06-09-2018

The digital music market makes up almost three quarters of music sales in Spain

Music sales generate revenue of €107.6 million in the first half of the year, an increase of 0.36% compared to same period in 2017

Revenue from paid subscription streaming saw a 53% increase

Music digital consumption is an unstoppable reality in the Spanish market. If the “sorpasso” of virtual formats compared to physical ones (compact discs and vinyls), took place in the summer of 2015, the digital modality has reached, during the first semester of 2018, 73.5% of the sector’s revenue, which represents an abysmal gap between the two formats. Spanish consumers spent during the first six months a total of 107.6 million Euros in recorded music, a slight improvement (0.36% more) with respect to the same period of the previous year.

Spanish phonographic industry, hit rock bottom in 2014, after 12 dramatic years of uninterrupted loses in the sector. Figures in 2001 (742 million Euros in sales at the end of the year), are difficult to be repeatable, but in the last four periods, both balances and perception are rather encouraging and the first results this 2018 show that this contribute to the consolidation in an ascending line, although the improvement is very slight: less than four tenths per cent.

The slight increase has much to do with the downfall of the free streaming tier (supported by advertising). Last signed agreements by different record companies with the most important streaming service providers, adjusted strictly the margin revenue in this modality for artists and music producers in 2017. If this digital music’s consumption generated 21.8 million in the first half of last year, that average has been reduced to only 8.4 million in the just concluded semester, in this case, the decrease represents a striking 62.7%. On the other hand, permanent downloads (those the user keeps as the digital files in its computer or device) also have been reduced in an important 23%, comparing 5.3 to only 4.1 million.

Nevertheless, the streaming phenomenon, online listening with no downloads, is a consolidated and unstoppable reality, to the extent that the paid version (in exchange for a monthly fee) of platforms like Spotify, Apple Music, Deezer, Napster, Tidal and similar, showed in Spain, in this first semester a striking increase of 52.9%: from generating a revenue of 34.6 million along the first six months of 2017 to 52.8 million in the just closed period.

Antonio Guisasola, President of PROMUSICAE, takes a positive view about this assessment: “one of the priorities of our sector is to encourage the benefits of the paid subscriptions in the new music services and it is gratifying to see these positive results. 

Consumers accept normally to pay monthly a small amount of money for all available music and are happy to enjoy it intensively”. He added that: “we believe this a consumption music model which is going satisfactorily ahead and which will be the entrance door for revenue recovery for the industry”. However, Antonio Guisasola was worried about the generated revenue for music visualization in video platforms like Youtube. “In this first period of the year, the market has grown from 10.8 to 11.5 million Euros. It is 6.9% more than last year, but we should not be deceived, a priori, for these positive figures. Music is a great content and very popular on these platforms and it represents the first source of revenue of music consumption in streaming, but we are far away from receiving a fair remuneration. Both PROMUSICAE and our International Phonographic Organization (IFPI) claim for the ending of this value gap according to which thousands of millions of videostreams only generate 15.9% of the total revenue coming from streaming”.

The figures launched today, prove that there is a sector of music consumers, who maintain themselves faithful to physical format. This is the case of vinyl consumers (being vinyls the ones preferred among big lovers of music) which again lies in stand out and maintain the world trend strong and alive, also in our country, of the recorded music market. Between the first of January and the 30th June, 2018, Lps sales in Spain accounted for 5.1 million of Euros, compared to 4.5 million a year ago, which represents an increase in this portion of the sector of 13% and an important 4.7% of the music market total. In parallel, the CDs’ market niche is still being reduced. Spaniards spent 22 million in this format compared to the 27.1 million in 2017. This decrease, in percentage terms, represents an 18.6%. In the same period, the music video niche grew 54.2%, especially, thanks to the success of DVD sales of Operación Triunfo 2017, The Concert.

In the total revenue of this first semester, digital music generated 79.1 million Euros compared to 28.5 million in physical format. Revenue from online modalities increase 6% (from 74.5 to 79.1 million), meanwhile physical format’s revenue fall 12.65% (from 32.6 to 28.5 million). The global distribution of the cake clearly shifted in favor of digital formats: 73.5% compared to 26.5% and the difference is getting bigger following the world trend, even above average, (average in the rest of countries is 55%, according to the Global Music Report, 2017).

In conclusion, in Spain, in the first semester of 2018, digital recorded music makes up almost three quarters of music sales (73.5%). 66.9% of that portion are revenue from paid subscriptions. With reference to the physical market, CD represents 77.3% and vinyls 17.9%. It is still a modest share, but it plays a meaningful role. Six year ago, LPs seemed to be in risk of disappearing, with residual sales.