Music is moving online more than ever before. Digital music is being distributed through mature sources like iTunes, but through new channels as well. Subscription services like Spotify are also contributing to the music industry. Despite the growth, however, digital music still lags behind physical format sales.
In 2013, digital music sales accounted for 39% of the total revenues that the industry saw.
Digital Music Sales
The good news is that the music industry is starting to expand into several new markets. The global audience is bigger than ever before, but where some markets are seeing growth, under markets are seeing steep declines in sales. In Japan, total music sales fell by almost 17%. What does this all mean for the digital music industry?
- Global digital revenues brought in $5.9 billion to the music industry. That’s a 4.3% increase in 2013 compared to 2012 numbers.
- In 30% of the world’s top markets, digital sales account for more sales in the music industry than physical format sales.
- Revenues from digital music subscriptions increased by over 51% in 2013, contributing more than $1 billion in revenues for the first time.
- The total number of digital subscription music providers increased by 28% in 2013, with 40 million total subscriptions sold.
- 27% of digital music sales now come from subscription model services.
- Advertising supported digital advertising streams have been played 14% more frequently compared to 2011-2012 figures.
- 67% of the digital music industry sales still come from direct downloads, which saw a 2.1% decrease in total revenues generated.
- In 2014, digital music sales declined by 9%, but streaming subscriptions increased by 54%
- The ten most-popular songs accounted for just a little less than 2% of all streams in 2013 and 2014.
Although digital music is become easier to access, it still isn’t dominating the music industry as some thought it might. Music is easier to create, produce, and distribute more than ever before, so there is a lot of future potential in digital music sales. Marketing is what will make the difference for this sales niche. If independent artists can begin accessing more marketing resources for their music that is distributed online, they will begin to tick digital sales ever upward. Without that marketing, however, the low compensation streaming services could price the independent musician right out of the market and that would have a potentially devastating effect on the music industry sales.
Traditional Mediums Are Experiencing a Comeback
- Overall album sales, both physical and digital, saw a decline of 11% to 257 million.
- A 9% overall drop came on digital album sales only, with 117.6 million total sold.
- Compared to 2001 numbers, 2014 digital music sales are about 5x higher. Even so, 2013 and 2014 are the only two years in the history of the industry where decreases instead of increases have been seen.
- Sales on iTunes dipped by at least 13% in 2014.
- Vinyl sales have increased year over year for the past nine consecutive years, and 2014 was the best year for vinyl since 1991 with an increase in sales of 52%.
- 164 billion song streams being played in 2014.
- Apple is looking to boost subscriptions to their acquired Beats Music subscription service by lowering prices to $5 per month.
- The sale of singles or specific songs dropped 12%, with a total of 1.26 billion sold overall.
- The mature markets are rather stable for music sales, with fluctuations within 1 percentage point. It’s the developing APAC industry that is seeing the most fluctuations.
Digital music sales are headed downward, but the niche industry sales are headed upward. Could the digital music industry learn something about the sales figures that are coming out of the vinyl and subscription service numbers? Vinyl record sales topped 2013′s records by over 3 million LPs. On-demand streams occurred 60 billion more times in 2014 when compared to the year before. So why are the numbers down so much? It’s simple economics. When people can pay less for music, they’re going to do it. Streams on YouTube or Spotify cost nothing. Is there advertising that can cause interference from time to time? Sure – but an ad or two compared to saving $10 or more on the cost of an album is difficult to ignore. Where there is scarcity, music thrives. Unfortunately there isn’t much scarcity left online.
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