DIGITAL MUSIC NEWS

Digital Sales Drive Music Business To First Revenue Gain Since '99 The International Federation of the Phonographic Industry (IFPI) this week reported that global music sales posted a 0.3% increase in 2012, with sales topping $16.5 billion - ending a 13-year slide. Noting that digital sales were the primary growth factor, Sony Music President/ International Edgar Berger told Reuters, "At the beginning of the digital revolution it was a common theme to say digital is killing music. Well, the reality is, digital is saving music. I absolutely believe that this marks the start of a global growth story. The industry has every reason to be optimistic about its future." IFPI figures indicate digital sales were up 9% vs. 2011, to $5.6 billion, accounting for 34% of overall income for the music business. Meanwhile, download sales were up 12% percent to 4.3 billion units, and digital album sales jumped 17% to 207 million units, vs. 2011 figures. "While the overall 0.3% rise was modest, it was fueled in part by a 9% jump on the digital side, an exciting development that bodes well for the future," National Association of Recording Merchandisers President Jim Donio said in a statement. "The year also saw a significant expansion of subscription and streaming models, with a 40% rise in the number of fee-paying customers. We have now had a full year to measure the impact of these services such as Spotify, Rdio, and more in the U.S., and they are expected to account for more than 10% of total digital revenues worldwide for the first time." [Full story: All Access]

Adaptation To Once-Feared Internet Now Fueling Music Business What at one time frightened the recorded music business now is causing music execs to (mildly) rejoice, as "music has not only adapted to the internet - it is at the very heart of its development." That's the word from Frances Moore, chief executive of the IFPI (acronym explained above), who said a symbiotic relationship has helped drive technology growth and device sales while boosting such outside industries as television and social networks. "These are hard-won successes for an industry that has innovated, battled, and transformed itself over a decade," she said. "They show the music industry has adapted to the internet world, learned how to meet the needs of consumers and monetized the digital marketplace." Additionally, Warner Music Group EVP Stu Bergen emphasized the new revenue streams the digital market has opened up for music companies. "We have plenty to do and some amazing opportunities ahead of us," he explained. "Until recently, the vast majority of our revenues came from a handful of countries. Today, digital channels mean we can monetize markets worldwide much more effectively." Still, every silver lining has its cloud, and IFPI Chairman Plácido Domingo said copyright issues - and the ability of artists to make a living from their craft - remains a top issue. "Copyright is the key ingredient to ensure this," he said in a statement. "Policymakers around the world are now debating how best to protect artists' rights in the digital age." [Full story: Medill Report]

Study: As Digital Music Sales And Streaming Increase, Piracy Declines Hidden in this week's positive music sales report was another bit of good news: music piracy is on the decline. As reported by the Washington Post, not only have free or low-priced streaming services (think Pandora and Spotify) provided music lovers easy access to their favorite tunes, the NPD Group found in a separate study that broader access to music is also driving fewer people to download songs illegally. These services have gained some industry support because they allow consumers to get the music they want while still supporting artists, record labels, and others in the industry. In fact, the NPD analysis strongly suggests that not only is the volume of illegally downloaded music files over file-sharing networks down 26% compared to 2011, but the number of people who burn and rip CDs, swap music files on hard drives, and download music from digital lockers also is down sharply. The NPD Group said a crackdown on sharing sites and questions about their digital safety, combined with the rise of easy, legitimate music streaming has fueled the decline. As a result, tearly 20% of users have stopped using these sites because they've been shut down or because of issues with spyware and viruses. [Full story: Washington Post]

Pandora Caps Mobile Listening Hours; Says Royalty Costs Are To Blame The only digital music company that isn't cheering the positive jump in recorded music business revenue may be Pandora, which this week announced it would cap the number of monthly free hours on its mobile apps to 40. According to company founder Tim Westergren, "Limiting listening is a very unusual thing to do, and very contrary to our mission. [However], Pandora's per-track royalty rates have increased more than 25% over the last 3 years, including 9% in 2013 alone, and are scheduled to increase an additional 16% over the next two years." Noting that only 4% of Pandora's active listeners will be affected, Westergren told users in an email that "most of you reading this will never hit the limit. For perspective, the average listener spends approximately 20 hours listening to Pandora across all devices in any given month." History shows that those "power-users" who tune to Pandora more than 40 hours a month are unlikely to upgrade to a paid subscription. because they know the "free ride" starts over in just a few days. Still, Pandora says the cap has proven to be a smart lever to impact royalty costs. [Full story: Digital Music News]

Universal's Keeling: "Google Would Be Biggest Funnel We Have" While the recorded music industry must work with such subscription music services as Spotify and Deezer to provide listeners with a free experience, a Google streaming service would provide the largest "funnel" the industry could hope for. That's the word from Francis Keeling, Universal Music's Global Head of Digital Business, who this week said that Google's entrance into music streaming would provide the industry with "arguably the biggest funnel" with regards to turning music consumers onto legal licensed services. As reported by Billboard, Keeling said, "With the likes of Spotify and Deezer and Rdio and other subscription services, we give consumers a free experience because we know that we need to change behavior. By giving a free experience to legal services we can encourage consumers to subscribe. Google, with its hundreds of millions of users through search, and YouTube with more than 800 million users [per month], arguably is the biggest funnel we can have. Clearly, if we can get consumers into a legal funnel through that route and encourage them into subscription, that would have a very positive impact on the business." Noting that "music tastes are complex and ever-changing," Keeling proclaimed that "music continues to drive the digital space." [Full story: Billboard]

Ford, Spotify Jointly Announce Sync Applink Deal Ford Motor Co. and Spotify this week jointly announced a new app designed to bring the music streaming service to the Sync Applink platform. Unveiled at the Mobile World Congress (MWC) in Barcelona, the deal marks Spotify's first partnership of this type with a car manufacturer and it means Ford owners will be able to access the music service's entire song catalog via voice activation technology on their smartphones. The app will support such voice commands as "play music," "shuffle." "repeat," and "choose playlist." The service will initially be made available to more than one million Applink-enabled cars in the U.S. but will eventually come SYNC-equipped vehicles in Europe too. "As one of the world's most popular music streaming services, Spotify is the perfect partner to demonstrate the benefits of the Ford SYNC AppLink system," gushed Paul Mascarenas, Ford's chief technical officer. [Full story: MT3]

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