Music sales up on popularity of streaming services

Headphones are seen in front of a logo of online music streaming service Spotify.
Headphones are seen in front of a logo of online music streaming service Spotify.PHOTO: REUTERS

More consumers turning to Spotify and Apple Music subscriptions as physical music becomes less popular

Music streaming services such as Spotify and Apple Music helped to prop up music sales in Singapore last year, even as demand for CDs continued to dwindle.

Total music sales rose 6.7 per cent from 2014 to last year to reach US$13.8 million (S$18.9 million), according to data from the International Federation of the Phonographic Industry, a Swiss-based global trade organisation. The rise was driven by a surge in paid subscriptions to streaming services.

It was the second year in a row that music sales have seen an uptick. Hit by online piracy, overall sales had been falling since 2010 but inched up in the last two years as demand for digital music increased.

Digital music sales last year rose 27 per cent year-on-year to US$8.5 million, with about half coming from paid subscription services like Apple Music - which launched last June - and Spotify, which allow users to play unlimited songs on demand for a fee. Sales of these services surged 92.5 per cent to almost US$4.3 million.

Meanwhile, sales of physical music such as CDs, vinyls and tapes continued to decline, falling 47 per cent to US$1.7 million last year. The change in consumer taste from physical to digital has resulted in high-profile closures of chains such as Gramophone in 2013, and HMV, which shut its last store here last September.

But Mr Paul Lim, 59, the second- generation owner of the 54-year- old Roxy Records & Trading, is optimistic that demand for physical music will eventually grow.

Paid subscriptions may have taken away some of his business, but they have also made music more affordable and accessible, allowing people to enjoy music at a younger age, he noted.

"These teenagers will enter the workforce in five to 10 years and be able to afford equipment that delivers music of greater quality, especially vinyls, thus increasing their appetite for physical music," he said.

Dr Dianna Chang, a marketing lecturer at SIM University, said digital music, especially streaming services, will be the future of the music industry. But she noted that there will still be a niche demand for physical music from consumers who like to buy CDs or vinyl either out of habit or out of personal preference.

"The key is to sustain loyal customers who are nostalgic about CDs and vinyl and to reach out to new customers who may be attracted by the unique features of and associations with CDs and vinyl ," she said.

Communications executive Chen Shanshan, 25, who has amassed a collection of about 300 CDs since she was 12, still likes to buy physical music. "I enjoy going through the liner notes, lyrics, artwork and the packaging (of CDs)," she said.

"It's a very intimate experience listening to an album while looking at the lyrics and artwork in your hand versus just streaming in the background."

But others, like student Lee Kim Weng, prefer the convenience of streaming music. The 19-year-old stopped buying CDs "when YouTube came out" and, two years ago, started using Spotify's premium, ad-free service that allows him to download tracks into his smartphone and listen to them off-line.

"Streaming allows me to pick from a wider range of artists, songs, genres and albums without having to spend much time searching for them, unlike CDs," he said.

Music downloads remained popular last year. Revenue from digital full-album downloads rose 50 per cent to US$1.163 million, although single-track download sales fell 28 per cent to US$0.946 million.

Digital music sales made up 62 per cent of total revenue while physical music sales made up 12 per cent.

The rest came from performance rights and synchronisation income - the use of music in advertisements, films and brand partnerships.

A version of this article appeared in the print edition of The Straits Times on May 16, 2016, with the headline 'Music sales up on popularity of streaming services'. Print Edition | Subscribe