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Streaming to boost South Africa’s declining music sales
A report released by the global auditing firm PricewaterhouseCoopers (PwC) on 22 September has revealed that the South African music industry will heavily rely on streaming revenue in coming years as physical music sales and downloads continue to decline.
- Digital music. Photo: www.routenote.com
According to the report, which focuses on South Africa, Nigeria and Kenya, and is titled Entertainment and Media Outlook, South Africa’s total music revenue fell by 1.2% to R2.0 billion ($145 million) in 2015. Improvements in the country’s streaming offerings and the live sector are, however, expected to boost music revenue going forward, ensuring a 4.4% annual growth for the next four years. By 2020 the industry’s total music revenue is expected to reach R2.4 billion ($175 million).
“Although physical music continues on its downward trajectory and downloads look set to fall out of popularity, it is streaming revenue that will single-handedly be responsible for keeping recorded music revenue from large falls,” say PwC.
In 2015 digital music streaming revenue contributed R74 million ($5.4 million) but this is expected to rise six-fold to R437 million ($31.8 million) in 2020, contributing a large percentage to the total revenue. Revenue from recorded music is expected to fall from R841 million ($61.3 million) in 2015 to R777 million ($56.6 million) in 2020.
The report says “live music is now playing an ever more important role” in South Africa. Improving ticket sales and sponsorship revenue mean that live music revenue is taking an ever greater share of South Africa’s music market, accounting for 57% of total music revenue in 2015 and 68% in 2020.
Although South Africa has arguably the most well regulated music industry in Africa, it will record the lowest growth rate in the next four years, compared to Nigeria and Kenya. Nigeria is expected to grow by 12.9% annually to reach $86 million by 2020 while Kenya is expected to grow by 9.3% annually to reach $29 million in the same period.
Streaming platforms are popular around the continent, with a number of South African services such as Simfy, Apple Music, Deezer, Bozza and telecom companies providing users with millions of songs across genres. The increasing strength of streaming in South Africa is linked to a growing internet access market—which is expected to increase from R39.4 billion ($287.3 million) in 2015 to R68.5 billion ($4.9 billion) in 2020, as fixed and mobile broadband become essential in the country.
For stakeholders in the music industry, this forecast will come as avenue to reconsider revenue sources.
Vicki Myburgh, Entertainment & Media Industry Leader for PwC Southern Africa says “In spite of widespread disruption in the entertainment and media industry, as well as intense competition for consumer attention, there are growth opportunities aplenty for companies to capitalise from in the new media landscape. Although the forecast CAGR of 11.7% (for the entire Entertainment and media industry) is lower than previously predicted, this still makes internet access by far the largest contributor to total Entertainment and media industry spend.”
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