapidly expanding subscription service space. And on that front, there was some optimistic stats in a new report this week commissioned by Norwegian streaming music firm WiMP, which assessed consumer “willingness to pay” for streaming services such as those operated by WiMP, Deezer and Spotify.
The survey, which focused on five Northern European markets, found that on average a third of those surveyed expressed a willingness to pay to access a decent streaming music platform (ranging from 25% in Germany to 48% in Norway), while only a quarter said they’d never consider paying for such a service.
Unsurprisingly, most said that their willingness to pay would depend on the specifics of a service. Though the WiMP research didn’t really tell us what things a streaming service should provide to turn those ‘willing to pay’ into actual paying subscribers. Then again, why would the digital firm want to share that information with its rivals?
