Music Sales Are Growing For the First Time This Century: Here's Why

More

Global music sales rose by 0.3 percent to $16.5 billion in 2012. While decimal growth is not typically a respectable cause for jubilee, this marks the first good year for the industry since 1999. Music's 21st-century renaissance boils down to four factors: Better mobile technology, a growing global middle class, more music-listening options, and an effective crackdown on piracy that is making paid music a more attractive option.

Perhaps this was a dead-cat bounce for an industry flayed by Napster, BitTorrent, and other file-sharing programs. But here's the case that music's comeback is for real -- with help from the IFPI Digital Music Report.

MUSIC GROWING EVERYWHERE (EXCEPT IN AMERICA)

Digital music (which accounts for about 1/3 of global music sales, and more than 1/2 of U.S. sales) aren't just rising. They're accelerating. Downloads, subscriptions and ad-supported music sales all growing. Online sales are following on the heels of smartphone penetration growth around the world. All good news there, but at least half of the top 20 markets aren't growing. Chief among them: the United States, where music sales are still falling.

Screen Shot 2013-02-26 at 9.17.16 AM.png

SUBSCRIPTIONS vs. DOWNLOADS AROUND THE WORLD

When Napster debuted, there was no iTunes, no YouTube, and no Spotify. But in the last 13 years, the market for paid downloads, ad-supported music, and subscription services has blossomed. Subscription services alone have grown 44 percent since 2011.

Different countries have different ways of getting to Internet songs. More Swedish people are familiar with Spotify (96%) than Americans are familiar with iTunes (84%), whereas French use the subscription service Deezer, which I have never heard of.

Screen Shot 2013-02-26 at 9.17.29 AM.png

LISTENING IN OUR OWN LANGUAGE

The music market is global. But popular music is still local. Even though all of the top ten global albums and nine of the top ten global singles of 2012 were in English, Europeans still seem to prefer songs in their own languages. More than 60 percent of the top albums in key European countries were artists from that country.

Screen Shot 2013-02-26 at 9.23.48 AM.png

THE PIRATES ARE LOSING

The last decade in the music industry has been a classic lesson in microeconomics. When the supply of digital music exploded with Napster, the price of songs dropped to zero and the music industry collapsed. As the government cracked down on file-sharing sites, the cost (and risk) of downloading illegally rose, and more consumers have shifted to legal downloads and subscriptions. 2012 was a banner year in crackdowns, with the FBI shutting down the top cyberlocker company Megaupload and big BitTorrent sites like BTJunkie.

Megaupload alone generated $175 million in revenues. That's half of global digital music growth between 2010 and 2011. Last year, cyberlocker use has fallen 18 percent. The black market for music is still enormous. But it's shrinking fast while the options for legal music (and the number of devices to play that music on) are growing.

Screen Shot 2013-02-26 at 9.27.34 AM.png

>

Jump to comments
Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

Get Today's Top Stories in Your Inbox (preview)

Sad Desk Lunch: Is This How You Want to Die?

How to avoid working through lunch, and diseases related to social isolation.


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

Where Time Comes From

The clocks that coordinate your cellphone, GPS, and more

Video

Computer Vision Syndrome and You

Save your eyes. Take breaks.

Video

What Happens in 60 Seconds

Quantifying human activity around the world

Writers

Up
Down

More in Business

Just In