Music industry revenue hits highest level since 2002

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Revenue in the global music industry last year reached its highest level since 2002 as paid-for streaming subscriptions and strong growth in Latin America and Africa continued to drive the sector’s recovery.

Total revenue increased 7.4 per cent to $21.6bn in 2020 according to IFPI, the global music trade body, its sixth consecutive year of growth. The rise was driven largely by streaming services including Spotify, Apple Music and Deezer, with the number of paid-for subscription accounts rising 18.5 per cent to 443m by the end of last year.

The overall rate of growth was slightly lower than in 2019 due partly to a 10 per cent decline in revenue from performance rights, or the royalties paid when songs are played live, as the pandemic hit the concerts business.

The music industry has bounced back from its nadir a decade ago when illegal filesharing and a sharp decline in CD sales sent the sector into a downward spiral.

Yet the continued recovery in 2020 comes against a backdrop of a fierce debate over how artists are paid in the streaming age. The UK government is reviewing whether artists and songwriters are benefiting or whether the major record labels and streaming services are taking too much of the profit.

Streaming now accounts for 62 per cent, or $13.4bn, of sales across the music industry, underlining the importance of the digital world in how income is generated by labels, artists and songwriters.

The major labels — Universal Music, Warner Music and Sony Music — have argued that the rise in profit on the back of streaming has boosted investment in a new generation of artists such as Dua Lipa that require huge marketing spend to “cut through” in the digital age.

That has proved a contentious argument in some quarters of the industry with artists and songwriters including Nadine Shah arguing they are struggling to pay the rent as live income has evaporated and streaming payments have proved anaemic.

Frances Moore, chief executive of the IFPI, said it was a “misconception” that artists are not doing well in the streaming age but noted that “competition for attention” has never been higher, pointing to Spotify data showing that 60,000 tracks are uploaded to the streaming platform each day. “The biggest investors in artists are the recording companies,” he said.

Geoff Taylor, chief executive of the UK music trade body BPI, said: “The ongoing increase in paid subscription streaming fuelled labels’ ability to continue investing in artists.”

The growth rate for new subscribers to paid-for streaming services proved much higher than overall revenue growth which was attributed to a faster expansion in emerging markets, where prices are much lower than in countries including the UK and the US.

The 2020 figures showed that streaming drove a 16 per rise in revenue in Latin America due to the “reggaeton explosion” and nearly 10 per cent in Asia, compared with 3.5 per cent in Europe and 7 per cent in the US and Canada.

Sipho Dlamini, chief executive of Universal Music’s South African and sub-Saharan African division, said “streaming plays a crucial role” in African and Latin American markets where smartphones availability has boomed in recent years.

Shridhar Subramaniam, head of strategy for Sony Music in Asia and the Middle East, said Asia offered huge potential with China and South Korea already growing at “breakneck speeds” while other territories including India and Indonesia, with large youthful populations, should provide growth in the future. “It’s a huge cultural and consumption powerhouse,” he said.

Last year was also notable for a more resilient physical music market. The BPI said physical music sales in the UK fell a modest 2.6 per cent to £210.3m, while vinyl sales grew 31 per cent to the highest level since 1989.

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