An annual report from the International Federation of the Phonographic Industry (IFPI) showed a significant growth in revenues from digital formats such as streaming in 2015, which overtook sales of physical formats for the first time in the industry.
The revenues in general for the music industry increased 3.2 percent, near $15 billion in total. This is the first time in over a decade that the industry shows growth rather than a decline in its incomes, according to the IFPI.
In the report, the organization highlighted the 10.2 percent rise in digital revenues to $6.7 billion. This represents a 45.2 percent for digital revenues compared to the 39 percent of physical sales, making them, for the first time, more valuable.
The return to growth, in general, is not an accident, it is the result of tireless work and adaptation. They reflected an industry that has adapted to the digital age and emerged stronger and smarter, commented Frances Moore, CEO at IFPI.
In addition, the growth in digital revenues can be attached to the spread of smartphones, the increased availability of high-quality subscription services and the connected fans migrating onto licenced music services, the report showed.
The value gap
The explosion in music consumption, however, has not been returned in a fair remuneration to artists and record labels, due to a “market distortion” resulting in a value gap that is depriving artists and labels of a fair return for their work.
The report showed that the industry’s efforts have paid off and brought music closer to a sustainable growth not seen for at least 20 years, but even though there is good news, work is still needed to be done.
“Exploding music consumption is not enough, value returned to the music community is vital too if we are to fund future innovation and creativity,” said Moore. “That is why our sector is united in looking for action on the value gap,” she added.