68 million sign up for streaming services

NEW YORK • The recorded music industry has enjoyed its first significant growth since the dawn of the Internet age, as streaming led digital to overtake physical sales, a global trade body said on Tuesday.

Recorded music revenue expanded by 3.2 per cent last year worldwide to US$15 billion (S$20.2 billion), fuelled by a big growth in subscriptions to streaming services, said the International Federation of the Phonographic Industry.

The growth is the first uptick in the music industry at a more than marginal level since 1998, when sales grew 4.8 per cent year-on-year.

But the industry is still down by one-third since the late 1990s, when Internet service became mainstream in developed countries and listeners flocked to music sites, both legal and illicit.

The rapid growth of streaming services such as Spotify - which allow unlimited, on-demand music online - led digital music to surpass sagging physical sales for the first time last year.

The industry federation estimated that 68 million people around the world had digital subscriptions, compared with just eight million in 2010 when it started keeping track.

Streaming revenue grew by 45.2 per cent in the past year, nearly matching sales from digital downloads on iTunes and other sites.

Yet the industry did not cast an entirely rosy picture, saying revenue was still far below potential.

"The value of music is still not being fully recognised. Today, there is a real spirit of optimism across our industry, but we are a long way from declaring 'mission accomplished'," Mr Stu Bergen, chief executive for international and global commercial services at Warner Music Group, told reporters on a conference call.

Without singling out YouTube by name, the industry federation took aim at "user-upload platforms" as a persistent drain on the industry.

About 900 million people essentially listen to music for free through advertising-supported sites, yet the revenue generated for the music industry is barely a quarter of that through streaming subscriptions, the annual report said.

The industry's growth came amid a massive spike in sales of licensed music in China, where revenue grew by nearly 64 per cent. China has long been notorious for piracy, but major labels have made inroads and tech giant Apple has rolled out its new Apple Music streaming platform in the world's most populous nation.

The labels credited China's government with keeping its word on stepping up the legal framework against piracy.

The health of the music industry varied widely by country, the result of not only business trends, but also the particular crop of local artists.

For example, Japan, the largest market after the United States, saw music sales grow by 3 per cent - reversing several years of steep declines that contributed to dragging down the global industry.

The growth was the result in part of the introduction of streaming including Apple Music to Japan where, in sharp contrast to most of the world, about three-quarters of sales are CDs or, to an increasing extent, vinyl.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on April 14, 2016, with the headline '68 million sign up for streaming services'. Print Edition | Subscribe