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Adjust Your Strategy According to the Latest Global Trends

ifpi_digitalmusicAs music continues to shape and color my daily life, what I’m most impressed with is the music industry’s ability to take on the changes and challenges that come its way head on. It makes me proud to work in music, and seeing the innovation and determination that have spawned from the incessant industry developments (and the knowledge at the same time that new developments and twists inevitably lie ahead) inspires me in ways beyond just my professional life.

In that vein, it’s important to look back and review the events of the past year, so there’s always a great buzz in the air when the IFPI Digital Music Report makes its appearance towards the end of Q1 each year. This year’s report is, as always, chock-full of great information, including stats and figures paired with special reports to contextualize the numbers. After combing through it with my orange highlighter, here are the key takeaways of the state of digital music in 2013.


Overall recorded music revenues grew in Europe and Latin America, stabilized in the United States and experienced a sharp 16.7% decline in Japan, bringing global revenues down 3.9% to an estimated US$15 billion.

Not including Japan, global music revenues were only down 0.1%.

Digital revenues worldwide grew by 4.3% in 2013 to US$5.9 billion.

Digital now accounts for 39% of total industry global revenues.

Revenues from music subscription services grew by 51.3%, exceeding US$1 billion:

  • Subscription and ad-supported streaming services now account for 27% of global digital revenues
  • The number of paying subscribers to subscription services increased by 40% to 28 million
  • Revenues from ad-supported streaming services increased by 17.6%, with a large focus on music videos

Digital downloads experienced a slight decline of 2.1%:

  • Still a key revenue stream, downloads account for 67% of global digital revenues
  • The album format is still coveted, and digital album sales remain on an upward curve

Performance rights income more than doubled in 2013, reaching US$1.1 billion globally, an estimated 19% rise. Our Collections services can help you tap into some of that. If you’re interested in signing up, reach out to your client rep!

Synchronization income declined by 3.4%, now accounting for 2.1% of total industry revenue. Our dedicated Sync Licensing team is constantly on the lookout for great opportunities, and we’d love to include more of your music in our pitches to supervisors. Interested? Let your client rep know.

While still on the decline, physical music sales continue to keep a majority share in many major markets, accounting for 51.4% of all global revenues (down from 56.1% in 2012).

Vinyl sales, though still niche, have increased substantially in the US (up 32% in 2013) and in the UK (up 101%!). Record Store Day‘s around the corner, people!

While the industry did experience some decline, it’s encouraging to see digital revenues growing overall, with streaming continuing to establish itself as a viable source of income. The report dives deeper into the impressive growth of the Scandinavian markets, all a few years ahead of the rest of the world in terms of streaming. It’s worth a read, particularly the special report on Sweden, a country which grew from US$144.8 million to US$194.2 million in just three years, with an increased share of digital going from 8% to a whopping 70%, of which subscription services account for 94%. Whew!

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Keep an Ear Out for Earbits

Earbits LogoAccording to the IFPI (International Federation of the Phonographic Industry) Digital Music Report 2013, the music industry’s global revenues increased by 0.3 percent in 2012. Though this may seem negligible, this was the first time that the industry’s global revenues increased since over a decade ago in 1999.

A major contributor to this growth is said to be the burgeoning popularity of subscription-based, music streaming services such as Spotify. Nevertheless, with the growing number of both free and premium users joining these platforms, many critics of this business model as well as rights owners of songs have condemned these services for paying out minimal royalties.

In the midst of these issues, Joey Flores, CEO of Earbits, has found an opportunity in which artists can generate more value for themselves with this new music consumption model. Earbits initially began as an Internet radio platform for SFGate Radio. Artists who were touring in and/or near San Francisco would actually pay the service in exchange for being exposed to fans located in the area. However, through some bouts of trial and error, Flores developed a new foundation for Earbits in which artists receive promotion and fan data in exchange for users being allowed to stream their songs.

Furthermore, there’s another layer to this model, whereby user streams are powered by a point system called “Groovies” (each song costs 10 Groovies to stream), which fans earn in a myriad of ways. These include creating an account on Earbits (500 Groovies), sharing music with friends on Facebook or Twitter (100 Groovies), and Liking an artist’s Facebook page or joining their email list (50 Groovies). Earbits is also planning to attribute points to attending live shows, buying merchandise, as well as joining Google Hangouts with artists. This type of system makes the foundation of payment a matter of social currency as opposed to a monetary one, which is the basis for other streaming services like Spotify, Rdio, and Deezer.

Though Earbits has moved toward the streaming model, it still has radio-style channels on the service that are curated by the team. Users can blend channels together to form their own, but like all Internet radio, it doesn’t allow for the freedom of interactive streaming. However, it costs no Groovies to listen to the channels, which makes it a viable option for those wanting to listen to music but not have to earn any points. It can also be a useful tool to discover music, and then earn/use Groovies to freely listen to the music that you discover and love.

With this innovative model, it appears that both artists and music listeners can benefit. Artists obtain more data on their music listeners as well as drive traffic to their social media outlets, which can lead to listeners spending money on their merchandise. Music listeners consume the music they want by simply engaging with the artist and the artist’s music via social media. Though only time will tell if this model is sustainable, Earbits offers a refreshing, new look on how artists and fans can obtain value from music consumption.

Too Lazy To Read The 2013 IFPI Digital Music Report?

March 4, 2013 Industry Trends 2 Comments

IFPI_LogoAs many of you may know, the 2013 IFPI Digital Music Report was recently released (all 34 pages of it). In case you do not have time to kick your feet up and soak in the various statistics pouring throughout the report, I’ve put together a cheat sheet just for you.

Note that there are several sections in this report (including digital marketing case studies and further reports on the driving forces behind the digital world). For this post, I am focusing solely on the report’s Facts and Figures.

Everyone here at The Orchard is thrilled to see digital trends on an uptick from 2011 to 2012. It’s an encouraging time to work in the digital space and it certainly allows us to look forward to a solid 2013, continuing this pattern of growth, innovation and international expansion.


  • Global Digital Revenue: 2011: 5.1 Billion and in 2012: 5.6 Billion (9% increase) which is 34% of total industry revenues
  • Download sales (both singles and albums) increased 12% in 2012 to 4.3 billion units globally which represents around 70% of global digital revenue
    • Digital album sales grew at more than 2x the pace of single tracks
    • 2.3 billion single track downloads (8% increase since 2011)
    • 201 million digital albums sold (17% increase since 2011)
  • In 2011, major international services were present in 23 countries, today they are in more than 100 countries
  • 62% of internet users use licensed music services to download music
  • Subscription services are now more than 10% of digital revenue — with 20 million paying subscribers (growth of 44%)
  • Paying subscriber numbers for subscription services increased by 44% in 2012
  • Pandora accounts for 8% of all radio listening in the US
  • Music industry recovery can be roughly attributed to 3 key factors:
    • Expansion of digital services
    • Improved quality of existing services (due, in some cases, to competition)
    • New ways of connecting


  • Physical sales decreased in 2011 61% and it is estimated that this number will reach a decrease of 58% for 2012

Performance Rights Income

  • Revenues have grown by 9.3% in 2012 to 1 billion, which accounts for 6% of the total industry revenue globally and 17.8% of global digital sales (and as much as 10% in Europe and Latin America)


  • YouTube has more than 800 million active users globally
  • 9 in 10 of the most watched videos on YouTube are music related

2012 Top Album List – Worldwide

On average 1 in 5 units of the top selling albums (21%) were bought in a digital format with 38% of One Direction’s tween contingent snatching up their album Up All Night digitally.

1. Adele 21 8.3 Million
2. Taylor Swift Red 5.2 Million
3. One Direction Up All Night 4.5 Million
4. One Direction Take Me Home 4.4 Million
5. Lana Del Rey Born To Die 3.4 Million
6. Pink The Truth About Love 2.6 Million
7. Rod Stewart Merry Christmas, Baby 2.6 Million
8. Rihanna Unapologetic 2.3 Million
9. Mumford & Sons Babel 2.3 Million
10. Maroon 5 Overexposed 2.2 Million

2012 Top Singles List – Worldwide

1. Carly Rae Jepsen Call Me Maybe 12.5 Million
2. Gotye Somebody That I Used… 11.8 Million
3. Psy Gangnam Style 9.7 Million
4. Fun We Are Young 9.6 Million
5. Maroon 5 Payphone 9.1 Million
6. Michel Teló* Ai Se Eu Te Pego 7.2 Million
7. Nicki Minaj Starships 7.2 Million
8. Maroon 5 One More Night 6.9 Million
9. Flo Rida Whistle 6.6 Million
10. Flo Rida Wild Ones 6.5 Million

*The first Brazilian solo artist in 5 decades to have a song in the U.S. Billboard Hot 100 chart AND is a client of The Orchard!

Digital Music on the Uprise in 2012

It’s no news that digital music has slowly been claiming a solid market share for the industry. But there are still improvements to be made and growth to be seen.

Worldwide sales of digital music grew by 8% last year to 5.2 billion U.S. dollars as the International Federation of the Phonographic Industry (IFPI) announced in London at the introduction of the Digital Music Report 2012. And it’s not over… The digital music market could continue its expansion in 2012.

In relation to global sales in 2011, the share of digital music grew by 32%. The range of relevant licensed online music services grew within the past year from 23 to 58 countries – mainly due to the rapid expansion of services such as iTunes, Spotify and Deezer.

Despite the positive impact, online piracy is still the biggest hurdle to sustainable growth for music on the Internet.”While concrete measures abroad to curb online piracy show first successes, Germany lags more and more in the enforcement of copyright,” lamented Florian Drücke, Managing Director of the Association of Music Industry in Berlin. “It is imperative that conditions for growth in the digital space also be created in Germany.”

The Digital Music Report shows all global sales of downloads, subscriptions and ad-supported online service on an annually basis and provides an overview of the legal music service on the Internet and displays on the market developments. The 32-page report can be downloaded for free here.

Newsflash: People to Pay for Digital Music; But What Does “Pay” Mean?

January 26, 2012 Industry Trends No Comments

Evolution Sketch by Charles Darwin“Give people a choice, and they might pay for digital music, after all.”
— Peter Kafka, All Things D, January 23, 2012.

Damn, that Peter Kafka at the Wall Street Journal is fast. He beat me to the much-anticipated IFPI (International Federation of the Phonographic Industry) 2012 report on the state of digital, er, phonographic music. Sorry IFPI. But, phonographic? Really?

Kafka’s thoughtful piece is titled Digital Music Sales Grow Worldwide, but Big Music Still Frets About Pirates and is about, well, that. I decided to avoid a re-hash and use his piece as a jumping off point…

His opening line struck me. “Give people a choice, and they might pay for digital music, after all.” Not to get all Bill Clinton but it depends on what your definition of “pay” is. As an industry, we spend a lot of time slicing up pie charts, demonstrating how much of the digital business is represented by download for pay, streaming music services, hybrid outlets such as YouTube and other models. Always lurking just off-slide from the aforementioned pie chart are the pirates. Ahhh, the pirates. Big week for them last week…

… Continue Reading

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