The BPI has delivered a bullish statement on record company trade income today (April 11) as it revealed a 10.6% increase for 2017 at £839.4 million.
While the recorded music market went into a serious decline in the noughties following the 2001 peak of £1.2 billion, the transition to streaming and subsequent turnaround meant the BPI could claim the latest figures represented the fastest level of growth since the Britpop era.
Speaking in the latest issue of Music Week, BPI and BRIT Awards chief executive Geoff Taylor was confident that the continued growth in streaming will boost consumption in terms of both units and revenue.
“What we have seen is really strong growth in premium subscription,” said Taylor. “There is no reason to believe that the value is falling behind the growth in consumption.”
That should calm any fears that labels might lose out on cash as overall physical sales face pressure as more consumers move to streaming. In fact, the growth in income was ahead of the 9.5% increase in music consumption for 2017 reported earlier this year.
Revenues from streaming grew by 41.1% to £388.8m - almost half (46%) of record industry turnover now comes from streaming platforms. CD represents 29.4%, vinyl LP stands at 6.6% and downloads are at 13.5% of the total market. At £112.9m, downloads were down 26.5% on a year ago and have slumped by 60% in four years.
Subscription services were the main driver of last year’s big jump in revenue: labels’ income from subscriptions had a year-on-year increase of 45% to £346.9 million. Growth in ad-supported audio and video streaming was smaller, though between them they contributed £42 million to industry turnover. Once again, the BPI noted the dampening effect on revenue of the “value gap” from platforms such as YouTube, though Google is readying a premium YouTube music service.
UK talent was behind the revenue growth last year, including the phenomenal sales for Ed Sheeran, whose three albums had OCC sales in 2017 of 3.25m. The ÷ LP was the most-consumed on all formats, while Sam Smith, Little Mix, Rag’N’Bone Man, Stormzy and Dua Lipa also sold strongly.
We are likely to see a continuing rise in 2018, with increasing awareness among consumers about the benefits of music streaming
For the first time in recent years, physical sales revenue actually increased in 2017 – up 2.4% to £310.4m – largely thanks to a surge in vinyl LP sales, up 23.6% to £55.1m. CD sales also inched up by 0.7% (£246.9m), although a few key releases by Sheeran, Rag’N’Bone Man and Michael Ball & Alfie Boe played a role in boosting demand. One-off occurrences in 2016 also meant that CD sales were given an artificial boost in 2017, so the BPI does not expect a return to growth for the compact disc.
The ‘Sheeran effect’ also had an impact on Q1 this year. Album Equivalent Sales increased by 4.8% year-on-year to 33,575,058 units – slower growth than the 10.7% recorded in Q1 for 2017. The quarter struggled to surge ahead of the same period last year because of ÷’s 1.4m sales late in Q1 for 2017.
“The underlying trends are extremely positive, and broadly in line with what we saw last year,” said Taylor. “[Q1] was just brought down by the fact that there was an amazing landmark release last year.”
If sales and streams of ÷ were taken out of the equation then AES growth in Q1 would be more like 10%, according to the BPI.
“The changes labels have made to their business models and their investment in new talent have borne fruit with rapid revenue growth in 2017,” Taylor added. “We are likely to see a continuing rise in 2018, with increasing awareness among consumers about the benefits of music streaming, and new developments that are likely to encourage the uptake of subscriptions, such as the launch of YouTube’s premium music service and the growing popularity of smart speakers in the home.”
Taylor also called for government action to remedy the value gap, and stressed that it was “vital” that British musicians can tour freely in the EU following the UK’s exit.