Another year over, and a new one just begun. January is a time when the music industry traditionally takes stock. Having recovered from its riotous Christmas celebrations, it pours itself a tall black coffee and starts going over the sales figures for the previous year. In days like these however, perhaps it should fix itself an altogether stiffer drink? The headline news for Britain’s music business is good. The ten best selling artists in the United Kingdom in 2014 were British, and included Sam Smith, George Ezra, Paolo Nutini, Coldplay, Paloma Faith, One Direction, Olly Murs, Pink Floyd and Take That. Indeed Ed Sheeran’s x was the biggest seller since Adele’s 21, in 2011. Many of these artists have sold extremely well internationally too.
Less happy is the news that overall music sales have stayed fairly static. Normally, sharp suited music industry bean counters would like to see at least some small growth, but total sales were down by value very slightly in 2014 – at £1.03 billion compared to £1.05 billion in 2013, a drop of 1.6%. Whilst this will have raised a few eyebrows, the really surprising news comes when you drill down deeper into the data…
Look further and you begin to spot dramatic shifts in the way Brits are buying music. For example, according to the year-end Official Charts Company stats released by the BPI, album sales have dropped by 7.8%. That is too large a number to be statistically insignificant; a few percentage points here or there wouldn’t count for much, but this tell us that people are becoming less fond of the album format – which of course does not bode well for Compact Disc.
To add insult to injury, the annual market share of physical albums dropped below the halfway mark in 2014. In 2013, they made 51.3% of the total market in 2013, but are now down to 48.8%. Again this is another psychological blow to the ailing silver disc; reports of its demise no longer seem so exaggerated. Of course audiophiles continue to purchase the faithful silver disc but the signs are pointing to the mass market going in a different direction.
So where have all the buyers gone? In a word, streaming. The value of this market rocketed by 65.1% in 2014, with revenues of £175m easily surpassing 2013’s £106m. The number of audio streams doubled, with almost 15 billion songs streamed from digital services like Spotify, Deezer and Google Play, compared with 7.5 billion streams in 2013. Streaming now accounts for 12.6% of all music consumed in the UK – up from 6.2% in 2013.
This echoes recent market data from the United States. Research from Nielsen SoundScan for The Wall Street Journal shows a similar picture across the pond; streaming was up 54% to 164 billion songs. At the same time, full album downloads were down by 9% and individual songs by 12%. The USA is a slightly more conservative market than Britain though, with physical media still accounting for 58.6% of album sales.
All of which tells us that mass music buyers are moving away from physical media – and also no longer feel the need even to ‘own’ the digital music files on their computer hard drive. Instead of going to the trouble of downloading music, people simply want it there, streamed off the Internet, any time, any place, anywhere. This has several implications; firstly, the writing is on the wall for CD, because it fails in two respects – it’s a physical object which many people don’t seem to want to possess anymore, and it also contains an album of music that many appear not to want to listen to, either. People simply aren’t consuming music in the way that it has traditionally been packaged anymore – the idea of buying an entire album and letting it ‘grow on you’, looks increasingly quaint.
A decade or two ago, music industry bean counters would look at the upswing or downturn in sales of this or that artist, and then examine the general pattern of format buying; for example, how quickly was CD replacing vinyl. Now though, we’re in a brave new world where the format is becoming irrelevant and the distinction between a single and an album increasingly no longer matters.
People now feel masters of their own destiny when it comes to music buying; consumers are streaming music track by track simply because they can. This will have implications that few have entirely thought through yet. What we can be sure of, is that streaming is going to get ever bigger – not least because Apple and YouTube are launching major new premium subscription-based streaming services later this year. Such a lot for blurry-eyed music industry executives to get their heads round on a chilly January morning!