5 Takeaways from the IFPI’s ‘Global Music Report 2023’ Launch
If you thought the pandemic was dark, talk to recording industry veterans about the early-to-mid-2000s.
In a world after Napster, and prior to downloads, smartphones and streaming, the recording industry was in a deep pitch where no light would shine.
Today, thanks to streaming — and with a little help from vinyl — the music industry is in a jolly mood.
There’s no official party, but the numbers are cause for the record industry to enjoy a moment of celebration.
Revenue in 2022 was up by 9% year-on-year to US$26.2 billion, according to the IFPI, which recently published its Global Music Report 2023.
That’s the eight consecutive year of growth.
Spotify, Apple Music, YouTube Music and the myriad streaming brands were once again in the driver’s seat, as subscription audio streams grew by 10.3% to US$12.7bn. Streaming in all its forms accounts for two-thirds of all revenue, worldwide.
The Music Network zoomed in for the presentation of the IFPI’s annual report, with guest speakers from each of the three major music companies, plus Frances Moore, CEO of IFPI.
Here are five takeaways.
Growth is good. No, great
Context is important, especially when good times follow bad.
The growth came on top of an 18.5% increase reported a year ago, a number which accounted for the effects of lockdowns.
“It’s growth on top of growth,” notes Moore. “For those of us who lived through that period where we never saw growth, this something to definitely be excited about.”
The results also point to a resilience in physical, and saw collective management rights return to post-pandemic levels “much quicker than we thought they would.”
Also, all 62 markets which are scrutinised by the IFPI were up, for just second time that phenomenon has happened.
The world is smaller. Here are the receipts
Technology has connected our planet, and made the place a little more compact. Need proof?
The top 10 acts in the world came from seven different countries, with South Korea leading the way with three acts (BTS, Seventeen, Stray Kids).
Superstar Puerto Rican rapper Bad Bunny is one of them (at No. 4), and his Billboard 200 chart leader Un Verano Sin Ti ranked as the No. 1 album in the world last year.
Thanks to the Bunny and others, Latin America has close to tripled its revenue base in the last 5 years.
China is now the No. 5 ranked country, nudging France into No. 6. “That’s really something,” says Moore. “It’s the first time since records began that we’ve seen any change in the top 5.”
Diversity is healthy. “Repertoire is now coming from all around the globe,” says Adam Granite, executive VP, market development. Australia holds a top 10 spot, at No. 10. But for how long?
Streaming is steaming ahead
Paid subscription accounts now number 589 million worldwide, a sum up 80 million from 2020, according to the IFPI.
Though the vast majority of users are still plugged into ad-supported models, subs generate about 75% of all streaming revenue. The recording industry is keen to see that revenue stream grow, in multiple ways.
“We all want the value of music to be fully appreciated and recognised,” explained Simon Robson, president, international, Recorded Music, Warner Music Group, “so it would help if music subscription pricing could reflect the realities of inflation. Which we’ve seen with the video streaming services, they’ve been putting up the prices significantly.”
The challenge for today is how to monetize other forms of consumption, while helping artists build better relationships with their fans. That’s the word from WMG’s Robson, who notes the industry has “done a great job looking at opportunities in fitness and the games sectors.”
Warner Music is working with Peleton and investing in Web3 companies, including Roblox. The reputation of Web3 and NFTs look “quite a big hit,” says Robson, who blames a market driven by speculation.
The dust is “still settling” but “we feel at Warners that NFTs is a massive opportunity.” It’s likely the established markets will be the first to benefit. There’s definitely a lot more room to grow.”
The kids are alright
Gen-Z will have the keys to the car soon. And that’s ok.
Speaking on the launch panel, Dennis Kooker, president, global digital business & U.S. sales, Sony Music Entertainment, suggested the future was bright, as long as we listen to the youngsters.
“I agree optimistically, looking forward there’s still a lot of room for us to continue to grow. Transformation is knocking on our door. This is an industry that has gone through two transformational events as its business in the last two decades,” he explained.
What the market research explains about music, artists and the fans, is “they’re passionate, always looking for new ways to experience music. What we’re seeing is the younger generational is ultimately the driver to this transformation, to change. They’re looking for something different and often technology is the enabler.”
Gen-Z, he explained, citing data, is the first generation where gaming is the No. 1 source of entertainment, not video. Music is No. 2.
“This energy we feel around gaming and music is being driven by young consumers,” says Kooker.
“And the innovation is created by young artists.”