Where’s the real growth in music?

This post is a crossroads of sorts with some news and some data.

Adam Sherwin’s article in the Independent shows that music singles continue to climb in popularity with a 40% rise in sales over the past year.

Add to this Mark Sweney’s Guardian piece about losses of £189m in CD revenues

But then I took some US data from Paul Resnikoff’s blog and did a bit of mashing. This is anything but scientific and compares US revenue figures, RIAA numbers, and some UK structure observations. Take with a pinch of salt.

So the first one is this graph, showing the structure of revenues from 1980 to 2010.

What’s interesting here is:

  • When a platform goes into decline it doesn’t recover, unless it does: vinyl LPs settled down to a core following and is now even growing a little, while cassette and others died
  • You’ve got to keep innovating. Anyone who put all their eggs in music video (whether cassette, dvd or digital) isn’t futureproof

And then if we look at the near term (2000 to 2010) and adjust to take out the massively dominant CD sales, we get this graph.

  • Revenue from music video (whether digital or analogue) is massively reduced, undercut by free services such as YouTube.
  • Mobile is similarly in decline, having topped out in 2008. Partly due to the unworkable margins set by iTunes and partly due to the clutter of other things to spend your money on in mobile these days.

Now if we overlay RIAA data of units shipped (“total equivalent albums”, from StopMusicTheft) we see just how much of an unsmiley face the curve of sales-and-revenues is in the music business.

In short, the value of the music business is no better off now than it was in 1970s! This despite a 36% population growth over the same period.

So where next? This final graph shows where revenue growth is coming from over the past 10 years.

There are some obvious losers (cassettes), some survivors (LPs), and three growth areas:

  • Download singles, which are growing but at an unexciting level
  • Download albums, which have experienced the greatest growth and leveled off
  • Digital performance royalties, which is still rising fast. If broadcasters, advertisers, and media owners use music to augment their material with the same enthusiasm as the past 20 years, music publishing is the area to watch.

And one last link for any musicians who’ve read all the way to the end: 32 different ways you can make money


About Morgan Holt

Morgan Holt is senior strategist at Wolff Olins, the global game-changing brand consultancy. He is also chairman of the Branded Content Marketing Association, and a non-executive director of CN Media Group.

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