State of play for recorded music – Global Music Report 2021
Decoding with Sylvain Morton, Head of Distribution for IDOL.
As a distributor, operating mainly with recorded music on digital platforms, IDOL is in a favourable market space. Indeed, this section has been less impacted by the pandemic compared to live performance or synchronisation.
Driven by streaming
“What we can observe is that in general streaming becomes more and more prominent in the recorded music revenues: it’s the factor that helps the market grow globally again. After the year we faced, it could have been an easy guess, but it’s interesting to realise that this growth is not entirely related to the increase of paid subscriptions but also to the development of video streaming and ad-supported streaming; while in the meantime, advertising budgets were cut because of the pandemic.”
“Ad-supported audio streaming revenues contributed US$422.3 million of growth in 2020 and accounted for 9.9% of the global recorded music market. Despite the pressure applied to the advertising industry by the pandemic which saw global ad spend fall 11.0% in 2020*, ad-supported streaming revenues passed the US$2 billion mark for the first time.” Global Music Report, p.64
“What is interesting is that the rise of vinyl alleviates the decline of physical revenues. On this topic, physical distribution is only a small part of the range of services we offer to record labels, but we noticed, over the past year, a real development on this format at the cost of the CD, and even more so worldwide.”
Development of the international market
“The five biggest markets in the world each recorded revenues of over US$1 billion in 2020 and grew at a combined rate of 4.0%. Outside of the top five markets, revenues increased by 15.6%, the sixth consecutive year of double digit growth.” Global Music Report, p. 57
“For the first time, these markets (driven by South Korea, China, Brazil and Russia) represent more than 30% of global revenues. These dynamics underline the importance of working worldwide, a position that has always been at the core of IDOL’s strategy since the very beginning. To promote and develop the catalogues we represent on as many markets as possible is part of our mission, and thus, on mature as well as emerging markets. With this aim in mind, we can rely on our offices around the world, but mainly on an expertise we developed over the years. For instance, we’ve opened an office in Johannesburg over four years ago: this presence allows us to reinforce our know-how in South Africa but also in other leading markets in Africa such as Nigeria, Ghana & MENA.
International development represents a constant investment, but our long experience on the subject allows us today to work more and more efficiently on a market that globalises continually. In the Asian region for instance, IDOL has multiplied its turnover by 4x over the past two years.”
In detail: streaming
As far as streaming is concerned, one can distinguish between three different subcategories of revenues: paid subscriptions, ad-supported streaming (that includes new challengers like TikTok or Facebook/Instagram) and video streaming with YouTube as a leader platform.
“Revenues from video streaming increased by 23.3% in 2020, valuing this format at US$1.4 billion.” (Global Music Report, p. 65) In 2019, the growth was by 14,8%. “This is a substantial increase, from which we benefited fully thanks to our video department. Indeed, we took an interest in video streaming revenues a long time ago, and we never stopped improving our skills in this area since. This expertise helps us grasp new stakes linked to the advent in the music market of social media such as Facebook/Instagram and TikTok, both generating more and more interesting direct or indirect revenues.”
“Taken together, these newer revenue streams added growth to the industry in the hundreds of millions of dollars in 2020 and show a sign of the future for recorded music.” Global Music Report, p.59
“This diversification of digital revenues transforms our professions: it requires a permanent evolution of our knowledge to benefit from these new opportunities. We are always trying to improve our competences in fields like community management, digital marketing and of course DSPs relations. We saw a real response to these efforts and were able to turn viral hits – initiated on platforms like TikTok (with French artist Else or British artists Strawberry Guy and The Irrepressibles) to our advantage. We are pleased with these strategic choices that allowed us to experience growth beyond streaming revenues based on paid subscriptions.
“Social media platforms contributed to ad-supported streaming revenues. As free streaming formats developed and diversified, revenues received from social media platforms such as Facebook and TikTok were also a significant driver of growth. Revenues across these two platforms more than doubled compared to 2019, adding hundreds of millions of dollars to the market.” Global Music Report, p.64
“Streaming is not what it used to be, it diversified tremendously, if not complexified, because it covers different rights and uses, new platforms… Things have changed a great deal. All those specificities require a lot of efforts to perform well, but it is evident that new opportunities develop continuously. It’s certainly an exciting time…”
A strong growth in subscriptions
“Subscription streaming continued as both the largest streaming format by revenue and the most important sub-format across all revenue streams for the recorded music industry in 2020. Income from subscription services contributed US$9.9 billion in 2020, representing 18.5% year-on-year growth and a total revenue share of 46.0%. 2020 marked the first time since 2011 that one sub-format held more than 45% of global recorded music revenues – CD revenues accounted for 48.7% that year.” Global Music Report, p.63
“Subscription streaming continued as both the largest streaming format by revenue and the most important sub-format across all revenue streams for the recorded music industry in 2020. Income from subscription services contributed US$9.9 billion in 2020, representing 18.5% year-on-year growth and a total revenue share of 46.0%. 2020 marked the first time since 2011 that one sub-format held more than 45% of global recorded music revenues – CD revenues accounted for 48.7% that year.” Global Music Report, p.63
“It’s interesting, because it means this consumer trend has been adopted in day-to-day life. Which proves that the Premium model is solid.”
Downloads in decline
“As we could have imagined, the download market has once again declined (except in China). This trend can be found in our figures as well, but that doesn’t prevent us from obtaining interesting results for some genres, such as jazz, electronic and classical music. With that aim in mind, we don’t only work with the main platforms, but also with the specialised ones, in order to offer a varied distribution network to our partners.”
Conclusions
2020 marked the sixth consecutive year of increasing revenues for the global recorded music market. “The perspectives are quite good, people have continued listening to music in many different ways. At one stage, it was only through radio – or maybe magazines -, that people could make discoveries. Now, even if it’s mostly via the Internet, we notice that music is everywhere. And the possibilities for monetisation arise everywhere, which means that the growth prospects will continue.
We can also see opportunities to generate interesting revenues on markets where it was not an option before. Growth can come from Asia, South America, Africa… At this point, it is difficult to say. Potentially, the actual market will persist because it will be more global than before. Maybe we will actually come to a 50% growth in 10 years, like this Global Music Report indicates, but it will be essentially linked to new markets.”
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