NEW YORK (CelebrityAccess MediaWire) — The recorded music industry is the engine helping to drive a much broader music sector, from subscription radio stations to mobile ringtone sales, which is worth more than $100 billion globally, according to the IFPI. This is over three times the value of the recorded music market and shows music to have an economic importance that extends far beyond the scope of record sales.
Global retail sales of recorded music totalled $33 billion in 2005. However, that market is helping to drive a much larger and more diverse commercial music sector. This includes live performance, online and high street retailers, ringtone vendors, audio equipment manufacturers, radio advertising revenues, performance rights collections, music magazine revenues, radio subscriptions, portable digital music players and music publishing revenues.
Music is also becoming an increasingly important economic driver in the digital era. The $100 billion figure excludes the impact of the recording industry on fast-growing sectors such as Internet service providers and mobile phone operators.
This is a valuable global industry that is a catalyst for a wide range of commercial uses of music and which has been created without subsidy or special measures. The recording industry is the principal investor in music talent and invests more than 17 per cent of its revenues on the search for and development of new artists.
The largest sector underpinned by recorded music, after sales of physical recordings, is the global commercial radio advertising market, which is worth $30 billion a year. Record companies provide the radio stations with the content they need to attract the audience that advertisers want to reach.
Live performance is also a fast-growing area, worth $14 billion in 2005.
Music is also helping drive the growth of radio subscriptions in the United States. Satellite radio is one of the fastest growth sectors in music (growing 144% in 2005), second only to digital sales of recordings. Two major providers, XM and Sirius, are offering advertising-free services to more than 10.6 million subscribers.
Nothing illustrates the importance of recorded music to other sectors more than the phenomenal growth in portable digital music players. IFPI estimates the value of this sector to be $9 billion in 2005 – over four times the estimated value of digital music retail sales. In addition, the market for peripheral equipment, such as speaker systems and docking stations, is estimated to be worth $1 billion by industry analysts. With digital player penetration at 15 per cent of online users in Europe and 20 per cent in the US, along with a high replacement rate, this market has further exciting growth potential.
In addition to the sectors mentioned above, recorded music is also one of the main drivers of the rapidly-growing digital economy. IFPI estimates that consumers spent over $75 billion on broadband subscriptions and $60 billion on mobile data services in 2005.
Music has been a key driver of 3G mobile services – research from the mobile operators confirms music is the top entertainment product on mobile phones, attracting the 18-35 age group in particular.
Music is central to the marketing strategies of these new media service providers and is seen as the leading source of entertainment content by a large contingent of major new media brands including Yahoo, America Online and MSN.
Music is one of the leading creative industries driving the media and entertainment sector that now accounts for more than seven per cent of global GDP and a worth an estimated $1.3 trillion – with experts predicting this figure will grow to $1.8 trillion by 2009. –Bob Grossweiner and Jane Cohen