Grappling with the issues facing the industry

Martin CullingfordMon 20th June 2016

Streaming is changing the record business - and the labels are working out how to adjust

Before beginning this, I turned to see what I’d written a year ago when I last returned from Classical:NEXT. This, by way of reminder, is the annual gathering of the classical industry – labels, distributors, representatives of artists and venues – where plans are shared, ideas aired, and deals done. Much holds true a year on. Readers have much to look forward to with regards to forthcoming releases. There is still as much passion and belief as ever in the importance of making music, and making that music available as widely as possible, and for posterity.

Equally familar was that the changes brought about by digital delivery of music – be that downloading or streaming – dominated many a conversation. But whereas, a year ago, the debate was about how streaming was going to change our industry, a year on it’s no longer about looking ahead. That change is here. Recent statistics from the IFPI, the international record industry organisation, reveal that across the entirety of music – from pop to polyphony – digital music has now overtaken physical (ie CDs) in terms of industry revenue, and that within that, streaming is about to overtake downloads. Streaming revenues are now four times what they were just five years ago, and that’s helped the overall industry to grow by 3.2%.

That’s a snapshot of a complicated picture of course – there are markets, such as Germany and Japan, where physical sales are much stronger than digital. There’s also the gulf between what labels earn from paid subscription services and the much lower figure from free, ad-funded services, despite the much higher usage of the latter. That needs addressing: recordings cost money to make, and without income labels cannot take the risks with new artists and repertoire which are a crucial catalyst of creativity. I also believe that it’s important to maintain a link in people’s minds between creativity and cost. But it’s worth noting that there are now an estimated 68m people paying to subscribe to a streaming service – up from 41m just a year ago.   

It’s usual at this point to insert the caveat that classical music is different to other forms of music in the way people collect it and explore it. But while acknowledging some truth in that, I’d also like to ask: why should that necessarily be? I chaired a conference session on streaming at Classical:NEXT, and sitting on my panel was the CEO of X5 Music, a company which presents classical music through digital compilations and playlists, and which this year expects to deliver an extraordinary 600m classical streams. His view is that classical music, if part of a non-genre-specific streaming service, becomes music like any other – that tomorrow’s classical listeners look, well, just like anybody else. That’s an inspiring thought. Less than a week later, X5 Music was bought by Warner Music Group: quite a statement of belief in the importance of streaming from a major label.

I’m aware that this has all been somewhat business-focused. But behind the recordings which enhance our lives are people and organisations with bills to pay, and it’s important that, as listeners, we understand and engage with the issues they face. For without the record industry – in whatever future form it takes – there would be no recordings. 

martin.cullingford@markallengroup.com

This article appears in the July 2016 issue of Gramophone, out now

Martin Cullingford

Martin Cullingford is the Editor and Publisher of Gramophone.

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