It’s no secret that lately the music industry hasn’t been doing so hot. CD sales have been down and piracy is usually blamed for the decreased sales. But in 2012, the industry saw revenue increase by 0.3%, which, however small, is the first increase in revenue since 1999. Still, the revenue in 2012 totaled $16.5 billion, whereas in 1999 they brought in $38 billion.
Though CD sales continue to decline, digital revenue was high enough to outweigh the decrease. Digital delivery also has less overhead cost than physical means, so the increase in revenue makes sense. Digital revenues increased by 9% and make up 34% of all revenues globally. Of the digital music revenues, digital downloads in particular rose 12% and made up around 70% of all digital revenues. Additionally, the number of people paying for subscription services like Spotify rose by a whopping 44%, though Spotify ads are annoying enough that this seems reasonable.
Subscription services will continue to expand, with new similar services expected to be offered by Apple and Google. The chief executive of the Australian Recording Industry Association, Dan Rosen, has noted that piracy is still an issue, though subscription services are helping. On applications like Spotify, he remarked, “The music industry has done an enormous amount to make it easier for people to do the right thing.”
However, the rise in revenues could have come sooner. Initially, record companies shied away from digital means of distribution because of the threat of piracy. Ideas similar to Spotify were initially rejected, but have obviously been revisited since. These services have for sure been a big help, so it’s a good thing industry leaders finally got over worrying about piracy so much. Since its creation, Spotify has paid over $500 million in royalties, which still pales in comparison next to the $2.6 billion brought in by digital downloads since 2011, but it’s still enough to make a difference.
Another increase was seen in the area of performance rights, which went up by 9.2% last year. They now make up 6% of overall revenues, up from just 3% in 2007. CDs and physical media, even with the decline, still make up just under 60% of overall revenues.
Now, whenever I am tortured with a Spotify ad with that overly excited lady, I’m going to consider it an act of charity benefiting the music industry.