music business basics - a midem presentation
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Music Business
Basics?
Bruno Crolot, Head of midem, Reed MIDEM (France)
@bcrolot | @midem
Part 1
Music, Brands &
Technologies Interact
Together in New Ways
7 of the top ten accounts are musicians
1/3 of all videos are music-related
9 of the top ten videos are music videos, summing
up to almost 5 billion plays
(Gangnam Style by PSY is 3rd as of Oct. 22nd)
74% of music fans and 67%
of labels agree that more fans will
buy directly from the artists
Over 5M artists now meet,
engage & transact over online
communities
Source: Music Supported Here / The Oatmeal
97% of people think that music can
strengthen their brand
91% of consumers accept or are
positive about brand involvement in
music entertainment and culture
Source: Sounds Like Branding / Frukt
New Players
“We're using music now in every way,
shape or form. We're innovating, working
with startups, having writers write,
having artists approach us, directors
approach us, big stars wanting to do stuff
for us”
Kevin Roberts, CEO, Saatchi & Saatchi
midem 2012
“There’s a new currency that’s
emerging in the music industry,
which is how many people have
shared a given song or a given
artist on Facebook”
Dan Rose, VP of Partnerships, Facebook
midem 2012
“This gives me a
platform that I would
never be afforded
maybe by Columbia
Records for doing a
song. I have to make
it great, because this
is maybe the biggest
exposure I’ll have for
a song”
Mark Ronson, Artist, Producer and DJ
midem 2012
A Changing Industry
from a Complex Value
Chain…
Source: Reed MIDEM
Source: Reed MIDEM
Towards a
Music
Ecosystem
Part 2
Basics of the
Music Ecosystem
The Global Business is
Thriving?
Source: IFPI / Floor64
The Broader Music Industry Value (Billions)
global recorded
music sales US$
billions, trade
value)
-40% since 1999
132
139 150
152
140
168
0
25
50
75
100
125
150
175
200
2005 2006 2007 2008 2009 2010
Other Revenues
Performance Rights
Digital
Physical
Source: IFPI Estimates / Music 3.0
The Broader Music Industry Value in 2010 (billions)
Radio advertising revenues 19,4%
Recorded music retail sales 16,6%
Audio home systems 14,9%
Portable digital players 14,4%
Live Music sector 12,9%
Music instrument sales 9,8%
Music TV/mags advertising revenues
5,4%
Music related video games sales 2,9%
Publishing 2,7%
Performance rights market 1,0%
Focus on Recording
Source: IFPI / Nielsen
Music Sales in 2011-2012
In 2011:
Album sales up for the first time since 2004: +3.2% w/ +19,5% digital album
sales
Overall music sales break 1.6 billion mark for first time
But global revenue is down 3%
South Korea
grew by 6,4 % in
2011, following
a 12% increase
in 2010
Overall Music Sales Digital Album Sales (Transactions, Albums, Singles, Music Video, Digital
Tracks - In Millions) (In Millions)
Units Sold 2012 2011 % CHG. Units Sold 2012 2011 % CHG.
853,2 820,5 +4,0% 57,2 50,3 +13,8%
Total Album Sales Digital Track Sales (Includes CD, Cassette, LP/Vinyl, Digital Albums - In
Millions) (In Millions)
Units Sold 2012 2011 % CHG. Units Sold 2012 2011 % CHG.
150,5 155,5 -3,2% 698,0 660,8 +5,6%
2012 U.S. MID-YEAR SALES (Source: Nielsen SoundScan)
Source: IFPI
Digital Market – Digital Services
Digital services:
Downloads
Streaming
Internet radio
Music video
Mobile bundles
70% K-pop revenue
comes through digital
channels, vs 55%
across the market as
a whole.
South Korea Placement in
Global Market
2007 23
2009 14
2011 11
500 legitimate music
services worldwide offering up to
20 million tracks
Digital Market – Download Services
Source: IFPI / Nielsen
Digital singles are the
main source of incomes.
The combined sales of
the top ten digital
singles grew by 11% in
2011.
Digital albums sales
grew by 19,5% in 2011.
Mumford & Sons sell
600,000 units of their
new album in first week
Source: Evolver.fm / IFPI / Strategy Analytics / Gartner
Digital Market – Revenues
Country Revenues from
digital sources
China 71%
South Korea 53%
USA 52%
Worldwide Online Music Revenues in 2011
Ringtones still make 4x
more money than:
Subscription to
account for 30% in
2015.
+
+
Download Services 57,3%
Personalization Services
(ringtones) 34,3%
Subscription Services
8,4%
Source: Flurry Analytics / Ipsos & Music Matters
Digital Market – Music Apps
Music apps:
Usage increased 530%
in 2011
9,000 music apps in
iTunes (2% of the
store)
For creation and
consumption
Users who downloaded music apps in 2012
Global – 26%
South Korea – 39%
Music app usage
Focus on Live Music
Source: eMarketer / Pollstar
Worldwide Live Music / Concert Revenues 2006-2011
(US$ billions)
16,6
18,1
19,4
20,8
22,2
23,5
0
5
10
15
20
25
2006 2007 2008 2009 2010 2011
+3.7%
in H1 2012
We see increasing
demand from other
markets such as
South Korea, China
and Indonesia… Alan Ridgeway
Live Nation – April 2012
Focus on
Rights Collection
Source: CISAC
Collection Sets a New Record in 2010
ASIA-PACIFIC
€1.151 billion
collected
15.3% of the total
royalties
12% increase in
royalties (vs 2009)
Total collections in 2010: €7.545 billion
+5.5% worldwide year-on-year growth
Part 3
New Models & Trends
Tech Players
Rovio & music music hack days
Source: Rovio / Reed MIDEM
Brand Partnerships
Coca-Cola & Music Dealers Innovative Partnerships
Source: Reed MIDEM / Sugarland at Amex Unstaged
Direct-to-Fan
Zoë Keating Joss Stone
Source: Reed MIDEM
Connected by
Music
Industry
Meetings
Evolution
Music Companies
Cutting-edge Technologies
Brands & Agencies
Artists
Selah Sue
Pete
Wentz
Damian Kulash
Patricia Kaas
Imany
Mark Ronson Pharell
Williams Joss Stone Amanda Palmer
David Guetta
Alison
Balsom
midem 2013 trailer
26-29 January 2013, Cannes, France
midem is the place where music makers, cutting-edge technologies,
brands & talent come together to enrich the passionate relationship
between people & music, transform audience engagement & form
new business connections.
Contact us: [email protected]
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