iTunes, other digital providers boost music industry to first revenue growth in 13 years

Posted:
in iPod + iTunes + AppleTV edited January 2014
Once ravaged by free file-sharing, the global music industry appears to be on the comeback, as digital download services such as Apple's iTunes boosted music revenues to $16.5 billion in 2012, the first year of industry growth since 1999.

iTunes


The news comes courtesy of the International Federation of the Phonographic Industry (IFPI), a non-profit organization representing 1,400 recording industry members across 66 countries. IFPI's figures showed global recorded music revenues up 0.3 percent for 2012, boosted by downloads, subscriptions, and other channels.

Revenues for digital music rose nine percent to $5.6 billion in 2012, with the industry on the whole posting $16.5 billion in revenue. That's a far way off from the $38 billion the industry posted at its peak in 1999, but industry members and observers believe even the small growth seen for 2012 is an encouraging sign.

Apple's iTunes leads the way in many countries, including the U.S., where it is the number one digital music provider, followed by Spotify. The iTunes Music Store is available in 119 countries and, earlier this month, sold its 25 billionth song.

More encouraging than iTunes for the music industry, though, is the rise of subscription services. Music subscriber numbers were up 44 percent in 2012, and revenues were up 59 percent in the first half of 2012. Spotify is now said to be the second-largest driver of digital music revenues in the United States, and tech giants such as Microsoft and Google have joined or are planning to join the subscription music market. Such models are preferable for the music industry, as they provide an ongoing revenue stream as opposed to a single purchase.

Piracy is still a concern, and IFPI's report calls on Google and internet service providers to do more to protect intellectual property. However, industry representatives appear to believe that the music business has finally surpassed piracy outlets in terms of ease of access and reliability.

"Pirate services are clunky and old-fashioned," said Rob Wells, president of Universal Music Group's global digital business, "they're being usurped by mass consumer migration to smartphones and access to millions of tracks from legitimate subscription services... The pirate option just cannot offer that complete consumer experience."
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Comments

  • Reply 1 of 25


    .99c per song did not hurt either......


     


    For a long time music was simply too expensive.  Hit the right price and make it easy and most people will buy it...

  • Reply 2 of 25
    Glad I read the article. The title has me excited that it could be higher than it was back in 1999. Less than have it but they are happy for some growth. Glad to hear it.

    I would like to know what the profits are now for the labels. With less distributors and less overall cost for digital music I think they are moat likely doing much better per revenue dollar.

    sranger wrote: »
    .99c per song did not hurt either......

    For a long time music was simply too expensive.  Hit the right price and make it easy and most people will buy it...

    Just wait for Apple to get blamed for its downfall, again, with acknowledgment that they at least plugged many of the leaks in the damn by making digitally distributed music easy enough to obtain that stealing became less advantageous for many.
  • Reply 3 of 25


    Jobs was right, sometimes "easy" trumps "free!"

  • Reply 4 of 25
    Jobs was right, sometimes "easy" trumps "free!"

    iTunes didn't kill Napster, lawsuits did.
  • Reply 5 of 25


    Originally Posted by dasanman69 View Post

    iTunes didn't kill Napster, lawsuits did.


     


    Yes, because that's what we're talking about¡

  • Reply 6 of 25
    zoetmbzoetmb Posts: 2,482member


    While growth is welcomed, the music industry is still well below half of its 1999 peak and that doesn't even include inflation, which is 38% since then.    What's killed it is not digital downloading per se, not even illegal digital downloading.   What's killed it is the return of the single as the dominant form of recorded music.   While the single was also dominant in the 1950s and 60s for rock, country, blues and some pop, the difference between then and now is that back then, an artist went into the studio and recorded three tracks in a few hours that had minimal mixing and which were frequently released within a few weeks.


     


    Today, an artist can spend months recording songs in different studios with different engineers and then use different mixers who obsess over every little thing and create tens of versions of each song in ProTools and then the tracks are sent to a different mastering engineer.   This process, although inefficient for any type of recording, "worked" economically (although artists rarely got paid beyond session fees and royalty advances) when albums dominated, but certainly doesn't work when 99 cent singles dominate.   


     


    The other issue is that music listening (and radio) has become extremely fragmented.   A Beatles, Stones, Madonna, Springsteen or Dylan could not happen today. 


     


    Back in the mid 1960s, singles listed for 99 cents and generally sold for 64 to 66 cents (albeit for a 2-sided single).   66 cents in 1965 is $4.82 in 2012 dollars.    The slight growth is almost meaningless.   The industry is extremely unhealthy and will continue to be until consumers recognize that music actually has value.  

  • Reply 7 of 25
    Yes, because that's what we're talking about¡

    It's not mentioned by name but it's clear that 'free file sharing' means Napster and the copycats that followed. Don't know about you but Napster's UI was very simplistic and easy to use along with being free. The OP insinuated it was otherwise.
  • Reply 8 of 25


    Originally Posted by dasanman69 View Post

    It's not mentioned by name but it's clear that 'free file sharing' means Napster and the copycats that followed. Don't know about you but Napster's UI was very simplistic and easy to use along with being free. The OP insinuated it was otherwise.


     


    He said nothing at all about the UI! You know exactly what he's talking about; my stars! Don't do this!

  • Reply 9 of 25
    zoetmb wrote: »

    The other issue is that music listening (and radio) has become extremely fragmented.   A Beatles, Stones, Madonna, Springsteen or Dylan could not happen today.

    I disagree, I think music lacks individuality. So much of today's music sounds alike. I wouldn't even go as far back as The Beatles, I don't think a Nirvana, Pearl Jam, Depeche Mode, or REM could happen today.
  • Reply 10 of 25
    He said nothing at all about the UI! You know exactly what he's talking about; my stars! Don't do this!

    Then sorry but I don't know what he meant by "easy" trumps "free". So please enlighten me, and I'm not being sarcastic, because you think I'm obviously missing something.
  • Reply 11 of 25


    Originally Posted by dasanman69 View Post

    Then sorry but I don't know what he meant by "easy" trumps "free". So please enlighten me, and I'm not being sarcastic, because you think I'm obviously missing something.


     


    Easy, as in "here's a storefront in which you can simply, readily, and accurately search for the music you want, know what you're getting into before you buy it, and then buy it with a single click, allowing you to use the music anywhere".


     


    vs.


     


    "figure out how to run a torrent/downloading program, find the torrent/rar you think is correct, download hoping that there are seeders, check, if real done, if not return to step 1".


     


    If paying for it is easier than the free method, people WILL pay for it, and that's what Apple endeavors to do with iTunes.

  • Reply 12 of 25
    Selling album tracks individually helped a lot with the numbers. It took Steve to convince the labels of this.
  • Reply 13 of 25
    feynmanfeynman Posts: 1,087member

    Quote:

    Originally Posted by JackTheRat View Post



    Selling album tracks individually helped a lot with the numbers. It took Steve to convince the labels of this.


    Music industry: "Oh look we're finally showing a profit! Lets have the content providers change the price of a single from 99¢ to $1.99!

  • Reply 14 of 25

    Quote:

    Originally Posted by zoetmb View Post


    Today, an artist can spend months recording songs in different studios with different engineers and then use different mixers who obsess over every little thing and create tens of versions of each song in ProTools and then the tracks are sent to a different mastering engineer.   This process, although inefficient for any type of recording, "worked" economically (although artists rarely got paid beyond session fees and royalty advances) when albums dominated, but certainly doesn't work when 99 cent singles dominate.   



     


    Say what? The opposite is true. Before ProTools and digital editing is when musicians had to spend long hours in the studio trying to perfect their sound. These days you can record an album in no time flat knowing that any "mistakes" can be digitally "repaired" later on. And you can create multiple versions of a song very quickly in ProTools.


     


    When I used to record in the studio (as an engineer) we would literally spend hours just fiddling with the placement of a mic (or trying different mics) until we got the sound we wanted. We would also spend hours moving things around to different parts of the studio to alter the sound. The bottom line is we did everything we could to make sure the source material was recorded as good as possible before it went to tape. That's something most people just don't bother with anymore since it's so easy to "fix" things in an editor.


     


    These days it costs far less to record an album simply because of the advances in technology. Now back on topic.....


     


     


    Interesting that iTunes represents 70% of the digital music market. I'm not sure why the record labels are "supposedly" having a tough time negotiating with Apple over a subscription streaming service. With their track record and revenue they're bringing in you'd think Apple would be a "preferred" customer for a new music service.

  • Reply 15 of 25
    Easy, as in "here's a storefront in which you can simply, readily, and accurately search for the music you want, know what you're getting into before you buy it, and then buy it with a single click, allowing you to use the music anywhere".

    vs.

    "figure out how to run a torrent/downloading program, find the torrent/rar you think is correct, download hoping that there are seeders, check, if real done, if not return to step 1".

    If paying for it is easier than the free method, people WILL pay for it, and that's what Apple endeavors to do with iTunes.

    Well torrents is the current way for illegal downloads, it wasn't the case back in 1999. The only advantage iTunes had over Napster was assurance that you were getting a song and not a corrupted file, but as far as easy goes it didn't get much easier than Napster.
  • Reply 16 of 25
    This is absolutely a fictitious story as we all know iTunes killed the music industry :P
  • Reply 17 of 25
    solipsismxsolipsismx Posts: 19,566member
    dasanman69 wrote: »
    Well torrents is the current way for illegal downloads, it wasn't the case back in 1999. The only advantage iTunes had over Napster was assurance that you were getting a song and not a corrupted file, but as far as easy goes it didn't get much easier than Napster.

    You need to look at the whole system. iPod + iTunes + iTunes Store made buying, syncing, and playing music very easy. With Napster or Limewire or torrents or newsgroups you need to understand more about the technology and more aware about what you could be getting. While there was no legal tender being passed for those options to steal media they weren't free because there is a time cost involved. Same goes for buying a CD, which was cheaper per song if you really all songs for your PMP. Apple streamlined the process and made the entry for play inexpensive and easy enough (which includes safety and security) that it took off.
  • Reply 18 of 25
    dasanman69dasanman69 Posts: 12,985member
    solipsismx wrote: »
    You need to look at the whole system. iPod + iTunes + iTunes Store made buying, syncing, and playing music very easy. With Napster or Limewire or torrents or newsgroups you need to understand more about the technology and more aware about what you could be getting. While there was no legal tender being passed for those options to steal media they weren't free because there is a time cost involved. Same goes for buying a CD, which was cheaper per song if you really all songs for your PMP. Apple streamlined the process and made the entry for play inexpensive and easy enough (which includes safety and security) that it took off.

    I'll agree that torrents and newsgroups are far more difficult, it didn't take a profound knowledge of technology to choose the iTunes folder for downloads from Napster/Limewire. Once set all songs went directly into iTunes.
  • Reply 19 of 25
    solipsismxsolipsismx Posts: 19,566member
    dasanman69 wrote: »
    I'll agree that torrents and newsgroups are far more difficult, it didn't take a profound knowledge of technology to choose the iTunes folder for downloads from Napster/Limewire. Once set all songs went directly into iTunes.

    And how did the typical person know to choose which version of, say, The Beatles song Help? To many options with many of them bad options is not how I define easy. You had to learn which track options were best and which ones to clearly stay away from, and how to properly do your search to help weed out bad results from Limewire and you'd still get bad copies from time to time. None of this was a problem with the iTS.
  • Reply 20 of 25
    dasanman69dasanman69 Posts: 12,985member
    solipsismx wrote: »
    And how did the typical person know to choose which version of, say, The Beatles song Help? To many options with many of them bad options is not how I define easy. You had to learn which track options were best and which ones to clearly stay away from, and how to properly do your search to help weed out bad results from Limewire and you'd still get bad copies from time to time. None of this was a problem with the iTS.

    I'd look for the one with the highest download count. Worked flawlessly with Napster, but I stopped using Limewire when advertisements were being labeled as songs.
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