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Music subscription accounts for 62% of the recorded music revenues

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According to figures revealed in the Entertainment Retailers Association (ERA) Yearbook, published on 5th March, 2019, new digital services are turning the UK into a country of subscribers rather than entertainment buyers.

Growth in music subscription

Revenues for paid for music subscription services rose 38% in 2018 to £829 mn with the result that subscription now accounts for 62% of total recorded music revenues. Ownership formats like CDs, vinyl LPs and downloads now only account for 38% of revenues.

Key to the growth in people paying for access to music rather than ownership in 2018 was the work of music subscription on streaming retailers like Spotify, YouTube and Deezer. These services continued to convert their free-tier users into paying subscribers while Amazon introduced many more of its customers to its music streaming service – not least through the success of the Amazon Echo smart speaker.

Now music has joined the party to become a majority rental market.

 

“This is a significant moment. For the first time since the birth of the modern entertainment business in the late 1950s, more revenue is coming from payments for access rather than purchase in all three sectors – music, video and games. New digital services have created a “Generation Rent” for whom access models seem natural. It is nothing less than a revolution in the entertainment business,” said Kim Bayley, CEO, ERA.

 

UK’s entertainment consumer is now spending over £4.5bn annually on accessing music, video and games, rather than paying to own it. The three sectors have adopted access models in different ways, but it means that video in particular has gone full circle – from a rental-based business at the dawn of VHS to an ownership model with DVD and now a subscription / rental model.

 

“Innovation and investment by digital services and retailers has literally proven a lifesaver for the video, games and music businesses, creating new business models and supporting jobs across the UK creative industries,”  said Bayley.

 

The ERA Yearbook has established itself as the authoritative statistical source on the UK entertainment market.

Vinyl – physical’s most buoyant formats

 

Continuing pressure on traditional physical formats is the mirror-image of the rise of digital. One of the physical formats stand out is vinyl LPs.

Spending on vinyl formats grew by a relatively modest 4.4% in 2018, but this comes after a remarkable 10 consecutive years of growth during which the vinyl album market has grown from just over 220,000 units in 2008 to more than 4.3mn in 2018.

The shifting format mix has affected different retailers in different ways. Supermarkets in particular are under pressure, though they still account for around 40% of the physical video market and a quarter of physical music sales.

More buoyant are the fortunes of the independent sector, where the continuing surge in demand for vinyl has seen the number of indie record shops increase to 425 – the highest total for 12 years.

 

Internet accounts for 85% of entertainment revenues

 

The ERA Yearbook confirms that UK entertainment revenues grew for the sixth consecutive year in 2018 to an all-time high of £7,536.8mn, up 9.4% versus 2017.

Key to that growth was booming digital services and music subscription. Digital now accounts for 76.1% of revenues. As recently as 2011 digital’s share was less than 20%.

 

 

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