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Global Music Markets – Preferred Music Formats and Genres

The music that songwriters create is as broad as the way it is consumed and even appreciated.  Some countries prefer streaming while others want to have a physical CD in their hands. Furthermore, some nations are more inclined to listen to EDM through a paid streaming subscription than download a pop album. Every nation, whether through culture or availability, have a preference as to the genre and medium in which it is listened. Simply put, different countries want to listen to different genres, and the way they purchase and listen to that music varies the same.

To shed light on this topic, we have analyzed the music industry as a whole and the top 5 countries with the lion’s share of music sales (United States, Japan, Germany, United Kingdom and France) to discover what they listen to and whether consumers are more partial toward digital (Downloads & Streaming) or physical (CDs & Vinyl) music formats. We will be using market value and revenue to indicate format preference. Our analysis is based on statistics released in 2015 and 2016.

2015 Global Revenue & Top Genre

When we last touched on digital U.S. revenues in our blog, Streaming – global-revenueThe Future of Physical and Digital Albums, we saw that streaming grew to be the largest contributor to music industry revenues in 2015. We can see similar growth in the industry as a whole.

As the 2016 IFPI Global Music Report shows, streaming revenue increased 45.2% to become the industry’s fastest-growing revenue source at $2.9 billion. Even with downloads falling by 10.5%, digital revenues rose to $6.7 billion, surpassing physical for the first time as the primary revenue stream with 45% of industry revenue (39% for physical revenue). The IFPI also said, “Digital revenues now account for more than half the recorded music market in 19 markets.” Within digital revenue, downloads remain the frontrunner with 45% ($3 billion) of generated revenue while streaming is close behind at 43%. By using these numbers as an indication to preference, we can assume that digital is the preferred form of music consumption. If statistics stay on path, we will continue to see physical and downloads fall as streaming rises to keep digital afloat as the primary listening format.

In regards to music preference, Spotify released a global study of its users and library showing that hip-hop is their most streamed genre. They were able to come to this conclusion by analyzing almost 20 billions songs and the listening trends for over 1000 cities.

Largest Music Markets: Format Consumption / Genre Preference

United States$4.9 Billion Trade Value

When we look at RIAA’s 2016 Mid-Year Shipment and Revenue Statistics, we can clearly see that digital owns the music industry with about 80% market value. Streaming grew by a staggering 57% year-over-year to remain the single largest contributor to U.S. music revenues at 47%.  Digital downloads saw a 17% dip in the first half of 2016 and was accompanied by physical’s decline of 14% since the first half of 2015.

When it comes to the United States’s overall favorite music genre, Rock ranks #1. However, if we look at the top genre based off of the most popular listening format (Streaming), R&B/Hip-Hop takes the cake. Nielsen Music put together a few stats (below) which notes the top genres by overall consumption and specific format.

Conclusion: Digital / Rock

www-nielsen-com-content-dam-corporate-us-en-reports-downloads-2016-reports-2015-year-end-music-report-pdf-pdf-google-chrome-today-at-1-13-55-pm

 

Japan$2.6 Billion Trade Value

physical-salesAccording to IFPI’s 2016 State of the Industry Report, Japan’s music market accounts for 76% of Asia’s trade value, making it the second largest market in the world. Even with digital taking over physical sales globally, physical remains Japan’s primary format choice and contributor to market profits. Physical formats, including CDs and vinyl, contribute to approximately 75% of Japan’s revenue. On the other hand, streaming accounts for less than 5% of revenue but helped the nation achieve its first increase in music sales (3%) in years.

Japan has not necessarily landed on its feet yet with the introduction to digital. As other nations embrace and actually capitalize on market growth, Japan’s cultural apprehension to change, love of collectables and licensing/rights restrictions has hindered their ability to evolve and grow. With the future growth of streaming, it will be interesting to see if it can become more widely accepted without cannibalizing Japan’s physical market.

J-Pop. Probably no surprise that J-Pop is the most popular genre in Japan. If aren’t already familiar, it’s a mixture of modern pop and rock with Japanese sensibilities and influences. Watching HERE is easier than explaining.

Conclusion: Physical / J-Pop

 

Germany – $1.4 Billion Trade Value

Germany’s music market falls in line with Japan’s format preference for physical. 2016 figures reveal that physical formats accounts for 60% of trade revenues while digital only sits at 40%. As CD sales continued to slide (down 9.6%) in the first half of 2016, the market was salvaged by an 88% leap in streaming and 46.2% growth in vinyl, resulting in 3.6% market growth. CD sales currently have 52.3% of market share along with vinyl at 4.3% to make physical the main music format that Germany consumes. We will most likely see a slow decline in physical sales as digital becomes folded into Germany’s purchasing habits.

Rock/pop are lumped together as the most popular genre in Germany. Most of the music on German charts are from American artists but Schlager and traditional folk are alive and well.

Conclusion: Physical / Rock & Pop

 

United Kingdom – $1.3 Billion Trade Valueuk-format-sales

The UK music market saw a 4% increase in 2015 sales with the most help coming from streaming (up 82%). In 2015, streaming made up 22% of music consumption to help digital music formats account for more than 54% of all music sales.

There was a 0.5% drop in physical music sales but the 64% growth in vinyl prevented even further declines. Even with CDs still making up 66% of all album purchases, 2015 sales were down by 3.9%.

The apparent trend is that digital downloads and physical sales will continue to slowly decline as streaming experiences further growth. It will be difficult to predict where the different formats will level off as physical/downloads decline and more streaming consumers get converted into paid subscription accounts.

In conclusion, digital’s 54% market share is enough to be the preferred music format for the United Kingdom.

Pop finally beat out rock to become the most popular music genre in UK. Pop now has the largest market share for album sales at 34.5% and 36% for single sales while rock has 33.2% for albums and 24.3% for singles.

Conclusion: Digital / Pop

 

france-salesFrance – $843 Million Trade Value

According to SNEP & MIDiA, France’s music market has seen better times as it experienced a 7% decline in 2015. Streaming was the only music format that increased around 47% while physical sales declined 16% and downloads by 21%. Streaming was the primary driver for digital’s 14.7% growth but reduced downloads resulted in digital attaining only 36% of market share. Even though physical sales fell, it still owns 42% of France’s music market and continues to be France’s preferred music format.

Once most notably known for their romantic and classical music, France continues to be a pioneer for innovation. Chanson, electronic, hip-hop and dance all play a significant role in French music but French pop is the genre that separates itself from the pack as a mixture of pop with, you guessed it, French influences.

Conclusion: Physical / French Pop

 

 

CONCLUSION

There is a definite battle between physical and digital preferences for the Top 5 countries. However, statistics point to one common occurrence – both physical CDs and digital downloads are in a decline while streaming continues to grow in every country. Streaming has been instrumental in stabilizing, if not improving, market growth for each of the selected countries.  As such, streaming has supported digital in becoming the world’s primary revenue source. Japan, Germany and France still might have physical as the preferred music format, but the encroachment of digital will likely create a niche market for physical music consumption. The future presence of this dated format is still yet to be revealed as the ashes of the digital explosion have yet to settle. In regards to genre, does Pop ever get old?

 

Sources:

  • IFPI Global Music Report 2016
  • Nielsen 2015-year-end-music-report
  • RIAA’s 2015 Year-End Industry Shipment and Revenue Statistics report
  • The Recording Industry Association of Japan (RIAJ)
  • BPI 2015 Music Market Report
  • Music Business Worldwide
  • Japan Times
  • Digital Music News