With Music Industry Undergoing Huge Transformation is Recorded Music Still the Main Way to Interact with Music?
What are your views in present scenario when somebody asks about the recorded music revenue? Can’t you still observe it dying? Well, it now confirmed that recorded music revenue is dying quickly and constantly. Aren’t we witnessing the plight of artists, record labels and managers who are all striving really very hard to remain relevant in a world in which music sales is becoming difficult? But the shrinking revenue from recorded music has become so obvious at exactly the same time that the live music industry has undergone a huge transformation. However, despite the online effect, publishing revenue which is competing well in this situation and the growth of otherwise low merchandise revenue are the major reasons why the global music industry has largely held its own. Because of this the recorded music revenue between 2000 and 2013 shrink ed by just 3% (check the figures below). If we compare the decline of recorded music revenue in retail over the same period, it was as much as 41%.
Thus, it is simply the 60% increment in revenue via live media that has neutralised the impact of declining music sales.
Recorded music is still the main way people interact with music:
Whether it be on the radio, YouTube, Spotify, an iTunes or a CD, the vast majority of consumers spend the vast majority of their music consumption time with the recorded product not the live product. In fact just 15% of people regularly go to gigs. And even for these consumers live is, in terms of total time spent, just a small fraction of their music consumption. So labels are faced with paradox of making less money from artists yet those same artists still needing the recording in order to drive live and merch income. This is why we ended up with 360 deals.
Much of the market growth didn’t make it down to artists:
The live music value chain is an incredibly complex one with multiple stakeholders taking their share (ticketing, secondary ticketing, venues, booking agents, promoters, tax, expenses etc.). The share of live revenue that artists make from live has declined every year since 2000. The impact on the total market is that total artist income (i.e. from all revenue sources) has declined every year too since 2009.
The Next Music Industry
It is probably fair to say that we are approximately half way through a huge period of transition for the music industry. The realignment of revenue is merely a precursor to the new business models, products and career paths that will emerge to capitalize on the new world order. It is in this next phase that the real ‘fun’ will start. Expect every traditional element of the industry to be challenged to its core, expect dots to be joined and old models to be broken. But be in no doubt that what we will end up with will be an industry set up for success in the digital era.