Report Finds Global Music Revenues Increased 3.2%, but Held Back by YouTube

Digital music revenues surpassed those for physical sales for the first time ever in 2015, according to research out today from the International Federation of the Phonographic Industry (IFPI). The music business organization released the 2016 edition of its Global Music Report, which found that global music revenues increased 3.2 percent overall last year.

Lest that seem like a negligible percentage increase, though, it's notable because it marks the industry's first significant year-on-year growth in almost two decades, as total industry revenues hit a grand total of $15 billion.

Digital revenues for the year were $6.7 billion, marking a 10.2 percent rise from the previous year. Physical's revenues fell by 4.5 percent, following on its trend of a slowed descent in recent years—8.5 percent decrease in 2014 and 10.6 percent in 2013.

Unsurprisingly, streaming remains the industry's fastest-growing source of revenue, and it grew by a 45.2 percent increase in the last year. The gains there have offset the decline in downloads, down 10.5 percent to $3.0 billion, and physical formats.

IFPI chief executive Frances Moore said in the report that user upload platforms like YouTube are keeping artists, record labels, and all music rights holders from getting the renumeration they deserve. These types of companies have the "biggest on-demand music audience in the world" in over 900 million users, but the advertising-supported revenue sector they belong to only makes up four percent of global music industry revenues.

Moore claims that this kind of platform is able to get around the normal stipulations for music licensing by claiming protection from DMCA safe harbor rules, which limit the platforms' liability for the illegal actions of their users. Because of that, they are allowed to benefit—in Moore's view, unfairly—from the page views illicit uploads generate without bearing the brunt themselves.

"Change is needed - and it is to policy makers that the music sector looks to effect change," she writes. "The 'safe harbour' regime designed for the early days of the internet should no longer be used to exempt user upload services that distribute music online from the normal conditions of music licensing. Labels should be able to operate in a fair functioning market place, not with one hand tied behind their back when they are negotiating licences for music."

Speaking to Music Week, YouTube responded to the report: "To date, Google has paid out over $3 billion to the music industry - and that number is growing significantly year on year," a spokesperson for the company said. "Only about 20 percent of people are historically willing to pay for music. YouTube is helping artists and labels monetise the remaining 80 percent that were not previously monetised. The global advertising market is worth $200bn. This is a tremendous opportunity."

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