The New Normal is Better than the Previous Normal

Recorded music revenues grew in Sweden, Spain, Belgium and elsewhere in the first half of 2016.

The new normal for today’s record music business is slight to modest revenue growth. The old normal was a combination of falling revenue and efforts to battle online piracy. Anti-piracy legislation has played a role in the turnaround, but much credit can be given to the rise and mainstreaming of legal streaming/subscription services. U.S. revenues may have been up in the first half of the year, according to Billboard’s estimate. Germany had 3.6 percent growth. Japan was flat (see below). Now there’s more news from Sweden, Spain and Belgium.

Sweden’s recorded music revenues grew 8.6 percent in the first half of the year. This market is pretty straightforward: so goes streaming, so goes Sweden. Streaming accounted for 86 percent of the 547.3 million kronor ($US 65.7 million) of total revenue. Sweden has been called “a haven for online piracy” but was also a music subscription innovator (the group before early adopters on the innovation diffusion bell curve). Read this for an explanation on Sweden’s digital adoption and current tech scene.

In Spain, recorded music revenues grew 4.1 percent to 73.5 million Euros ($US 83.2 million). Streaming revenue grew 30.1 percent to 40 million Euros and accounted for 86 percent of digital revenue and 55 percent of total revenue. Subscription revenue was 38 percent of total revenue and 59 percent of digital revenue. Ad-supported revenue accounted for 17 percent of total revenue and 27 percent of digital revenue. Spain’s has come a long way. Piracy became a normal behavior in the ’00s. Spain’s entertainment business has fought for IP legislation and last year claimed to have success.

Belgium also had streaming-led growth. Its recorded music revenue grew 6.5 percent on an 82-percent jump in streaming revenue, now 34 percent of total revenue, and a bearable 13-percent decline in CD revenue, still the largest source of revenue with a 45-percent share (news first seen at Music Business Worldwide). The Belgium Entertainment Association credits the arrival of Apple Music for some of the streaming gain. The country has taken a hard stance on piracy.

Japan, the world’s second-largest music market, was basically flat at 0.5-percent growth in the first half (I started with the previously available physical revenue discussed here and added since-released digital revenue). It put up 85-percent growth in subscription revenue but comparisons to Spain or other fast-growing digital markets end there. Japan’s total digital revenue grew only 12 percent—they were dragged down by losses in every other digital category—and subscriptions accounted for less than 5 percent of total revenue. Check out this recent Midia Research blog post for insight into the unique qualities of the Japanese market.