The Best of Times, the Worst of Times…
As the music industry rumbles into 2018 with headline retail growth of almost 10%, we ponder the key issues and cut through the hyperbole to map out where we go from here.
All of the vital signs are positive – Spotify announced at the beginning of the year that, as it heads towards an IPO, it has added 10m subscribers in the past five months, bringing its total to over 70m paying customers worldwide. According to the Entertainment Retailers’ Association (ERA), the UK has announced recorded music revenue figures for 2017, with headline retail growth of almost 10%. ERA announced a 9.6% rise in UK retail spending on music last year – up to £1.2bn, driven unsurprisingly by a dramatic rise in subscription streaming of 42%. 9.6% is more double the rate of the 3.5% increase experienced in the previous year and the live industry continues to boom, generating £4bn in direct and indirect spending in 2016 according to UK Music’s ‘Wish you were here’ report.
Separate figures from the BPI demonstrate that streaming now accounts for more than half of UK music consumption, fuelling the fastest growth in consumption this millennium. Bring on the hyperbole – The BPI bangs its drum and proclaims a “Tipping Point” with Chief Executive Geoff Taylor saying: “Demand for music in the UK is growing fast, driven by brilliant British artists such as Ed Sheeran, Sam Smith, Rag‘n’Bone Man, Little Mix, Stormzy and Dua Lipa and the innovative music industry that supports them” and various publications scrambling around proclaiming a streaming revolution. You’re a little late to the party mate.
These developments are positive and working in the industry certainly feels much less like arranging the deckchairs on the titanic as it did in the early days of online piracy. There is at least now a chance to steer the ship and it was always clear that streaming was the long game that now hopefully looks like it is going to pay off on a global level – especially once it truly cracks emerging markets like China and Africa.
Back in the UK, it would be foolhardy for the industry to start thinking it is returning to the heady heights of 2001, a mere 16 years ago in which the industry was worth £2.11bn. Of course, “We’re in a different kind of thing now” to quote one of my favourite tracks of last year, ‘The System Only Dreams in Total Darkness’ by The National, themselves a trend defying slow burning indie success. The musical landscape, indeed the world is immeasurably different, more connected, transformed by technology with consumer habits rapidly evolving.
2017 was also propped up by some huge selling UK pop releases, not least Ed Sheeran et al. referenced above and serious challenges lie ahead from solving the value gap created by YouTube to remaining nimble and maximising the potential of reaching new audiences through streaming, voice activation and smart devices in the home and AR and VR. It is an exciting time but having allowed itself a brief air punch, the music industry will need to work harder, better, faster and stronger to sustain and hopefully surpass these results in 2018.
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