March 9, 2020
Since 2016, Europe has seen significant growth in music revenues. This can be heavily attributed to the rise in music streaming in the region. In their most recent collections report, CISAC shared that European digital music revenues grew by 34.9% in 2018. This growth has been consistent over the past five years with digital collections growing by 300%.
The improvement in music revenues is welcomed as like other global regions, there had been a significant decrease since 2001. Although the majority of European music collections are coming from key leading markets, such as the UK, Germany and France, other regions are experiencing significant growth with their own music streaming revolutions. Digital music streaming is changing the landscape of music royalties in Europe, with a lot of movement to be seen in the traditional ranking.
Key European markets experience growth with Germany leading
Revenue growth in the past few years has been led by key markets such as Germany, the UK and France. Traditionally the UK has generated the most music revenues in the continent. However, this January, BVMI reported that Germany overtook the UK ($1.7 billion) in music revenues for the first time. The German music rights organisation shared music revenues had reached a record of over $1.82 billion. This growth in revenue was heavily driven by streaming which now accounts for over half of all music revenues in the country.
Similarly to Germany, France also reported a significant growth in music revenues for 2019 of $867 million. SNEP, the French music trade body, reported a 5.4% growth in 2019. Changes in consumer behaviour are leaning towards music streaming with 18.5% of revenues coming from premium subscriptions.
The share of digital streaming in Nordics is significant
Despite more revenues coming from the UK, France and Germany, other regions are consistently growing their digital share. One such region is the Nordics, where approximately 90% of people stream music (Polaris Digital Music in the Nordics 2018). In the Nordic region, the home to streaming behemoth Spotify, subscriptions are approximately an even split between paid and free. Echoing the information in the Polaris 2018 report, CISAC also shares that the Nordics are leading digital streaming growth in Europe. Denmark, Sweden, Norway and Finland all reported growth in music collections with the digital share twice the European average.
In Central Eastern Europe digital is growing
CISAC has reported a 10.4% growth in music revenue in the Central Eastern Europe region over the past 5 years. Digital is accounting for a growing portion of this, particularly in Poland. In a spotlight by CISAC, it was reported that collections from digital sources have more than doubled since 2018. ZAiKS, a music collections society in Poland, reported 5.1% growth in revenues thanks to “increased efficiencies in licencing and processing of agreements” (CISAC Collections Report 2019). Despite the large growth, this is still an emerging market for digital at just 2.6% of all collections. There is scope for digital streaming platforms to increase their footprint in this region.
Spain and Italy see a surge in paid subscriptions
One of the biggest contributors to rising digital revenues is the shift to paid streaming. While in a 2016 Statistica survey European music consumers reported free music access being a major reason for choosing a streaming platform, now paid subscriptions are on the rise. In Southern Europe, Spain and Italy are seeing significant growth in paid subscriptions. In 2019 Promusicae, a Spanish collections organisation reported a growth of 24.4% in revenue from paid subscriptions. This translated into an increase of €2 million in revenues.
Similarly, in Italy, there has been significant growth in paid subscriptions. In a 2019 deep dive into the Italian music industry, news publication MusicAlly reported a 31.7% year on year increase in paid music streaming.
The future of music streaming in Europe
Streaming in Europe is very complex as some markets are incredibly mature with premium music streaming reaching peak levels, while in other countries the revenue share from streaming is still marginal. With the landmark Copyright Directive brought into law by the European Union, Brexit concerns and new agreements by societies, the future is uncertain. We have reviewed just a snapshot of the European streaming landscape. We recommend that CMOs review their technology to ensure it remains fit for purpose in a dynamic market. Talk to The Matching Engine team about how this application can support your systems to manage increased scale and data issues that increased volume can present. Our cloud based applications can prepare European societies for the future of digital music collections.