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Business News (more headlines) 03-08-2014

German Recorded Music Market Grew By 1.2% In 2013

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In 2013 the German music market finally grew again. After evaluating the past year's performance, the Bundesverband Musikindustrie (Federal Association of the German Music Industry, BVMI) announced that revenues from the sale of physical formats and downloads, as well as income from music streaming increased by 1.2 percent to 1.45 billion euros. The foundation of this stable market performance is the continuing strength of the physical business, where despite a slight loss (-1.3 percent) CDs continue to be responsible for two-thirds of total revenues. The declines are offset by double-digit growth (+11.7 percent) in the digital business segments: while the download market (+0.8 percent) grew more slowly than in previous years, music streaming doubled its market share to about five percent (+91 percent), delivering the strongest impetus for growth in the market. The total number of streams through ad-based and premium services rose to over six billion in 2013.

Musically, the trend for German-language music continues. In 2013, seven German artists made it into the annual Top 10 list of the official German album charts as determined by media control GfK, and 45 albums by German artists entered the annual Top 100 list. As before, the top-selling genres in Germany are international pop (30.5 percent) and rock music (19.2 percent), with "Schlager", classical and rap music on the rise as they become more of a focus of the German music scene.

BVMI Chairman Professor Dieter Gorny says: "The gratifying market performance is the result of jointly harnessed strengths and investments in a market that still lacks the necessary balancing with regard to the digital dimension. Despite the known risks, the music industry has invested in this market and created attractive products and music services that pick up on the spirit of the times. What's still missing is a policy framework that focuses on legal offers, protects them from illegal offers, and creates security for investors."
Physical music formats remain in demand

The mainstay of the German music market is the sale of physical products, which despite a slight 1.5-percent decline generate turnover of 1.124 billion euros - more than three-quarters of all music revenues in Germany. The most important revenue driver is still the CD, which recorded its lowest revenue decline in 13 years (-1.3 percent) and continues to bring in more than one billion euros in Germany. In addition to the traditional CD format, high-quality boxed multi-CD sets, and fan editions are increasingly gaining ground. As a haptic complement to digital music consumption, they can continue to leverage the strengths of the CD in future. The continuing mini-comeback of the vinyl record demonstrates that haptic formats remain to be popular: After 40-percent growth in 2012, vinyl sales increased by 47.2 percent to 29 million euros in 2013. After a low point in 2006, the "black gold" now accounts for two percent of the total market again, but measured in terms of revenues remains a niche product for passionate collectors and fans.
Stable results for downloads

In 2013, revenues from the digital music business grew by 11.7 percent to 328 million euros. This means that 22.6 percent of all music sales in Germany are now digitally generated. While the number of download buyers fell by one percent to 8.3 million in 2013 (BVMI/GfK Panel Services), download revenues were stable overall, growing by 0.8 percent. They make up 17.7 percent of total music revenues in Germany. As in other countries, single and album downloads developed differently. While digital album revenues increased by 4.8 percent year-on-year in 2013, single downloads fell by 4.4 percent. In all, albums now account for 58.7 percent of all download revenues.
Streaming revenues nearly doubled

Music streaming was undoubtedly one of the hot topics of the music year 2013. This is reflected not only in the level of media attention, but also in revenues. For instance, revenues from paid streaming subscriptions and ad-supported streaming services increased by 91.2 percent in all, to 68 million euros. Germany now has a total of 17 audio streaming providers. These premium and freemium services are also the key revenue drivers in the streaming segment. Seen in the context of total revenues in Germany, streaming nearly doubled its market share from 2.5 percent in 2012 to 4.7 percent in 2013. Its still minor significance in terms of revenue also reveals that streaming has not yet arrived in the German mainstream.

BVMI CEO Dr Florian Drucke says: "The final result of the 2013 music year confirms earlier positive trends in Germany and also links to positive developments in the international arena - albeit this is due not to one but to many different recipes for success. For instance, unlike in many other countries, Germany's growth course is based on the strength of the physical market as well as on digital growth. On the other hand, systematic enforcement of the law, and awareness-building schemes like the PLAYFAIR initiative launched in 2013, should also be taken into account."
Streaming's share in total revenue expected to rise to 35 percent by 2018

A recent GfK market assessment forecasts close to zero growth again for the German market in 2014 before it is predicted to pick up again starting in 2015. While streaming currently only makes up five percent of revenues in the German music market, its contribution should grow to 35 percent in 2018, bringing it significantly closer to international levels.

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