Spotify helps UK music industry turn first profit in 15 years

28/02/2013

Streaming services such as Spotify and YouTube have given the UK industry its first increase in profits recorded in 15 years, according to new reports.

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The details emerged in two reports that were released this week. The IFPI Digital Music Report showed a 0.3% rise, amazingly the biggest rise since 1999.

Meanwhile, a report by the NPD group showed that peer-to-peer music download services dropped by 17% globally.

According to industry bosses, this could set them back on the road to recovery, after online piracy and the decrease of physical CD sales saw the industry struggling.

Key points from the IFPI report include that the small percentage rise in sales actually equates to $16.5bn hard cash. Furthermore, digital sales increased about 9% to $5.6bn, which is around 34% of global music industry sales.

Perhaps a sign of things to come, some markets like India, Norway, Sweden and the US, find that digital channels now bring in the majority of a record companies’ income.

The growth is fuelled by digital revenues, such as music streaming on YouTube and paid subscription services such as Spotify.

The subscription services are expected to be responsible for more than 10 per cent of digital revenues in 2012, and the number of people paying to use them has increased to 44 per cent.
One of the biggest hits of 2012 was Psy's 'Gangnam Style' , but Adele and One Direction also helped by selling 2.3 million and 8.3 million copies of their albums, respectively.

The International Federation of the Phonographic Industry (IFPI) reported that global recorded music revenues rose by 0.3 per cent in 2012, with chief executive Frances Moore saying, "The industry is on the road to recovery."

However, she continued by saying, "This growth is still fragile. Google needs to priorities legal sites in its searches. Far from copyright ‘smothering innovation’, music, based on copyright, is driving the digital economy.

"Music is driving social network sites. The highest number of searches on Facebook and Twitter are for music artists."

The report from the IFPI went on to say that digital revenues increased by 9 per cent to $5.6 billion in 2012 and they they now account for around 34 per cent of global industry revenues. However, a third of internet users - 32% globally - still regularly use illegal file-sharing sites.
Moore finished by saying that the growth is "a hard-won success for an industry that has innovated, battled and transformed itself over a decade. The music industry has adapted to the internet world and learned how to meet the needs of consumers."

Drop in piracy?

The NPD Group said last year the number of users on peer-to-peer (P2P) illegally downloading music fell by 17% - down to 21 million worldwide.

The market research firm cited an increased use of legal streaming music sites as being behind the drop.

The NPD Group's report, based on its annual study of music consumers, said that at P2P file sharing's peak, in 2005, as many as 33 million people used the services - one in five of all internet users aged 13 and older.

But in 2012 that number was measured as being down to 21 million people.
The report said as many as 40% of people who used illegal music services in 2011 stopped doing so in 2012.

Of those, 20% said this was due to the fact the illegal service they were using had been shut down, or had contained spyware and viruses.

More than half the users who stopped using illegal sites said they now preferred legal services such as the UK-headquartered Spotify.

Global singles best sellers in 2012

1. Carly Rae Jepsen, Call Me Maybe, 12.5 million units
2. Gotye, Somebody That I Used To Know, 11.8 million
3. PSY, Gangnam Style, 9.7 million
4. Fun, We Are Young, 9.6 million
5. Maroon 5, Payphone, 9.1 million
6. Michel Telo, Ai Se Eu Te Pego, 7.2 million
7. Nicki Minaj, Starships, 7.2 million
8. Maroon 5, One More Night, 6.9 million
9. Flo Rida, Whistle, 6.6 million
10. Flo Rida, Wild Ones, 6.5 million

Source: IFPI

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