Digital revenues help offset CD sales slump
Published Feb 16 2012, 15:25 GMT | By Andrew Laughlin
The UK music industry saw earnings fall just 3.4% to £795 million last year, as the strong market for digital downloads and subscription services such as Spotify, Deezer and Napster helped offset a continuing slump in CD sales.
Trade body the BPI said that digital revenues were up 24.7% to £281.6m, and now account for a third of overall record industry trade income.
Sales of digital albums on platforms such as Apple iTunes and Amazon increased 43.2%, and are now almost at the same level as digital single tracks.
Digital albums generated £117.8m in trade income, while revenue from digital singles rose 11.3% to £120.5m in 2011, compared to £108.3m in 2010.
The income drawn from subscription digital music services, such as Spotify Premium, Napster, We7 and eMusic, was up 47.5% year-on-year in 2011, generating £24m for the industry.
Services that adopt the 'freemium' model involving advertising-supported, free digital music services, including Spotify, YouTube, We7 and Last.fm, earned £10.7m for UK record companies in 2011, but that was down 1.4% year-on-year.
The growth in digital revenues helped offset the decline in sales of physical albums, singles and music videos, which were down 14.1% in 2011. Revenues from physical formats dropped for the eighth year in a row to £513.8m, down from £598m in 2010.
The 2011 market for physical albums dropped 14.4% to £484.7m. Revenue from physical singles dwindled even further, by 33.1% to £3.3m overall, with the BPI noting that the market was "characterised by The X Factor
releases, charitable singles and vinyl".
Industry revenues from physical music videos on DVD and Blu-ray were down by 3.3%, accounting for £25.8m of overall income. Mobile income from the sales of ringtones and ringback tones slumped 30.6% to £2.5m.
BPI chief executive Geoff Taylor said: "It is highly encouraging for the long-term prospects of the industry that the pace of digital growth continues to accelerate. British labels are supporting a wide range of innovative music services and music fans are embracing digital like never before.
"The record industry has continued to invest heavily in discovering and supporting outstanding British talent, which has helped sustain revenues in the face of difficult economic circumstances."> Occupation Records shuns Apple, Amazon over 'labour violations'> Rhapsody to take on Spotify after acquiring Napster International