Consumer & Entertainment Services
A selection of reports and forecasts for 2020 Trends to Watch from our Consumer and Entertainment Services team.
In April 2019, the global recorded-music trade group the IFPI will reveal that record company earnings from the sale and use of music increased for the fourth year in a row after 15 straight years of decline. Trade sales in 2017 grew at the fastest rate for 20 years, and the expected rise in 2018 may well set a new record. In retail terms, Ovum estimated in November that the growth rate for combined spending on physical and digital formats and services last year would almost match 2017, with spending set to increase, albeit at a slowing rate, for the next five years (see Figure 1). Early results published by national trade associations have painted a similar picture, with subscription sales more than offsetting declines in buy-to-own formats and most markets already or soon to be access-service dominated. However, despite the growth, spending on recorded music will still be lower than it was at the turn of the century.
Figure 1: Global recorded-music retail sales, 2000 and 2018–23
Subscribing to access recorded music is a fairly new process, given the long history of selling recorded music. Spotify only launched in October 2008 (it was founded two years earlier), and in the short time it has been operating it has become the biggest audio subscription service in the world. Although the idea for subscribing to music was tested a few years earlier by Napster 2.0, consumers didn't take to the service, partly because the means for accessing recorded music was insufficient, but also because consumers still had easy access to "free" downloads. However, although subscribing to a service has quickly become the norm in music, the same is true for an increasing number of other products and services, so while many of the plaudits for turning the recorded-music industry around go to Spotify, the recovery should also be seen in the wider context of how consumers now pay for goods and services. From vitamins, food supplements, and savory snacks to shaving products, fossils and artifacts, and house plants, it seems nothing is immune to becoming a subscription product.
While the subscription model can be good for business planning and is less prone to boom and bust, there are downsides. For the recorded-music sector specifically, only a certain number of consumers are willing to pay $/€/£9.99 per month to listen to music. Moreover, prior to the music subscription boom, the majority of spending on music in most countries was by a minority of the population, even in the peak years of the late 1990s. So as well as competing with lots of other buy-monthly products, recorded-music subscriptions have a ceiling, and when this is reached it will be very difficult to convince consumers who previously bought the occasional CD to join the ranks of the regular spenders. It may be a little premature to talk of subscription ceilings given the current optimism, but there are plenty of indicators that the savior of the recorded-music sector may also be the reason why we will always look back to the record years for retail sales, rather than forward.
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