Report: Streaming pushes indie labels to 38.4% share of global market

The streaming phenomenon continues to bolster the global independent music sector, and allows it to operate on more of a playing level field than ever before.

In Australia, it will play a key role in predictions that the domestic indie sector could achieve a 50% share in a few years.

This week London-based Worldwide Independent Network (WIN)’s second WINTEL report revealed that indie labels accounted for 38.4% of the global recorded music market in 2016 (up 0.9% from the year before), and grew 6.9% in revenue to US$6 billion.

Alison Wenham (Pictured), CEO of WIN said, “The WINTEL 2017 report tells the story of another strong year for the independent sector.

“It has seen solid growth overall and an astonishing increase in streaming revenues. Both are trends we are confident will continue.”

Streaming grew 60.4% in 2016, and now accounts for 59% of all digital revenues. Digital accounts for 50% of the indie turnover.

According to the report, “Independent label streaming revenues grew by 80.4% in 2016, reaching $2.1 billion, up from $1.2 billion in 2015.

“This growth was slightly greater than the 78% by which the entire market grew, so independent label market share of streaming revenues increased by 0.6%, up from 39.4% to 40% over the same period.”

Australia has also benefitted from the streaming take-up, not only as a source of revenue but also finding new markets.

“It has definitely made it easier to connect with fans and consumers globally,” agrees Maria Amato, GM & CFO of the Australian Independent Record Labels Association (AIR).

Last month, Air Share, an AIR-commissioned inaugural report by Deloitte Access Economic (covering the last few years) stated that the sector earned 44% of total revenue through digital channels.

It found that In 2014/5, the digital revenue split 61% from downloads and 25% from streaming.

However, it added, “But this balance is shifting quickly, in 2017 almost two-thirds of (Australian) independent labels globally earned more revenue from streaming than downloads.”

Air Share found that indie labels represented 30% of the Australian recorded music market, with an estimated total revenue of over $154 million in the 2014/15 financial year when the total local market was valued at $400 million.

To TMN’s query as to what the market could be in five years, Amato responds, “First and foremost, it is growing sector that returns and reinvests its profits in Australia.

“Collectively it currently holds more market share than any major and whilst it is hard to predict what its market share will be in the next 5 years, I do expect it to be well over 50% of the total recorded music market, Clearly, the future is well and truly indie!”

Both Air Share and WINTEL base their market share appraisals on rights ownership rather than distribution, which is how major label analysis estimates figures.

In the past, major labels which distribute indie labels (or companies owned by majors) in some territories have included the performances of these labels in their own financials.

WIN claims that up to $1.2 billion claimed by majors should rightfully be attributed to indies.

Wenham notes, “It is important when making sense of the global market for independent music that we continue to use ownership rather than distribution as the method of calculation.

“The claiming of market share through distribution by major labels distorts the true value of the independent market and creates a false picture of the amazing growth and vitality of our sector.”

WIN also emphasises that it is important to get the market share right because that’s what digital companies as Apple, Google and Spotify use in negotiations over royalty rates.

Amato points out, “It is a global problem just as Alison states.

“Unfortunately we don’t have the data to verify the dollar value of independent content being claimed by the majors is in Australia.

“AIR does, however, prepare two weekly charts, one that it is 100% owned and distributed by independents and one that is distributed by majors”

According to WINTEL, the biggest swing towards independents was registered in the U.S., increasing 1.7% to 37.3%. South Korean independents grew 0.6% to now making up 89.1%. of that market.

The story was different in Japan (down 0.3% to 63.3%) while the UK and Germany saw market share loss although revenue grew.

The survey received data from 660 respondents including labels and distributors from 26 countries.