Japan Drags World Music Figures Down After Tough Year

A stark decline in Japan's music sales last year have dragged down the global figures as the Asian country enters the digital transformation.

According global recording industry body IFPI's Digital Music Report, which was released today, international music revenues are down 3.9 percent this year from $US15.652 billion to $US15.029 billion. Japan, which accounts for over a fifth of global revenues, fell by 16.7 percent in 2013 – down from $US3.616 billion to $US3.012 billion.

KEY STATS

- Global revenue down 3.9 percent, mostly due to Japan's 16.7 percent decline
- Streaming revenue up 51 percent
- 28 million paying subscribers to streaming services, up 40 percent on 2012
- Physical sales down 11.7 percent, digital up 4.3 percent
- Global execs "concerned" over Australia's decline

Taking Japan out of the equation the global market is only down 0.1 percent thanks to steadying North American and European markets, and emerging Latin America markets.

In a phone conference to launch the report Max Hole, Chairman and CEO of Universal Music Group International, was given the job of explaining the Japanese decline and painted the world's second biggest music market as one only just entering the digital transformation. With 80 percent of sales still physical and retail price regulation working to keep CD prices high, he said lack of major label control was unique to Japan and causes one of the main hurdles digital service roll-outs.

“The three majors are different [in Japan] because it's Sony, Universal and an independent called Avex [Trax, part of the Avex Group] and they only make up about half the market, the other half of the market is made up of about 40 independents. In a consensual society it's amazingly difficult to build consensus in Japan, which is part of the background for the problems that we find ourselves in.

“For example, iTunes launched in Japan in 2008 and it took four years before they could persuade all of those constituent parts of the artist managers and the record labels to agree to license all of the repertoire into iTunes. And guess what? As soon as they did, 14 months ago, iTunes has exploded in Japan and is the one bright spark in the digital landscape, growing by about 30 percent.”

Hole added, “What we need to do for the future in Japan is learn from the iTunes experience, we need to encourage business partners to launch. The horizon looks bright, we know that Spotify and Google are liable to launch music services during the year.

"There are also some domestic Japanese services that look like they're going to launch and we need to build consensus amongst the industry to make those services what the consumer wants and do away with things like holdbacks and do away with the services are attractive and easy to use.”

Outside of Japan the news was largely positive, with Edgar Berger, President and CEO, international, of Sony Music Entertainment noting that Europe was in growth for the first time iin 12 years. Largely thanks to streaming revenue.

“The top five markets in Europe are all showing positive development," he said. "UK a very encouraging 2.2 percent [growth], France up 1.3 percent, Germany up 1.1 percent, Italy up 8.3 percent and the Netherlands up too, so are Sweden and Norway. What is also great news is that North American is up as a market, roughly half a percent, and Latin American is growing as well – 1.4 percent.”

Streaming and subscription services are hugely prominent in some of those European markets, with revenue from those platforms up 51 percent on 2012's $US734 million to $US1.111 billion in 2013. IFPI's report says that 28 million people around the world are now paying subscribers to streaming services.

In Sweden, Spotify's home country, streaming revenue makes up about 70 percent of the market.

CURRENT STREAMING SERVICES IN AUSTRALIA

7digital, Bandit.fm, Beatport, BigPond Music, Blackberry World, Deezer, Getmusic.com.au, Google Play, Guvera, iHeart, Radio, iTunes, JB Hi Fi NOW, MOG, Music Unlimited, Nokia Mix Radio, Optus, Pandora, rara.com, Rdio, Samsung Music Hub, Songl, Spotify, The InSong, Vevo, VidZone, Xbox Music, YouTube

While streaming is pushing ahead, IFPI CEO Frances Moore stressed that copyright was still a vital part of the music industry's fight for sustainability.

“I think the point that we need to remember is that the music business is built on good copyright legislation and it's a campaign IFPI must continue to push,” she said in the conference.

The sentiments echoed those which she presented to industry at ARIA Week in November.

GLOBAL SALES RANKINGS FOR 2013

ALBUMS

1. One Direction – Midnight Memories (4 million)
2. Eminem – The Marshall Mathers LP2 (3.8 million)
3. Justin Timberlake – The 20/20 Experience (3.6 million)
4. Bruno Mars – Unorthodox Jukebox (3.2 million)
5. Daft Punk – Random Access Memories (3.2 million)
6. Katy Perry – Prism (2.8 million)
7. Michael Bublé – To Be Loved (2.4 million)
8. Imagine Dragons – Night Visions (2.4 million)
9. Lady Gaga – Artpop (2.3 million)
10. Beyoncé – Beyoncé (2.3 million)

SINGLES

1. Robin Thicke featuring T.I. and Pharrell Williams – Blurred Lines (14.8 million)
2. Macklemore & Ryan Lewis featuring Wanz – Thrift Shop (13.4 million)
3. Avicii – Wake Me Up (11.1 million)
4. P!nk featuring Nate Ruess – Just Give Me A Reason (9.9 million)
5. Katy Perry – Roar (9.9 million)
6. Daft Punk featuring Pharrell Williams and Nile Rodgers – Get Lucky (9.3 million)
7. Imagine Dragons – Radioactive (8.6 million)
8. Bruno Mars – When I Was Your Man (8.3 million)
9. will.i.am featuring Britney Spears – Scream & Shout (8.1 million)
10. Rihanna – Stay (7.9 million)