Summary of the Key figures for 2017
- Global revenue growth: +8.1%
- Digital share of global revenues: 54%
- Digital revenue growth: +19.1%
- Growth in streaming revenues: +41.1%
- Physical revenues: -5.4%
- Download revenue: -20.5%
History of the music industry
At the beginning of the music industry’s digitalization, numerous record label and brick-and-mortar record store suffered or in the worst-case closed. Consumers got an easier access to songs and they have also many way to produce and upload their creation. In addition, it was hard to track the music industry’s growth.
In China, where the culture of paying for music is still undeveloped as this topic hasn’t been discussed a lot, the progress is slow. The piracy represented also a matter for long time. However, in recent years consumers seem to be gradually accustomated with subscription or digital album purchases.
In 2014, the market increased in value by 5.6%, its first growth after 15 years of significant revenue decline in the global market. This increase is helped by streaming revenues, creating great hopes for the future development in this industry as labels and services roll out initiatives to establish a paid model for music.
In 2017, according to the IFPI’s Global Music Report 2018, the market grew by 8,1%, showing total revenues of US$ 17.3 billion. Its third consecutive year of growth. Frances Moores, chief executive of IFPI said “It’s been another incredibly exciting year for music. The work and investment from record companies is enabling brilliant, diverse artists to break through to fans around the world, soundtracking their lives and bringing them increasingly rich and immersive ways to enjoy the music they love”.
However, “the race is far from won”. Moore explained: “Record companies are continuing in their efforts to put the industry back onto a stable path and, to that end, we are continuing our campaign to fix the value gap. This is not just essential for music to thrive in today’s global market, but to create the right – fair – environment for it to do so in the future.
Digitalization is saving music industry
The consumption behavior has changed a lot in this market, some physical supports are on the way out or to became only using by the minority of the population. Not only artists but the digital innovations and tools are enriching the experience of music fans all over the world.
This digital growth was driven by streaming revenues growth (+41,1%). Record companies have also worked to foster growth in the system to deliver, manage and track the global distribution of music. Multiples services and platforms allow fans to access and discover new music.
While now consumers have access more easily to listen music, as we said before, they are also gradually accepting to pay for it. The digitalization has an indirect effect, the one to bring and share information widely. Consumers became more educated with musician’s right and intellectual property matter which is pushing them to pay more attention and to be more indulgent with music purchases. The download revenue decreased by 20,5% in 2017.
Success of Katy Perry’s latest album “Witness” online
Katy Perry’s new album “witness”, went live on NetEase cloud music (网易云音乐) and other music platforms, priced at 20 yuan/record. Otherwise, there is also the possibility to purchase a single, priced at 2 yuan each one. After 10 days on the line, “witness” has already sold more than 550,000 songs just on NetEase cloud music, and the results are pleasurable.
Players on Digital music market
The “2018 Global Music Report” pointed out also that the income of the Chinese music market has increased by 35.3%, two times higher than last year, ranking among the top ten in the world for the first time.
In China, three major internet companies: Alibaba, CMC (China Music Corporation) and Tencent have made several acquisitions to dominate digital music distribution. They also work with major recording companies such as Sony and Warner. Stu Bergen, president of Warner Recorded Music says: “Our partnership with Tencent is aimed at harnessing the incredible demand for music in one of the world’s most rapidly changing territories. Together we can help create a sustainable, legitimate music ecosystem that encourages artistry and entrepreneurial investment.”
With Alibaba backing the XiaMi internet portal and CMC-Tencent operating the Kuwo and Kugou music services, consumer’s main choices to listen music, the music distribution is a bit centralized in China. In a strategic side, to be present on these platforms, you could reach your target music fans consumers.
China’s music industry is at an evolution stage where there is a lot of thing to develop. Despite the recent uplift, revenues for 2017 are still only 68.4% of the market’s peak in 1999. The digitalization hasn’t spread out all its potential. Music have always been in Chinese people daily life.
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Read also :
China’s music market remains with enormous untapped potential. Its huge online user base (more than 75% of Chinese listens to music) and growing number of licensed digital services are driving the market development. Technology giants like Alibaba and Tencent Co. also try to get benefits from their music & entertainment apps, chasing after latest music market trends new consumers’ habits.
This article will give you an overview of the music market in China. How digitalization took the ground and is “saving” the music industry.