Music industry body the IFPI has published its annual Global Music Report, revealing that recorded music revenue grew by 10.2% to $28.6bn in 2023.
That’s the ninth consecutive year of growth for these revenues, with streaming subscriptions firmly in the driving seat.
Recorded music rightsholders – this report does not cover publishing or live – saw their revenue from streaming subscriptions grow by 11.2% last year.
Subscriptions now account for nearly half (48.9%) of the overall market, which by our reckoning means just under $14bn.
The IFPI said that by the end of 2023 there were more than 667 million users of paid subscription accounts globally, up from 589 million at the end of 2022.
Streaming overall – including free, ad-supported services – generated $19.3bn for recordings rightsholders in 2023, up 10.4% year-on-year.
Guess what grew even faster, albeit from a smaller base? Physical music sales. They were up 13.4% globally in 2023 to $5.1bn – 17.8% of the overall market.
While vinyl and even CDs are doing well around the world, Asia is key to this growth: the region accounted for 49.2% of global physical sales.
The rest of the recordings pie saw 9.5% growth in performance rights (to $2.7bn); a 4.7% increase for sync revenues (to $632m); and a 2.6% drop in downloads and other digital revenues.
Breaking the revenues down geographically, the IFPI said that North America saw 7.4% growth last year – up from 5.1% in 2022 – while Europe (including the UK) saw 8.9% growth.
However, in percentage terms, the fastest growing regions were Sub-Saharan Africa (up 24.7%), Latin America (up 19.4%), and the Middle East and North Africa (up 14.4%). Australasia saw growth of 10.8% meanwhile.
The fastest rate of growth for an individual country came from China, where revenues grew by 25.9% last year. Brazil (up 13.4%) and Canada (12.2%) were the second and fastest growing markets in percentage terms.
The IFPI represents labels, so its report was as keen as ever to present their role in the industry as a positive one. New figures for that include its claim that labels spend $3.9bn on A&R and $3.2bn on marketing artists annually.
The body also says that between 2016 and 2021 “artists’ share of revenue grew by 20.2% to 34.9% of global sales revenue” and that “labels’ payments to artists have increased by +96% vs a +63% increase in revenues for IFPI’s largest member companies.
That’s interesting data, although it would be more interesting if it included figures for 2022 and 2023 as well.
At the IFPI’s launch event for the report in London, several label execs spoke about the growth for recorded music, and the trends that they see in the market. Starting with short video and free, ad-supported music.
More work needed in ad-supported music
“Growth over the next few years is still going to depend primarily on our ability to expand paid subscription in creative ways, and bring more customers and music lovers into paying platforms,” said Dennis Kooker, president, global digital business at Sony Music Entertainment.
“The emphasis, I think, is shifting a little bit from solely focusing just on adding paid subscribers, to understanding that we need to be smarter about what we ask consumers to pay.”
Kooker said that in ‘high-growth’ (earlier-stage) markets, the task is still convincing people to pay at all, and that while there is progress here “those markets have a much lower average revenue per consumer than the more established markets”.
That’s a challenge. “It takes a lot more new subscribers to make up for any slowdowns in established markets, which are naturally going to occur as they get more and more-highly penetrated,” said Kooker.
“That’s why the focus is shifting to be more thoughtful about how we segment consumers, those who want to want more, that are willing to pay more, need products that are specifically designed for that.”
Kooker also had some criticism for the free, ad-supported services, both streaming and social/video.
“We also haven’t progressed ad-supported tiers in established markets, especially in the worst-monetising type of ad-supported products: short-clip video platforms that have no chance to lead to paid subscription and become primary consumption platforms for many of the young consumers.”
Not everyone will share this view. YouTube has been strengthening the links between its Shorts and YouTube Music services, while TikTok is rolling out its own subscription streaming service, TikTok Music, and its ‘add to music app’ feature to encourage its users to stream the tracks they discover on their DSP of choice.
Still, Kooker made it clear that he wants more innovation. “There’s been no evolution of the financial models for free tiers since the beginning of the streaming era, and that needs to be re-examined as markets mature.”
Later, in the Q&A section of the launch, he was asked to expand on his views on short video and ad-supported music.
“The challenge with short-clip video is that it is an ad-supported-only product, and it’s still a very young product in the market. As a result I think that everyone is struggling with how to monetise it properly,” he said.
“This is not something unusual that we haven’t seen before. The key is recognising that and then putting a strategy around it that actually leads to better.”
“Ultimately what we want to see is better monetisation on the core product itself, but then also something that leads to even better economics. In particular, leading to paid subscription,” he added.
“If you look at the last nine years, I’ve been up here before talking about this. If the ad-supported and free tier’s main purpose is to introduce people to music and drive them into paid, if we can’t convince people to pay for music, that’s problematic. And if certain services start to pull people away from the consumer-attention standpoint and time, that’s problematic for us as well.”
Kooker also signalled a potential hardening of his label’s negotiating agenda with streaming services that have a free tier, although he was careful not to name any specifically.
“One obvious [desirable] thing for me is free tiers that are not completely free – that are more of a hybrid,” he said.
“While we’re all in support of the [subscription] price changes that have happened, and consumers have continued to be willing to pay for this product because it’s an amazing value, to think that ad-supported tiers will not also be adjusted, especially in more mature markets, I think is kind of missing the point.”
“It’s great that there’s an openness and a focus now on growing average revenue per consumer, especially as markets mature, the free tier has to be a component of that question or we’re missing something.”
High-growth markets need time and effort
Universal Music Group’s EVP, market development, Adam Granite talked about the potential he sees in the high-growth markets.
“What’s interesting about many of these markets – an example is India, which is now the most populous country on earth – is that they tend to have younger populations. And we know that young demographics have been quick to adopt music streaming,” said Granite.
“And when you combine this with rising penetration of smartphones, access to high-speed low-cost internet, and the rise of streaming services, there’s a great opportunity for growth for international artists.”
Granite pointed to Universal’s recent partnerships and investments in Pakistan, Nigeria, the UAE and Thailand as examples of how labels are trying to ride (and drive) this growth.
“For this to be sustainable and to have a lasting impact on the music scene in these markets, the commitment of time and resources really has to be long-term,” he said.
“China is a great example of this. It holds tremendous opportunity still, as evidenced by its continued strong growth. But it didn’t just happen overnight. It’s a consequence of sustained investment, local market expertise, and long-term plans working with local partners.”
Leila Oliveira, president of Warner Music Brazil, also talked about global trends during the launch, with a focus on Latin America’s growth.
“Latin America is a cultural powerhouse, and it’s great to see it finally getting the recognition it deserves,” she said.
“If you look at the top 10 markets for consumption, we have two in the top 10 in Brazil and Mexico. I think the region’s journey is still in its infancy too: it’s very exciting for us.”
Labels moving on from the gatekeeper era
Konrad von Löhneysen, founder of independent label Embassy of Music, talked about the changes in the market that see a growing number of artists taking routes to success outside the traditional labels.
Historically, the labels had access to retail, and access to media. But in 2024, artists can record and release music themselves, and have a direct line to fans through social media.
“They have access to the platforms, they have their own channels, they can speak to their fans, but they are completely overwhelmed by it,” said von Löhneysen.
“So our role is not to be the gatekeeper. It’s still a lot that we need to talk to the media and we need to scream to everybody – to retail, to media – about how proud we are with the artists. But we also have to manage and help them with their channels, because they’re completely overwhelmed.”
“I see our role as like the role of a gallery. We display art and we have to make sure that people come and visit our gallery and see how great the artists are. We don’t necessarily need to tamper with the art!”
Vanessa Bosåen, president of Virgin Music Group UK, continued that theme.
“It’s not just the change, it’s the pace of change that we’re seeing now, and I think that’s what can be overwhelming. It’s not just that there’s all these different platforms and mediums that artists have to navigate, it’s that the way we work with them changes month to month. Week to week sometimes,” she said.
“The musician, the artist, has more control than they’ve ever had before, which is a good thing. But it’s a hard thing, and you need the expertise of the industry to really fulfil your potential. There just aren’t enough hours in the day for an artist or an artist team to do all of that by themselves.”
This, in a nutshell, is the label pitch in 2024, and there’s a lot of truth to it – although it’s also true that there are artists who are building the teams to try this themselves, and succeeding.
Local strength and cross-collaborations
Kabiru Bello, VP, global A&R at Warner Music Group talked about the shifting sands of artist development, including the potential for collaboration across some of the emerging global music scenes.
“We are having an Afro-European camp coming up in Madrid in April. We have an Afro-Latin camp coming up in June as well,” he said. “And we are doing these based on making sure that we have authentic, organic cross-collaborations. That’s been key because today’s audience know what is authentic.”
Marie-Anne Robert, MD of Sony Music Entertainment France, talked about the strength of domestic music scenes, meanwhile.
“Streaming has been great news for domestic repertoire and local music scenes. It has provided space for local artists to find their fans and grow their local communities,” she said.
That’s certainly been happening in France, where 17 of the top 20 albums last year were by French artists: hip-hop, pop and other genres.
“There is one thing holding our artists back in France,” she warned. “It’s the streaming penetration rate, which is very low. It’s a huge challenge for us and for the artists. And the recent introduction of a streaming tax in France clearly doesn’t help. It’s important that every player in the industry, and also the government, address that critical topic.”
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