This article first appeared in the Record of the Day weekly magazine. Subscribers can access the archive here.
18th January 2016
Could music really have turned the corner following 10 years of decline?
That was the question which dominated discussion of the year-end sales figures last week after UK retailers and digital retailers delivered an increase in UK music revenues of a surprise 3.5% on 2014. The figures led to widespread discussion on TV and radio, in the press and online as to whether we have really reached the turning point.
To be fair, ERA and its members were pleasantly surprised by the final tally, showing revenues up £35.8m to £1.059bn. Even just a couple of weeks before the year-end, such good news seemed anything but certain. Admittedly we were blessed with a 53 week year in 2015, but even on a rolling 52 week basis sales would still have been up nearly 2%.
Something is clearly happening. So what is it, and what can we learn from it?
The most obvious observation at ERA is that this is a clear response to retail investment in the music market. 2015 saw genuinely phenomenal growth in the streaming market driven by the marketing of ERA members such as Spotify, Google Play Music, Amazon Prime and Deezer and non-members like Apple Music. We also saw continued growth in vinyl sales driven both by indie retailers and by bigger players like Amazon, HMV and even Tesco (now stocking vinyl in 40 stores). Even in the mainstream CD market - and no doubt contributing to CD's best year in a decade - we are seeing increased competitive activity as more, many of them non-traditional, retailers join the market. The clear message is that a healthy and competitive retail market drives music sales.
I am aware that to some readers this analysis may be slightly ERA centric. I have not mentioned A&R, I've not talked about hits, I have not talked about the dominance of UK artists, taking seven of the Top 10 in the Official Albums Chart. Naturally these are vital and contributed in no small part to the growth in 2015. Without music to sell or stream, ERA's members would be in a bit of a pickle. The truth is, however, as most people recognise, that the biggest changes shaping the music landscape over the past 10 years have had less to do with A&R and everything to do with the changing ways in which fans access music. What has and is making the difference is the investment by retailers and digital services in new and convenient ways of accessing the music they love.
Daniel EK at Spotify was famously motivated by a desire to create a new legal music consumption experience which was better than piracy. Latest figures suggest that he and his peers have been largely successful. You might expect me to say so, since I run a trade association devoted to retailers and digital services, but it's worth considering whether the supply side of the industry should not spend a little more time focusing on ensuring that music is as attractive and profitable a sector for retailers as possible.
Given the difference successful and thriving retailers and digital services can make to the industry's fortunes, ensuring that they can innovate and nurture the next generation of hit acts will secure the long term growth of the industry we all love.