If you believe everything you read, the music industry is swirling the financial drain. There’s always some new study or article that purports to show how business is much worse than it’s ever been. But every industry goes through changes at some point and either evolves or dies. Why should the music industry be any different?
The fact of the matter is that if you combine the global revenue from recorded music, licensing, publishing, merchandise and touring, 2012 was better than ever for the music business as a whole, with over $67 billion in global revenue. That said, revenue for the recorded music business slipped about .3% last year, according to the International Federation of Phonograph Industry (IFPI).
But there are some bright signs even in the recorded music part of the business. Take Adele, for instance. Since her 21 album was released in 2011, the album has sold more than 28 million units world-wide and is amongst the best selling of all time. A few years prior, pundits the world over said a sales number like that would never be reached again, and would in fact never see another album with even 5 million sales. So much for that prediction.
Then along came Psy in 2012 and 1.7 billion views of “Gangham Style” later (plus another 530 million of “Gentleman”), and you can see not only how the pundits were wrong again, but how business was morphing away from sales into streaming. A big hit is a big hit, and didn’t necessarily need sales anymore to identify it as such.
This year we have Daft Punk, who’s “Get Lucky” has been streamed over 107 million times on Spotify alone. Add another 115 million views on YouTube and around 4 million in actual sales and you can see that even though the music business has changed in a big way, it still has what every business needs – customers. We just deliver the product to them differently than ever before.
The big change is that today’s music lover does indeed consume in more ways than ever before, thanks to the plethora of technology available. Sales of physical product (which still comprises over 60% of the total sales) and downloads are decreasing, while streaming of all sorts, from YouTube to services like Spotify and Pandora, are increasing. Expect that increase to accelerate even more as soon as the the upcoming iTunes Radio and Beats Music services come online.
The point is, the music business is much healthier than people think or even would like to believe. We just need a new way to classify exactly what a hit is, because sales don’t and can’t tell the whole story.
That’s why more attention should be paid to something like the Ultimate Chart (Katy Perry’s “Roar” tops it this week), which uses not only sales, but radio airplay and online listening and watching to determine the most popular songs. Every measurement has a flaw and it’s most likely that the Ultimate Chart does too, but at least it’s a 21st Century answer to the problem that our mostly 20th Century industry finds itself in. Regardless of the way it’s delivered, a hit is a hit. We’ve just go to recognize it.
