recorded music
The recorded music market in Europe is at risk of falling behind other global regions unless regulators enforce tougher protections for artists, creators and rightsholders, according to a new report from international labels trade body IFPI.
In Europe, music sales grew to over $8 billion in 2023, representing more than a quarter of global revenues (28.1%) and maintaining the continent’s long-held status as the second largest region in the world for recorded music sales behind the U.S. and Canada, according to IFPI data.
Europe’s prominent position is coming under threat, however, from other music markets that are growing at faster rates, states IFPI’s first-ever report focused specifically on recorded music in the European Union, published Tuesday (Sept. 10).
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Last year, music sales among the 27 members of the European Union trading block — which the U.K. exited in 2020 — grew by 8.7% to 5.2 billion euros ($5.7 billion), says IFPI. While that places the EU below only the U.S. in total revenue terms, several other international markets are significantly outpacing its growth rate thanks to the widespread global adoption of music streaming services.
Examples cited by IFPI include China, which grew music sales by more than 25% to 1.3 billion euro ($1.4 billion) in 2023; Sub-Saharan Africa, up 25% to 85 million euros ($93 million); Mexico, up 18% to 454 million euros ($500 million); and the Middle East and North Africa (MENA), which climbed 14% to 102 million euro ($112 million).
Although all of those territories are developing from far lower bases than mature EU markets such as France and Germany — and all have some way to go before they come close to surpassing EU music sales — IFPI said their rapid growth represents “warning signs” that the region is facing strong competition from its global competitors. Notably, some of those fast-growing music markets were virtually non-existent just over a decade ago.
The report, which is titled “Music in the EU: A Global Opportunity,” comes three months after European Parliament elections and ahead of the unveiling of the new European Commission, the EU’s executive branch, which is expected to take place later this month.
The new cohort of Brussels politicians will be responsible for monitoring and enforcing already passed EU legislation such as the Digital Services Act, Digital Markets Act and the AI Act, which all impact the music business to varying degrees, in some instances significantly.
“The EU is a vitally important place for music,” said IFPI CEO Victoria Oakley in a statement. “However, the data in this report shows us that other parts of the world are developing and growing rapidly and the EU risks falling behind.”
To ensure that the EU’s music market stays competitive, Oakley called on European policymakers to provide “legal certainty and protection for music rightsholders, supporting the development of responsible and ethical AI and creating a competitive playing field on which today’s dynamic music sector can evolve.”
“Today, European music faces great risk but also great opportunity,” Oakley continued. “How policymakers address these issues will help determine its future.”
An accompanying press release from IFPI said its research sets out how policymakers can help “secure a positive future for music at what is a pivotal time for music in Europe” amidst rising global competition.The report notes that when adjusted for inflation, recorded music revenue in the EU last year was only 61% of where they were in 2001, the music industry’s revenue peak.
Specific areas in which IFPI says policymakers can support creators and rightsholders include effective implementation of the EU’s AI Act, which passed earlier this year, and upholding existing EU copyright laws preventing the use of copyright-protected works and music from being used for training AI systems without prior consent. AI developers must also maintain and provide records of the materials used in training and developing generative AI models that enable rightsholders to exercise and enforce their rights, says IFPI.
When it comes to individual EU markets, the report highlights the continued strong performance of domestic acts in their home countries. In the 22 EU markets where IFPI collects yearly chart data, on average, 60% of the Top 10s were tracks by domestic artists in 2023, compared to only 47% in non-EU markets.
EU markets fared less well in terms of top 10 global chart exports, which were once again dominated by U.S. artists like Miley Cyrus, SZA and Taylor Swift last year, though Latin and Central American artists, most notably from Columbia and Puerto Rico, also performed well.
A rebound in performing rights and heightened demand for physical product helped the value of global music copyright reach $41.5 billion in 2022, surpassing the $40 billion mark for the first time, according to a report released Monday (Nov. 6).
While record labels commanded a majority of the global market, the $5 billion annual increase was “evenly shared” between recorded music and music publishing, noted the report’s author, Will Page. The 2022 tally represented a 16% increase at constant currency — and currency fluctuations played a major role. Page restated the value of global music copyright in 2021 to $36.9 billion from $39.6 billion due to updated foreign exchange rates. Almost $2 billion of the nearly $3 billion restatement came from IFPI’s global recorded music revenues, while about $1 billion of the adjustment came from music publishing.
Record labels accounted for $26 billion of the $41.5 billion sum, a 62.7% share that was lower than both 2021 (64.6%) and 2020 (63.5%). Since 2020, a slowdown in labels’ digital revenue has been offset by more than $1 billion in growth from physical formats from “accelerating demand for CDs in Asia” and an “insatiable need” for vinyl records in Europe and the United States: “And this isn’t going to slow down,” predicts Page.
Music publishers increased their share of the global total to 37.3%. Part of the reason publishers outperformed labels could be from what Page calls a “lag effect,” where labels tend to license to new streaming platforms before publishers. Another potential reason for publishers’ improvement is early accruals from the royalty increase in the United States from the Copyright Royalty Board, “a decision that will fully crystalize when the 2023 figures are calculated,” writes Page.
Publishers’ direct revenue rose from $3.7 billion to $4.1 billion but accounted for a smaller 9.9% share of total revenue, down from 10.2% in 2021. Songwriter CMOs rebounded with a 27.5% share of total revenue worth $11.4 billion, after taking a 25.3% share worth $9.2 billion in 2021 and a 27.2% share worth $8.5 billion in 2020. Page attributes CMOs’ improvement to music’s return to the live space after the pandemic, which drives gains in public performance royalties. Also, “inflation is embedded into blanket licenses,” wrote Page, meaning higher prices increase collections when the royalties are calculated as a percentage of revenue. Finally, as CISAC’s Gadi Oron has noted, CMOs have improved collections through a combination of content identification and improved licensing terms.
There’s a chance Page’s $41.5 billion figure is low. The estimate incorporates global recording revenue tallied by the trade group IFPI. But as Page notes in his report, MIDiA Research “has arguably done more research” on segments undercounted by IFPI’s various members, including the do-it-yourself artists who account for 10% of global streams, indie labels and the South Korean market. MIDiA Research put the value of global recorded music in 2022 at $18.9 billion, about 8% greater than the IFPI’s figure of $17.5 billion.
If MIDiA’s methodology is correct, says Page, the value of global copyright is closer to $45 billion than $40 billion and could be $50 billion sooner than people expect. When the music business hits that threshold, it will have doubled since Page’s 2014 report put the global value of music copyright at $25 billion.
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