Streaming accounts for biggest chunk of music revenue – report

The International Federation of the Phonographic Industry (IFPI) Global Music Report 2018 chalks up the bulk of the increase to streaming.

The recorded global total of music revenue was $17.3bn last year. Of this, physical sales contributed $5.2bn, a 5.4% decrease from the previous year. Download revenue saw a steep decline of 20.5% to $2.8bn while streaming surged to $6.6bn – a 41.1% increase from $4.7bn in 2016. Performance rights showed a growth of $100m from $2.3bn while synchronisation revenue remained steady at $300m.

The report said that despite three years of consecutive growth, revenue in 2017 was just 68.4% of the figure in 1999.

While the report shows stats for Europe, Asia, Australasia and the Americas, it does not account for the contribution of African music markets.

Last year, PricewaterhouseCoopers (PwC) released an entertainment and media industry report for five African economies, which showed overall growth in Internet usage. The report said South Africa generated a total of R118m ($10m) in music streaming revenue and R165m in digital downloads in 2016, while physical sales prevailed at R165m. Although physical sales were dominant, it is widely believed that Africa will mirror worldwide trends in the near future, especially with the introduction of streaming services such as Apple Music, Spotify and Deezer.

The PwC report, which provides a forecast in Internet usage until 2021, predicts that streaming revenue will continue to increase substantially. “As in many markets, audiences are not only turning away from owning physical music product but they are also set to reduce their consumption of digital downloads,” the PwC report reads.

The rise of music revenue is fertile ground for streaming services, which collectively boast 176 million paying users. This also means that content producers can now tap into a bigger audience than ever before.

Music revenue had been fluctuating since the IFPI released its first global report in 1999, when physical sales alone reached $25.2bn. Previous IFPI reports show that music revenue began hitting a major trough in 2003 with the lowest revenue recorded in 2014 at $14.2bn.

Despite that decrease, music streaming has shown an exponential growth since it was first recorded at only $2m in 2005. In 2017, music streaming made up 38% of the total $17.3bn, while physical sales, which contributed 30%, have continued to decline in the last three years.