BPI’s Music Market Review Of 2016

20 May 2016 - Press release

Stellar year for British music as UK artists achieve record 17.1% global share – around 1 in every 6 albums sold worldwide – but to sustain this success Government must fix music’s “Value Grab”

Surge in music consumption and popularity of UK artists does not translate into increased revenues for artists and their labels due to market distortion caused by “UGC” platforms

2015 Music Market highlights include:

·         Impetus for continued growth comes from audio streaming, which increases 82% to 27 billion plays, delivering a 69% rise in income to £146.1m.

·         However, an even larger 88% rise in video streaming generates only a meagre increase in revenue from pure ad-funded platforms of 0.4% to £24.4m.

·         Multi-channel dynamic consolidates, as CD rate of decline softens to 3.9%, while vinyl LP shows eighth consecutive year of growth to pass 2m unit mark – highest in 21 years.

·         British music exports up in key markets.

·         Adele’s 25 leads the way as world’s best-selling album with 17.4m copies sold in 2015 (2.5m in UK) – the 8^th time in the last 11 years the global best-seller has come from the UK.

·         British artists dominate at home, with 7 of year’s top-10 artist albums, while globally they account for half of top-10 best sellers, including Ed Sheeran, Sam Smith, One Direction & Coldplay.

The BPI, the record labels’ association which promotes British music, today publishes its Music Market 2016 yearbook, an 88-page guide to the UK recorded music industry in numbers, with full analysis and detailed commentary on market trends based on Official Charts, IFPI, Kantar Worldpanel and other data.

The book highlights the achievements of British artists in 2015, whose share of domestic album sales reached an 18-year high (at 54.7 per cent) and saw them make up seven of the top 10 annual best-sellers in the Official Charts.  British music’s exports to key markets around the world also grew, as UK acts, led by the extraordinary success of Adele’s 25, claimed an impressive 17.1 per cent share of the global albums market – equivalent to around one in every six artist albums sold worldwide, and most likely the highest on record.

However, while music consumption based on Album Equivalent Sales (AES)¹ rose by 3.7 per cent at home –   a figure which increases to 12.9 per cent if you include streaming of music videos – total industry revenues including performance rights grew by only 0.6 per cent in 2015, with income from sales and streaming of recorded music, including the share that can be passed on to artists, dipping by 0.9 per cent to £688 million. The disparity between consumption and revenues is explained by pure ad-supported platforms, in which YouTube is the dominant player, contributing a meagre 4 per cent – just £24.4 million – to this total, despite increasing by 88 per cent year-on-year to represent nearly a fifth of total music consumption. 

This stands in stark contrast to the £146.1 million that audio streaming services (such as Spotify and Deezer), contributed to artists and labels from a similar number of streams. Audio streams increased by 82 per cent in 2015, leading to a 69 per cent rise in revenues.  The £24.4m generated by pure ad-supported streaming – principally music videos streamed on YouTube – was smaller even than the £25.1 million earned by labels

from the sale of vinyl LPs in 2015 – a format which represents less than 2 per cent of overall UK music consumption.   This illustrates that the much-debated music industry “value gap” or “value grab” – caused by UGC platforms relying on copyright loophole “safe harbours” in EU legislation to pay much lower royalties than competing services – is growing.

Geoff Taylor, BPI & BRIT Awards Chief Executive, comments: 

“It is hugely encouraging that demand for British music is so strong at home and abroad thanks to our brilliant artists and the continual innovation and investment of our record labels.  Yet the fact that sales revenues dipped in a record year for British music shows clearly that something is fundamentally broken in the music market, so that artists and the labels that invest in them no longer benefit fairly from growing demand. Instead, dominant tech platforms like YouTube are able to abuse liability protections as royalty havens, dictating terms so they can grab the value from music for themselves, at the expense of artists. The long-term consequences of this will be serious, reducing investment in new music, making it difficult for most artists to earn a living, and undermining the growth of more innovative services like Spotify and Apple Music that pay more fairly for the music they use.

“In 2015, UK fans streamed almost twice as many music videos as the year before; tens of billions more views. Yet artists and labels did not benefit from the increased demand for what they created. This is wrong. Music is precious – it’s not a commodity to be strip-mined for big data. And as we’ve seen time and again in the digital market, where music goes first, the rest of the content sector will follow. This problem requires urgent action by the EU, and our Government needs to take the lead in making sure it is tackled.”