Music industry situation up to 2019 and the COVID-19 ‘Era’

After weeks of continuous live streamings and events across all digital platforms, these last days we woke up with the initiative of ES_música Federación de la Música de España, which includes entities, groups and societies such as ACCES, OPEM, SGAE, UFI, Promusicae, AEDEM, AIE, APM and ARTE.

Under the slogan #QueNoPareLaMúsica, ES_Música has taken on the mission of spreading the message of the importance of the music industry in the national economy of this country. We must remember that it is a sector that directly employs more than 300,000 people in Spain, as well as the close links it has with digital services, commerce and tourism.

The campaign claims the artistic, emotional and cultural power of music, but also the determined and powerful response of many agents in the sector, starting mainly with the creative people, who have been able to enter everyone’s home during these last few weeks.

2019: Progressive recovery and hope in the sector, interrupted by the healthcare crisis

In Spain, 88% of the population listen to music daily, consuming around 19.5 hours a week; above the average in countries such as France, Germany and the United Kingdom. In 2019, 90,000 live music events were held with an audience of over 28 million people.

According to the annual report for 2019 published by Promusicae, the market for recorded music in any format (physical and digital) generated a total turnover of 296.4 million euros, far from the numbers grossed in Spanish cinemas (624.1 million euros), but which represents the highest revenue since the outbreak of the global economic crisis in 2008, even exceeding the revenue for that year.

Evolution in the last years

Digital vs. Physical market

  • The king is and will remain streaming

Most of the income from that distant 2008 – extremely similar to what is coming in this year 2020 – came from the sale of physical audio formats (CD’s, LP’s, singles…). In 2019 the proportion was practically the same but inverted. Digital music accounts for 75.3% of consumption in Spain, most of which is controlled by on-demand music platforms, and is currently the main source of income in the market.

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Font: Counterpoint. 2020

At the international level, the study Music Streaming Around the World (Global Web Index, 2019) indicated that about 67% of adults have used one of these streaming platforms, being the most used media between millennials and Z Generation, but with a constant increase among more adult generations.

  • Vinyl: The exception

Not everything is streaming. And the most music lovers know it well. Of all current formats – physical and digital – vinyl is the one that has experienced the greatest increase (+56.3% in sales vs. previous year).

In just six years, vinyl unit sales have grown almost 10 times over the numbers for 2013.

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The evolution of vinyl sales over time

Therefore, it is not surprising that the vinyl format is the great merchandising element today to try to obtain a source of income that directly benefits artists and record companies. In this line, the UFI (Unión Fonográfica Independiente) has promoted #HoyMeComproUnDisco, a campaign with the vinyl as the main axis to try to alleviate the economic difficulties that are coming in the industry (see here entry of #HoyMeComproUnDisco).

What’s next? Era post-COVID-19

Although all previous indicators were encouraging for the coming years, the current health crisis will lead to some changes in many aspects of the sector, mainly affecting the lower investment in paid products and services, as well as the likely decrease of costs in live music shows.

As a result, regular users of both live and recorded music may think much more in the coming months about what kind of streaming services to buy. And although there may be a considerable drop in the price of tickets for shows, this will be to the detriment of the quality of the production of these shows.

New opportunities

The figure of the user with more than one subscription on the large platforms (Apple Music, Spotify, Tidal, Google or Amazon) will probably not grow; but the online audience will be greater, and with it, new formats of online shows and gigs will be more professional, which we are seeing in the last few weeks.

It’s interesting to think about what it might mean for traditional media such as radio. The investment in mass broadcasting channels will decrease, but technology has allowed it to be a medium easily adaptable to streaming trends, leading to a possible increase in specific podcasts and more local scope.

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The Satate of Podcasting

In addition, it has been more than proven that many of the industry’s professionals can continue working from home, which will encourage the creation of 100% online projects and more easily to reach the end user with less cost.

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