Jan 17, 2018 - The British music industry started ... The UK music industry sees considerable room for growth, ... Amazo
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United Kingdom UNITED KINGDOM STATS
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the report
The UK music industry sees considerable room for growth, with some estimates that the country could eventually see up to 30m paid subscribers to music streaming services.
Active smartphones Active tablets
64.4m $42,500 59.0m 26.1m 69.7m 35.9m
Source: IFPI
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he British music industry started 2018 with Ed Sheeran riding high in the global charts and also celebrated significant rises in both domestic music spending and consumption. And yet it is hard to shake a feeling of uncertainty among the country’s music business, with the consequences of Brexit likely to become more apparent as 2018 progresses. Figures released by the UK’s Entertainment Retailers’ Association (ERA) at the start of January 2018 revealed that British consumers spent slightly more than £1.2bn on recorded music in 2017, a year-on-year increase of 9.6%; meanwhile, recorded music body the
ERA said that British consumers spent £577.1m on streaming subscriptions in 2017, up 41.9% from 2016’s £406.6m, a figure that more than made up for a 3.4% decline in physical sales and a 23.1% decline in downloads...” BPI simultaneously announced a 9.5% annual increase in music consumption, based on 135.1m “album equivalent sales” (the number of albums or their equivalent streamed or bought in physical or download form). Streaming, unsurprisingly, was at the heart of both rises. ERA said that British consumers spent £577.1m on streaming subscriptions in 2017, up 41.9% from 2016’s £406.6m, a figure that more than made up for a 3.4% decline in physical sales and a 23.1% decline in downloads. The BPI, meanwhile, revealed that Britons streamed 68.1bn songs through audio-streaming services (not, of course, including YouTube) in 2017, up 51.5% year-on-year, with streaming accounting for 50.4% of all music consumption last year. In both cases, the figures show a market whose rate of expansion is accelerating. The 9.6% growth in spending reported by ERA is nearly double the 4.6% growth in 2016 for consumer spending on recorded music in the UK, while British music consumption is growing at its fastest rate
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MARKET PROFILE
RECORDED MUSIC SALES
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the report
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since 1998 (when the BPI reported a 10% annual increase). “The streaming market has come of age,” says Kim Bayley, ERA’s CEO. “If you reverse to a couple of years ago, streaming was for music aficionados. Now it has gone mainstream. We are reaping the rewards of the investment that the streaming services have put in.” The question now is how long this success can continue, with the gloomy shadow of Brexit hanging over the UK’s music industry. On the face of it, there seems to be cause for continued optimism for the industry’s future, especially given the appetite with which British consumers have taken to streaming.
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The streaming market has come of age. If you reverse to a couple of years ago, streaming was for music aficionados. Now it has gone mainstream. We are reaping the rewards of the investment that the streaming services have put in...” – Kim Bayley, ERA
Up-to-date figures for the exact number of music subscribers in the UK are hard to come by. In Spotify UK’s 2016 results – released in October 2017 – the company said it had 2.8m paying subscribers in the UK, up from 1.7m 12 months previously. ERA’s consumer tracking figures – which are based on 2.5k people in the UK – suggest that between 8.1m and 8.3m Britons subscribe to a music streaming service, although this figure counts each individual on a family subscription. Geoff Taylor, CE of the BPI, cites a slightly lower figure of between 7.5m and 8m subscribers, based on industry sources.
Unsurprisingly, Spotify rules the British roost. ERA/Fly Research figures, based on consumer panel research, indicate that among all Britons who stream music (free and paid), 74% have recently used Spotify, 17% have recently used Amazon as part of their Prime subscription, 6% have used Amazon Prime standalone and 14% Apple. Among those who pay to stream, 42% do so with Spotify, 13% with Apple, 26% with Amazon bundled as part of their Prime membership and 5% with Amazon Prime Unlimited. Bayley believes there is room for the number of UK music subscribers to
increase significantly. “As we see it, if you go back to the physical world, about half of the population bought music. We might say that the ceiling is half of the UK population – so 30m subscriptions,” she says. Even this, she adds, might be an understatement, given the broader range of repertoire that streaming offers. Among the new music streamers are a significant number of older consumers, as Taylor explains. “It isn’t just Millennials and Generation Z fuelling [streaming] growth – important though they are to the market; the number of older consumers becoming subscribers is growing fast, helped by free
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trials and telco deals. Data from Kantar shows that, in 2014, 4.4% of consumers aged 45-54 had used a subscription service at some point that year, whereas in 2016 that figure had risen to 13.6%, making these older consumers the fastest growing age group. We believe that dynamic has continued in 2017.”
It isn’t just Millennials and Generation Z fuelling [streaming] growth – important though they are to the market; the number of older consumers becoming subscribers is growing fast, helped by free trials and telco deals....”
the report
– Geoff Taylor, BPI
This subscription growth should, you would imagine, be safe from the impact of Brexit. While leaving the European Union will most likely harm the UK’s economy in the short term, leaving consumers with less money in their pocket, the standard £9.99 monthly price point for subscription streaming in the UK is already one of the world’s highest – not to mention conveniently priced – so it is unlikely to increase, even if the pound falls further. There have even been rather optimistic claims (notably from the Committee on
Standards in Public Life) that the UK may be able to strengthen its copyright laws post-Brexit, including the “safe harbour” principle under which YouTube operates, a prediction that Bayley calls this “wholly unrealistic” considering the globalised world in which we live. For the moment, the impact of Brexit is difficult to predict. Taylor flags up potential problems with manufacturing and touring, post-EU. “Our concerns relate principally to the detail of any new arrangements with the EU, which could impose new financial or administrative burden on
continued... labels, management and artists, from tax to touring,” he says. “We need Government to take these concerns seriously. All physical product is currently manufactured in the EU and any additional financial or logistical burdens bringing that into the UK for sale is a big deal for the viability of releases on small labels.” Paul Pacifico, CEO of UK indie label body AIM, is slightly more optimistic. “There remains a massive spectrum of potential outcomes [of Brexit], so it is way too early to predict the impact,” he says. “However, we are encouraged by messages from politicians across the house that no one wants to see a Britain that is both commercially and culturally isolated from our nearest neighbours and strongest trading partners. Let’s see how we go.” Overall, Pacifico believes the future is positive for British indie labels. “We see new digital tools coming to market with our community in mind that will really start to enable even the smaller labels and self-releasing artists to understand and leverage the data that is out there to target the market and increase engagement, so an increasing sense of democratisation in the digital opportunity,” he says. Taylor concludes that, with music consumption in the UK rising at its fastest rate in nearly 20 years, there is plenty to be optimistic about in the British market as a whole. However, he adds a note of caution. “Whilst the rapid growth of streaming and resilient demand for physical formats gives us confidence for the future, it is important to remember that the music industry still has a long way to go to recover fully,” he says. “Structural
challenges must be overcome if long-term growth is to be sustained.” These, he explains, include addressing the value gap; ensuring that musicians are able to tour freely, even after Britain leaves the EU; and making the UK “the best place to invest in new content by forging an online environment that is safe for consumers and where illegal sites cannot flourish”. “If we do this, the future for British music, which is already one of our leading exports, will be very bright,” Taylor adds. :)
We see new digital tools coming to market with our community in mind that will really start to enable even the smaller labels and self-releasing artists to understand and leverage the data that is out there to target the market and increase engagement...” – Paul Pacifico, AIM
