March 2, 2015 by Bill Johnson
Early results of 2014 recorded music revenues from eight countries suggest the record industry won’t have a global recovery as much as an uneven series of regional and country-specific recoveries. A country could have had a successful year in spite of a neighboring country posting an annual loss. Such is the nature of a business delineated by languages, cultures, politics and commercial boundaries.
The eight markets profiled below have experienced various levels of forward progress, but all are in the midst of change. Their average rate of growth in streaming revenues, 61.4 percent, is a signal of this transition. Yet these countries also averaged a 1.1-percent decline in total revenue and an 18.4-percent drop in physical revenue.
Spain has the most impressive revenue story thus far. After 12 straight years of decline, the Spanish market jumped up 21.2 percent in 2014, to €149.9 million ($167.9 million). That’s a far cry from the €626 million ($700 million) the Spanish market generated in 2001, but is a welcome change in a country that for years has been challenged by casual attitudes to piracy, a sharp erosion of physical sales and slow adoption of new business models.
Spain reversed that descent mainly because of strong CD sales — an especially meaningful event, since physical sales are 58 percent of total revenues. Without the 22-percent increase in CD shipments, the impressive gains in streaming (up 36.3 percent) and overall digital revenue (up 22.7 percent) would have been negated. Spanish artists had 17 of the top 20 titles in the country, with a number of blockbusters. Malaga Pablo Alboran’s Terral sold 157,000 units, equivalent to triple platinum, in spite of a November release.
Italy had the next-largest increase, with a small 4-percent gain. Like Spain, the country’s revenues still come predominantly from physical products — a 62-percent share — but its streaming market is faring better, accounting for 22 percent of revenues, compared to 16 percent for downloads.
Revenue gains in Spain and Italy are notable because of the size of the countries’ economies. Spain and Italy have the world’s 13th and 8th largest nominal gross domestic products respectively, as ranked by the International Monetary Fund. Even small improvements in these countries can exceed large gains in smaller countries (such as the Nordics), where streaming services have led to industry growth. As a result, large-market gains can have significant impacts on the earnings of global music companies.
The opposite is true in countries like France and Australia. A large drop in CD revenue in a sizable, CD-dominant country can wipe out streaming gains.
France gets a greater share of its recorded music revenue from the CD than either Italy or Spain. Because physical sales accounted for 70.9 percent of revenue in France last year (excluding performance royalties), the country’s total revenue declined 5.3 percent despite a solid 34-percent gain in streaming revenue. Revenue from subscription services, like the Paris-based Deezer, rose 35.2 percent to €48.4 million ($64.4 million). The number of subscribers to all services in the country rose 35 percent, to 2 million. Ad-supported streaming revenue grew 32.2 percent to €24.1 ($32.1 million).
In Australia, a 15-percent decline in physical revenue led to a 9.6-percent drop overall. But because streaming accounted for only 10 percent of total revenue (41 percent for physical), Australia’s 118-percent gain in streaming revenue was more than negated. Download revenue dropped slightly, by 2.3 percent.
The trailblazing Nordic countries cooled off in 2014. The Swedish market overall declined 0.4 percent, in spite of a 10.8-percent gain in streaming revenue. Streaming accounted for 79.2 percent of total revenues. Norway’s market was down 0.3 percent. Streaming revenue was up 14 percent, accounting for 75 percent of the total market. In Finland, total revenue was down 14 percent, while streaming revenue grew 38 percent and subscription revenue rose 19.6 percent.