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Posted by Mark Mulligan on April 26, 2010
The BPI has just published numbers recording 1.4% year on year growth in the UK music market during 2009. With more than half an eye on the wider political context, the BPI’s press release treads a careful balance between reporting the good news and casting it in the context of a wider malaise. Whatever the motives though, the ‘glass half empty’ perspective is appropriate. The UK recorded music market has lost close to 40% of its value since 2003. Though this isn’t necessarily a dead cat bounce, it is going to take a lot more than 1.4% annual growth to turn things around.
Downloads aren’t replacing the CD. Digital sales in 2009 boomed - growing by 48% - offsetting the impact of CD sales decline for the first time … just … (online digital revenue growth was 53m GBP compared to a CD decline of 48m GBP). But this isn’t a simple downloads versus CDs picture. In these days of plummeting CD sales, recorded music numbers encompass a pretty diverse portfolio of products and revenue streams, including DVDs, mobile, ad-supported streaming, etc.
The digital model is far from fixed yet. The download market will not save the music industry. It will be one small part of a multifaceted product portfolio. 48% digital growth may sound good but it is important to keep a sense of scale: download revenues are just 21% of CD sales and mobile revenues actually *declined by 14%*. The CD remains the bedrock of sales not because it is a robust product but because the competition is so weak.
Monetizing consumptions needs fixing too, and quickly. Spotify is of course the current darling of the UK digital music market, but it and YouTube combined generated just 1% of recorded music revenues. Granted, this doesn’t account for publishing royalties nor for the joint venture revenue that goes direct to labels. Nonetheless, it highlights how far the record labels are from building meaningful revenues from the epicenter of music consumption and behavior.
Ultimately a 1.4% growth in 2009 is neither here nor there. Not enough significant progress has been made and next year could easily go either way. Only when we have 3 years plus of steady growth can we talk with confidence of the corner being turned. These numbers are a welcome glint of sunshine in a depressingly dark tunnel but there is much work to be done before we can be sure it’s not just the light of an onrushing train.