Some Numbers In The Digital Music Industry

There are now very few barriers to entry in the digital music industry, if you are lucky enough to be middle class in a developed economy. Production tools are essentially free if you have a computer; broadband connects you to a number of service providers that can put you on sale. Even if you have no musical skills there is a growing public domain of sound recordings that can be repackaged and sold. Low costs and no gatekeepering are driving a continuing expansion in the number of tracks in the market, with 2012 seeing perhaps 15 million already on sale and probably at least another million or two arriving each year.

I have gathered a few numbers from around the industry, which I shall present rounded off and anonymised or generalised to respect confidence and commercial sensitivity where they have not been widely published elsewhere. Some of them might well be wildly wrong, due to mis-remembered conversations or just poor data management.

One of the many music services that includes on demand streaming has delivered at least one listen for each of 720,000 tracks over a year, out of a catalogue of approximately 5 million tracks. A similar service, aimed at families, finds that each  account expands by 15 tracks the diversity of the music that gets listened to. A European neighbouring rights society knows about approximately 5 million tracks of which somewhere between 5 and 6% get payments allocated over a year.

ASCAP, the American organisation that collects and distributes royalties for the performances of compositions, shares the money it collects between the 200 highest grossing tours or concerts. It also makes discretionary awards to about 4000 applicants each year who would be entitled to be paid under a scheme that simply allocated royalties to reported performances. College webcast radio in the USA can pay an additional $100 on top of the $500 minimum fee to avoid reporting up to 825,000 performances of sound recordings per month, (9,900,000 performances per year).

The global digital music industry brought in $5.2b for record labels in 2011 according to the IFPI. If that were evenly distributed across the sound recordings in the market that would mean each earned approximately $350. Markets don’t tend to work like this; if the revenue followed one of the most likely distributions, 70% of the revenue would be generated by 1% of the tracks. Each of those 150,000 tracks in the top 1% would therefore earn a little more than $24,000 on average. Assuming the same distribution the top 150 tracks would average about $8.66m each. Just sharing that money out between performers registered in the International Performers Database, a joint project between neighbouring rights societies, would net each performer about $10,000.

Digital music is full of strangeness and contradiction, and as these numbers show, as a business its existence on its current scale is a triumph of either ignorance or hope over expectation. If any more interesting numbers pop up I shall update this article.



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