Digital music sales growing, subscription services gaining ground over pirates

28 Feb 2013

Cover of the IFPI Digital Music Report 2013

A report from the International Federation of the Phonographic Industry (IFPI) released this week shows how the music industry is staying strong in the digital age.

Figures from the IFPI Digital Music Report 2013 show that global digital music revenues grew for the first time since 1999 last year, rising 9pc to ratchet up US$5.6bn – more than a third of total industry revenues.

In fact, digital platforms have become the main source of record companies’ revenue in some markets, such as India, Norway, Sweden and the US. Download unit sales grew 12pc in 2012 and online stores like Apple’s iTunes take the largest chunk of the pie, representing about 70pc of global digital revenues.

Streaming success

However, the popularity of music-streaming services is also growing and the number of people paying for subscription services jumped 44pc in 2012 to reach 20m. Spotify reports that more than 20pc of its users converted to a premium account in the last year, while Deezer expanded its reach to 182 countries, attracting 3m paying subscribers worldwide – and 60pc of its new subscriptions originated from mobile phones.

“After a long period of confusion and mess in the music industry, it’s brilliant to see that digital music has come of age,” said Mark Foster, managing director of Deezer UK and Ireland. “Our aim has always been to enable people to access the music they want, wherever and whenever they want it while helping artists increase their global reach and find new audiences. The latest report from the IFPI demonstrates how this vision can be delivered in a profitable way that benefits the entire industry. Supporting the industry and helping it grow will only help further inspire new music for us all to discover, which is what it’s all about.”

Blocking the pirates

While 62pc of internet users are said to use licensed services to access digital music, piracy is still a big issue for the industry. The IFPI’s report advocates the blocking of websites such as The Pirate Bay, noting the success of this tactic in The Netherlands. In Ireland, two ISPs blocked access to the file-sharing website in 2012, and subsequently the Dutch digital market saw the biggest growth in western Europe at 66pc as use of Spotify overtook The Pirate Bay.

Social media trends drive sales

As far as artists go, Adele had the most successful album of 2012 as 21 sold 8.3m units. The top-selling single at 12.5m units went to Canadian pop star Carly Rae Jepsen for Call Me Maybe – a track that owes much of its success to social media trends.

The significant presence of musicians on social media is unmistakable. All but one of the 10 most liked people on Facebook are artists, as well as seven of the 10 most followed Twitter users (US President Barack Obama, reality TV star Kim Kardashian and chat-show host Ellen DeGeneres being the only well-known faces to compete with the likes of Justin Bieber, Lady Gaga and Katy Perry).

Vevo is still the most viewed channel on YouTube, streaming 4bn music videos per month, and nine of the 10 most watched videos on YouTube are music. And let’s not forget that the most watched video ever on YouTube is Gangnam Style by Psy, which amassed 1bn views in just five months and then went on to become the third best-selling single of 2012.

Elaine Burke is the host of For Tech’s Sake, a co-production from Silicon Republic and The HeadStuff Podcast Network. She was previously the editor of Silicon Republic.