The Music Industry

The music industry has been undergoing a steady decline in profits over the past decade. Globally, music revenue has dropped from 25.1 billion dollars in 2002 to just 14.97 billion dollars in 2014.  However, the U.S., the world’s largest contributor to the music industry has in recent times shown to be increasing in its production of music thanks to the rise of subscription music services and novel music delivery formats. Live music performances continue to rise as well around the world in record numbers which suggests that the music industry is in the middle of a substantial rebound.

The steady decline in music sales around the world has been quite dramatic. The graph below, courtesy of Statista, clearly shows how for every year since 2002, revenue has continued to drop without once breaking its downward momentum. The change represents a percentage drop of nearly 50%. These numbers include the total amount of recorded music sales, performance rights, and synchronization.

(Chart omitted for preview. Available via download).

 The U.S. industry improved from 2013 to 2014 with an increase in music revenues. The revenues grew 6.9 % to 6.85 billion dollars.  The revenues within the U.S. were fairly divided between digital downloads at 37%, physical purchases at 32%, and streaming happening at 27%. Paid subscription services also grew tremendously in the U.S. from 2011 to 2014 with users rising from 1.8 to 7.7 million. 

Despite the downfall in global sales, live music is certainly picking up in popularity and profit. In 2013, the Boxscore chart, a metric developed by the music magazine Billboard, reported $4.8 billion in gross ticket sales worldwide. This is a nearly a 30% increase from the year before making it one of the most explosive years for growth in live music performances ever.   Intriguingly, Ticket sales increased 26% while show numbers increased just 5.8%.  Ibis World reports that the U.S.’s annual live music revenue rests at about 25 billion dollars with 211,076 people working in the field.  This figure represents a modest growth of 4.7% in the field which is a solid gain that is expected to grow into the future as consumers’ disposable incomes increase.  IFIP writes that the artists received a substantial increase in their income from live performances, broadcasts, and personalized streaming services of 8.3 % to reach nearly 1 billion U.S. dollars. 

These positive trends in music revenue from the U.S. and in the live music performance fields are very encouraging considering the overall downfall of music revenue over the past decade. Though the falls have been quite large, the turn-around in the last year alone gives hope that continued gains will continue. The fact that artists are receiving more for their work may help motivate them to create more and thereby further increase the profits within the music industry. The U.S.’s growth is also good news to the music industry providers and stakeholders around the world.

References

Concert & Event Promotion in the US: Market Research Report. IBIS World, http://www.ibisworld.com/industry/global/global-music-production-and-distribution.html, 2015. 

Friedlander, J. News and Notes on 2014 RIAA Music Industry Shipment and Revenue Statistics. RIAA, http://riaa.com/media/D1F4E3E8-D3E0-FCEE-BB55-FD8B35BC8785.pdf, 2014. 

IFPI, Global Statistics, IFPI. http://www.ifpi.org/facts-and-stats.php.

Statista.Global Revenue of the music industry from 2002 to 2014 (in billion). Statista, http://www.statista.com/statistics/272305/global-revenue-of-the-music-industry/ 2014.

Waddell, R.. The Year in touring 2013: Beyond the Numbers. Billboard http://www.billboard.com/articles/columns/chart-beat/5827394/the-year-in-touring-2013-beyond-the-numbers?page=0%2C0, 2013.