Reports of a full recovery by the record business may be exaggerated.
A recent annual report from the International Federation of the Phonographic Industry (IFPI) trumpets global recorded music revenue swelling in 2018 for the fourth consecutive year, up 9.7% over 2017 figures, with the highest rate of growth since the recording industry trade group began tracking in 1997 and the tallest total sales since 2007 when revenues reached $18.4 billion.
The industry indeed is recuperating steadily from a near-death experience in the mid-2000s, when illegal file sharing devastated record sales. But worldwide recording revenue today is only a fraction of what it was at its peak in 1999. In that banner year, the industry claimed some $39 billion in global revenue, according to the IFPI. In today’s dollars, the 1999 sum approaches $60 billion, two thirds higher than 2018’s revenue harvest of $19.1 billion.
Of course, distribution costs in the digital era are far below what they were in the age of physical product like CDs, vinyl and cassettes, leading to better net profits today. The cost of releasing a recording on streaming services like Spotify and Apple Music is next to nil compared to the nut distributors had to cover for shipping and storage pre-Millennium. So, $19.1 billion looks larger considering the lower expenses and less extravagant recording and marketing budgets of today’s belt-tightened music industry, compared to the jet-setting 1990s.
Those who stayed in the music business through the dark days of the last decade tend to be die-hard music lovers. Some former label executives, music lawyers, and creators who pronounced the record business flat-lined in the 2000s fled for fields that looked greener, like finance, tech, and real estate. This exodus has left more opportunities for those who weathered the storm. Today the forecast is sunny and major label A&R (artists and repertoire) departments are spending more than in past years to sign and record young creators and to attract their indie-leaning audiences back to mainstream imprints of Universal Music Group, Sony Music Entertainment, and Warner Music Group.
Whether the April IFPI report marks the beginning of a complete comeback or the middle of a modest rebound will depend largely on streaming saturation around the globe. That is, how many more Asian, Latin American and African music fans will pay monthly streaming subscription fees, suggests the IFPI report. By the end of 2018, the trade group estimated 255 million users of paid subscription accounts worldwide, with monthly fees varying widely across the globe. It would take at least a billion streaming subscribers paying an average of $5 per month to restore recording revenue back to its glory days, a price too dear for many of the masses the industry needs to sign up before it can party like it’s 1999.
At the turn of the millennium, recording revenue was sky high because digital piracy had not yet metastasized but also because of old school marketing methods, like almost killing off the “singles” market in order to push fans to purchase whole albums when all they wanted was the hit song. Fans got their revenge in the early 2000s, when Napster, Pirate Bay, and other boat rockers nearly capsized the recorded music business. In today’s streaming world, the album format is waning, and majors are releasing more singles and EPs to younger fans.
Some swear the record business will never get back to its 1999 partying self. But, even so, the record business is not the whole of the music business. Live performance has been a relatively stable business since the days of the Troubadour. Not the fabled nightclub in West Hollywood but the traveling musician of the Middle Ages. The recorded music¬¬ trade — born in the 1880s with the sale of scratchy wax cylinders played on phonographs and graphophones – is a relatively recent development, a small float in the long parade of music history.
Others predict record business income will blow away 1999’s benchmark in coming years, as streaming subscribers approach a billion worldwide, who will access music, video, and movies through far faster smart devices. Fortune tellers at music industry events have lately prophesied future IFPI annual reports ten times higher than today, in the $150-200 billion range.
One thing is certain: the recording industry loves a parade and the IFPI’s latest report sounds more like an optimistic Scott Joplin march than a New Orleans jazz funeral strut.