Streaming overcomes music sales in Spain in spite of the slump caused by COVID-19

08-09-2020

The industry maintains in the first half 2020 with an increase of 4% due to the flourishing of platforms

Music consumption on digital streaming platforms has overcome the setback of the industry in Spain during first half 2020. Spanish music industry has managed to resist first half of the year while getting a 3.99% upturn in global sales, despite of the pandemic impact on the physical market, losing almost 45% of revenues as a consequence of closing of shops during confinement and therefore meeting all slump estimates forecasted by Promusicae. Revenues, according to figures compiled by the association (representing almost 95% of the Spanish phonographic industry) reached 145.1 million euros between 1^st January and 30^th June, compared to 139.5 million for the same period 2019. It is a shy increase and it cuts the over 20% growing streak of the industry, but it’s a strong indicator of the strength of the digital models that already represent almost 88% of the income obtained. A positive sign that comes to alleviate the extreme difficulties musicians are facing in 2020.

High digitalisation industry

Not only seems that the boom of streaming (on line listening without download) is far from peaking, but it also consolidates in a more than complicated semester for the world economy in the context of the coronavirus crisis. “Following long years of effort, innovation, adaptation and investment of the industry, we can now boast about having reached an industry with high levels of digitalisation in the distribution of recorded music which, in circumstances as today’s, benefits us and that unfortunately other economic sectors have not been able to achieve. The fact that the industry has proven to be resilient to the Covid crisis in the first half of 2020 is very rewarding and the result of companies’ successful digital strategy last years” declared Promusicae’s President Antonio Guisasola; adding that “in pandemic and home lockdown times, recording companies have virtually been the sole income source for many artists, given the general activity drop and the impossibility to arrange live concerts”.

Figures in detail

Digital music market revenues got a 18.9% growth spurt in Spain, from 106.9 to 127.1 million euros. This improvement is supported by the increase experienced by streaming in all forms, despite being much lower than expected at the beginning of the year.

Regarding audio streaming, subscriptions increased by 17 percentage points (from 77.1 million in 2019 to 90.2 in the newly started semester), and free and ad-supported tiers rocketed above 55.7 percentage points: from 10.3 to 16.1 million. In the judgement of Promusicae’s analysts, these data show that consumers have overwhelmingly incorporated streaming to their consumption habits, but also that the lockdown underpinned music streams by a more circumstantial fan, who makes use of platforms free tiers. However, a call for prudence is done with figures of this modality, as given the dramatic drop in advertising income caused by general economic downturn, it is foreseeable that in the second half of the year they will drop due to the decrease of revenues a single stream generates.

On the other hand, music consumption by means of video streaming (YouTube, Vevo) also sees a substantial improvement of 14.9% (from 14.1 million in H1 2019 to 16.3 million today). This increase is basically founded at the beginning of the year as, in spite of the increase in views observed during the confinement, even a fall in income has been seen during those months. This comes to further enhance the fact that these results remain far from being proportionate revenues regarding the volume of views recorded by these platforms. Once more, the industry highlights the need of a faithful transposition of the EU directive regarding the value gap, in order to establish a legal framework allowing an appropriate remuneration for this use. Lastly, other digital products such as permanent downloads of albums or songs, or mobile products, keep registering falls (of 11% and 20%,  respectively) and remain at almost negligible values.

The flip side of the coin represents the physical market, irrevocably hampered by the temporal shops lockdown in the grips of the health alert. However, behaviour in this area changes considerably regarding the format chosen by consumers. Sales of vinyl albums shrank a modest 7.7%, from 7.8 million in first half 2019 to 7.2 million today; downturn of CD sales is most severe though: from 24.2 to 10.6 million, that means a slump of almost 57 percentage points.

This being, vinyl keeps gaining supporters among music fans that prefer physical sales and already absorbs virtually 40% of sales. CD maintains with 58.2% of market share (video and singles complete the pie with 1.3 and 0.5 percent, respectively).

Globally, physical sales barely reached 18 million euros in Spain between January and June (45 percent less compared to 2019), while digital revenues increased above 127 million (almost 19% more). Imbalance is higher and higher in favour of digital formulas, only five summers after that of 2015 where, for the first time in the history of music in Spain, online revenues shyly overcame those generated by physical CD and vinyl discs.

To conclude, Guisasola points out that “it is absolutely key to put these positive figures into the general context of the music industry, because the slight industry growth this semester cannot detract from the magnitude of the crisis we will be facing in the second half of the year, particularly intense for the live sector, with devastating effects for artists and for everyone involved in the creation of value”.

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