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Back in 2016, the global recorded music market grew by 5.9%, the fastest rate of growth since IFPI began tracking the market in 1997 (IFPI Global Music Report 2017). Streaming has been the clear driver of this growth, with revenues surging by 60.4%. With more than 100 million users of paid subscriptions globally, streaming has passed a crucial milestone. It makes up the majority of digital revenues which now account for 50% of total recorded music revenues.

The global digital market is now seeing services develop and extend their offerings around the world. These developments are expanding the streaming base, providing fans with a more varied, richer experience and bringing streaming to new audiences and new territories.

Global recorded music industry revenues 1999-2016

As we point out in our Deliverable ‘D1.1 Music Industry Innovation Report v1’the transformation has created an enormously exciting environment for music fans who are benefitting from new and evolving services and accessing more music than ever before. In turn, artists have more ways to connect with their fans and more opportunities to share their work in diverse and creative ways. For record companies, the transformation during the last decade from CDs to the digital market has been challenging, but it has come with a lot of opportunities. We can now make what we call information products, i.e. products with low marginal cost. The barriers to reach out to consumers across the globe have diminished and the cost to do so is very low.

Nevertheless, the cost of marketing and promotion is still high and made where it is believed to have the biggest impact. For a record company, it is hard to know what kind of music people like. Thanks to Spotify and other digital streaming platforms, consumers can now listen to music regardless of whether they are willing to pay or not. The long tail has emerged and the variety of content that is available to consumers is huge.

Unlike physical sales and sales of digital downloads, streaming is no sale of music. The consumers are instead offered the opportunity to listen to music via a subscription. Consumers who place a high value on the quality of the sound or/and who is bothered with advertising, could today pay for the subscription.                                                                            
Through different algorithms based on the consumer's previous music selection, for example, Spotify offers consumers the music they are most likely to listen to and that can be considered to suit their tastes best. The way in which music is offered to a specific consumer depends today on their past preferences and tastes. In the immeasurable supply, algorithms and recommendations are presented as a kind of selection engine.

For record labels, it is critical to understand the real value of the artists, songs and videos that they represent. Traditionally, record sales were considered the main success indicator. Yet, the recent disruptions in the music industry, notably the increasing number of digital music sales via music stores (e.g., iTunes) and streaming services (e.g., Spotify), and the prevalence of YouTube as the main channel of distributing music videos, have rendered record sales largely insufficient as a success indicator.

Today, record labels rely on different sources of revenue, for instance music streaming, digital music sales, and advertising revenues from YouTube videos. Furthermore, record labels often get access to data coming from social media, e.g., artist Facebook page, YouTube channel (or individual videos), and try to manually make sense of them, using a number of platform-specific tools (such as the dashboards offered by Facebook and YouTube). With FuturePulse, professionals will be able to track and understand such data; and most importantly which data are crucial in order to optimize their operations.

You can read the Deliverable ‘D1.1 Music Industry Innovation Report v1’ here.


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This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 761634. This website reflects the views only of the Consortium, and the Commission cannot be held responsible for any use which may be made of the information contained herein.