Digital Music Surpasses Physical Music Revenue

While this week physical media mounted a comeback in the form of 4K Ultra HD Blu-rays, that same fight seems to have been lost in the music arena. According to the IFPI’s Global Music Report digital music now outsells physical formats worldwide, with it commanding 45% of all purchases in 2015.

Expect that number to grow with the IFPI noting that streaming media continues its rise to the top; with its revenue growing 45% in 2015 when compared to 2014.

With big names such as Apple and Jay-Z launching their very own music streaming services in 2015, it’s little surprise that streaming media has become the hottest trend in the industry. In fact, in the US, the RIAA revealed that music streaming alone had overtaken physical sales last March.

In terms of numbers, digital revenue accounted for $6.7bn (£4.7bn) of all music sales worldwide. That helped the industry boost its revenue to $15bn (£10.5bn) in 2015, which is a 3.2% increase on the previous year.

Despite the revenue increase however, physical sales and digital downloads continue to decline as people opt for streaming media instead. This has some in the industry worried, with the IFPI noting: “there is a fundamental weakness underlying this recovery. Music is being consumed at record levels, but this explosion in consumption is not returning a fair remuneration to artists and record labels.

“This is because of a market distortion resulting in a “value gap” which is depriving artists and labels of a fair return for their work.”

The organisation isn’t the first to take issue with streaming media, with many popular celebrities launching their very own boycott to prevent their music from being available on popular services such as Spotify. Both Adele and Taylor Swift have withheld their latest albums from Spotify, although the latter has been a big supporter of Apple Music.

IFPI Chief Executive Frances Moore adds: “After two decades of almost uninterrupted decline, 2015 witnessed key milestones for recorded music: measurable revenue growth globally; consumption of music exploding everywhere; and digital revenues overtaking income from physical formats for the first time. They reflect an industry that has adapted to the digital age and emerged stronger and smarter.

“This should be great news for music creators, investors and consumers. But there is good reason why the celebrations are muted: it is simply that the revenues, vital in funding future investment, are not being fairly returned to rights holders.

“The message is clear and it comes from a united music community: the value gap is the biggest constraint to revenue growth for artists, record labels and all music rights holders. Change is needed – and it is to the policy makers that the music sector looks to effect change”.