ARIA 2015 Wholesale Figures: Total revenue up 5%

The Australian Recording Industry Association (ARIA) has today released its annual wholesale figures for2015, showing a 5% increase in the value of the local recorded music industry. The spike in value to $333.8 million marks the first upwards trend the industry has experienced in its wholesale figures since 2012.

Emerging digital business models, in particular musical streaming services, were major drivers of the growth. Revenue from services such as Apple Music, Deezer, Google Play, Guvera and Spotify, along with non-subscription on-demand services such as YouTube and Vevo, doubled over the course of the year.

Digital products now make up 62% of the total market at $207.6 million, a 10.6% increase on 2014. This is despite a 12.96% decline in digital download revenues (including digital tracks and albums).

Interestingly, digital revenues in 2014 were down 2.36% on 2013 figures; 2015’s upwards trend could be modestly attributed to the introduction of Tidal to the market in April and Apple Music in June. In under a year Apple Music now claims 12 million subscribers, while Tidal now claims it has 3 million paying subscribers. Earlier this year Spotify revealed it had its “fastest ever” growth in the second half of 2015, and this month announced it has clocked up over 30 million paying subscribers.

Kate Vale,Managing Director, Spotify ANZ told TMN the isolated growth in Spotify Australia is in line with the market-wide success.

“We’re really excited (and proud) to see the results today,” she said. “In the four years since Spotify launched in Australia, we’ve amassed almost 3 million monthly unique visitors (comScore), and boast one of the highest Premium conversions rates of any Spotify market in the world.

“We couldn’t be happier with how these successes have correlated in to real results for the local music industry,” Vale added. “The future looks bright!”

Max Hegerman, Global Director of Brand Strategy atGuvera told TMN thefree, ad-funded model is key to streaming’s growth.

“It’s really about providing what consumers want,” he said. “That’s evident within the market place where there’s a very small percentage of users who are willing to or excited about paying for music.

“I spent the last five-and-half-years in India, and it’s the same in China; people just aren’t excited about downloading anything and having to pay for it,”Hegerman added. “It’s about providing people with something that they want, something that’s free. It’s also about providing added value for that content and creativity.”

In March Guvera introduceditssocial-focused version: Guvera 3.0.The commercially-funded platform was rolled out to connect brands and music fans, offering more features including branded Music Channels and video content.Hegerman told TMN the response from thebeta versionhas already been marked.

“Just looking at the numbers for us at least, there has been a pretty significant uptake for us,” he said. “Year against year it’s over 150% [growth increase].”

Jane Huxley, Managing Director, at Pandora ANZ, told TMN early data on the platform’s personalised playlist product Thumbprint Radio shows a listener appetite for targeted algorithms.

“Pandora is designed to make adding music that you’ll love to your everyday life as seamless as possible, and Thumbprint radio is the latest product that takes that experience to the next level,” said Huxley. “Early data backs this up with hours spent on Thumbprint radio nearly five times the average, which is way beyond what we imagined. It shows that getting the music delivery right for each listener is so key to them loving the experience.”

With 4 million registered listeners, Pandora now boasts a growth rate of around 140% year-on-year. Nicole McInnes,Director of Marketing, ANZ told TMNaccessibility rather than growth, is the company’sgoal.

“Part of our DNA is to make music available to everyone and we have crafted a strong business model to support that,” she said. “As the listenerevolves though we have to make sure we keep offering them what they want so we never stop innovating and making changes that they tell us they want.”

Other figures released in ARIA’s report showrevenue from physical music sales fell just 3%, compared to the 18% the previous year. Meanwhile revenue from vinyl sales were up once more, rising 38% with over 8.9 million records sold in 2015. The increase isn’t as impressive as ARIA’s 2014 figures however, when the market reported an increase of 127% on vinyl sales.

ARIA CEO, Dan Rosen said the market’s return to growth is a testament to the ongoing innovation and resilience of the local industry.

“Australian music fans are consuming more music than ever before and did so across an unpreceded number of formats from streaming and downloading on mobile devices, to buying CDs and vinyl at local record stores,” said Rosen.

Denis Handlin AM, ARIA Chairman and Chairman & CEO of Sony Music Entertainment Australia & New Zealand and President, Asia said the work to reward artists and labels continues.

“While the work with Government, ISPs and other service providers to ensure artists and record labels are properly rewarded for their creative efforts is far from over, Australian music fans are embracing the many legitimate platforms where an incredible range of local and international music is widely available,” he said.