176 Million Users Of Paid Streaming Drive Global Recorded Music Market

Worldwide recorded music revenues grew by 8.1 percent year-on-year, reaching a total of $17.3 billion in 2017, according to IFPI’s Global Music Report 2018, unveiled in London April 24.

Ed Sheeran
AP Photo / Rafiq Maqbool
– Ed Sheeran
Last year’s best seller

According to IFPI, “streaming remains the main driver of recovering revenues.” Streaming grew by 41.1 percent year-on-year, generating $6.6 billion in 2017. It accounted for 38.4 percent of worldwide recorded music revenues, offsetting a 5.4 percent decline in physical revenues as well as a 20.5 percent decline in download revenues.

176 million users paid for a streaming subscription in 2017, while some 96 million used an ad-supported service. Both factions generated $5.6 billion in revenues.

1.3 billion users, a much larger user base than for audio streaming, generated significantly smaller video streaming revenues of $856 million. It is this discrepancy that IFPI describes as the value gap.

In other words: while video streaming accounts for more than half of on-demand streaming time, it only generates a fraction of revenues.
Backed by current online legislation, YouTube claims to only host content, without having any control over the content itself. It’s how it was able to end up with a vast library of content, for which other services such as Spotify or Apple Music had to pay license fees.

This led to “a mismatch between the value that online user upload services, such as YouTube, extract from music and the revenue returned to the music community,” IFPI writes, calling this situation “the biggest policy challenge facing the music industry.”

The Global Music Report 2018 states: “For music to thrive in a digital world, those that are creating and investing in music must be able to negotiate fair commercial terms for its use. Furthermore, digital music services that are licensing music on freely negotiated terms, must be allowed to compete on a level playing field – something they currently do not have. The global music community is united in its call to fix the value gap and is campaigning around the world.”

For the first time since IFPI began tracking the market in 1997, digital income accounted for more than half (54 percent) of total revenues.
Worldwide revenues are still far off from what they were in the peak year of 1999, when they reached $25.2 billion, or 68.4 percent above the 2017 figure.
Latin America showed the greatest growth potential in 2017, with recorded music revenues increasing by 17.7 percent to $709 million. North America showed the second-strongest growth in 2017, when revenues increased by 12.8 percent to $6.35 billion.

The U.S. continues to lead the world’s music territories ahead of Japan and Germany at two and three. The UK ended 2017 in fourth place, followed by France on five.

Ed Sheeran didn’t just dominate last year in terms of live, but also in terms of album and single sales. “Shape Of You” leads the singles category with 26.6 million sales in total. The number includes streams, which are calculated based on a formula to represent units sold.

He’s also on ninth position with “Perfect,” which sold 7.9 million times. His album Divide leads the ranking with 6.1 million records sold. Taylor Swift’s Reputation lands on two (4.5 million sold), Pink comes in at three with Beautiful Trauma (1.8 million).

Frances Moore, chief executive of IFPI, commented: “The industry is on a positive path of recovery but it’s very clear that the race is far from won. Record companies are continuing in their efforts to put the industry back onto a stable path and, to that end, we are continuing our campaign to fix the value gap. This is not just essential for music to thrive in today’s global market, but to create the right – fair – environment for it to do so in the future.”

A condensed version of IFPI’s Global Music Report 2018 can be downloaded here. The full report with in-depth statistical analysis is available on the industry body’s homepage.