Merlin: iTunes Remains Biggest Digital Destination; Spotify + Amazon 2nd And 3rd; Streaming Still Just An Opening Act

Posted: May 16, 2013 in Europe, GT, Media
Tags: , , , , ,


On the heels of Google wading into the music
streaming waters with its Google Play Music All
Access service, with a $10 fee for all-you-can-eat
streamed tracks, the indie music agency Merlin has
today published results of a recent survey of its
20,000-label member group, plus an analysis of 6.5 billion music streams over the last year, which spell
out where the money is coming from today.
Streaming services are making increasing headway
as a revenue driver for musicians, but digital
downloads — specifically Apple’s iTunes — are still
ruling the roost. Worldwide, iTunes has held on to its spot as the
single-biggest source of revenues for Merlin’s
independent label members, both across key markets
like the U.S. and UK, as well across Europe and
globally. Interestingly, Spotify is securely in second
position, underscoring just how popular both Spotify and streaming services have become — second has
been a place held by Amazon for some time prior to
this. Amazon’s MP3 download service subsequently
slipped down to third place across the board, while
Deezer and eMusic are split regionally in terms of
their influence and in grabbing fourth place. We’re reaching out to Merlin to see if we can get a
specific percentage breakdown here. Typically iTunes
has been estimated to hold around 60% of the digital
music market by revenues; NPD put its share at 63%
in April 2013. (Update: A Merlin spokesperson says those breakdowns are not being disclosed.) “The new generation of digital services has created a
new dynamic of consumer freedom, limitless choice
and myriad paths to discovery,” Charles Caldas, the
chief executive of Merlin, said today in a speech at
the Great Escape conference in Brighton. “Our
numbers illustrate that this dynamic is bringing incremental value to the market, and the demand
from music fans for the music being released by our
independent members is higher than ever before.”
However, in what might be a swipe not just at big
labels but big players like Google jumping deeper into
the market, he also cautioned against companies that might be trying to apply legacy music royalty
concepts to digital. “The ecosystem is fragile: power is more
concentrated than ever, and we are seeing an
attempted land grab by the largest companies for
digital market share as they try to recreate the old-
market advantages they are clearly losing in the
digital space,” he noted. Merlin, despite its tens of thousands of indie label partners, only makes up
about 10% of the world’s music market, so it has a
place continuing to rage against the machine. It will be interesting to see whether Spotify’s (and
streaming’s) rise are eating into that 60%
marketshare for iTunes. But the research from Merlin
suggests that if this is the case it’s not a watershed
moment quite yet: both formats appear to still be
growing, even if streaming is growing more. Some 92% of respondents in the survey said that
streaming and subscription revenues (based on
streaming) grew in 2012 compared to a year ago.
One-third said the rise was as much as 100%. The rise in downloads was less pronounced: around
66% said a-la-carte download sales grew alongside
that streaming rise. Only 8.4% said the rise in
download revenues increased by 100%. In terms of what the growth in streaming means for
actual businesses, the takeaway is still marginal. Merlin’s members say that they expect royalties of
$65 million or more for 2013 from streaming services,
but if you just do the math and divide that among
20,000 members, that works out to only $3,250 per
label. Considering that Merlin claims that its
members’ share of streaming services is typically 12-20% higher than those of other major labels —
included in Merlin’s counts are acts like The National,
Grizzly Bear and Bon Iver, as well as labels like
Domino and Beggars Group — it sounds like
streaming, despite all the advances and popularity,
remains for now just an opening act, and not the main event. Full results of the report below. View this document on Scribd

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