By Claire Atkinson NYpost.com 4/11/16
The music business has finally hit bottom and is beginning to bounce back.
After years of falling album sales and piracy woes, the global recording business notched its first significant revenue uptick in almost two decades last year, according to a new industry report set to be released on Tuesday.
The International Federation of the Phonographic Industry’s 2015 digital music report will show that revenue rose more than 3 percent, topping $15 billion, in 2015. That’s the first significant jump since 1998, when global revenue rose 4.8 percent.
While the long-awaited gain should have the industry singing an upbeat tune, the big record labels are far from happy with the state of music streaming.
Most of last year’s revenue growth came from paid subscription services, a category that includes Apple Music, and Spotify’s premium tier. That’s a business the labels would like to keep growing.
But the industry is less than pleased with the revenue artists and others collect from ad-supported services such as YouTube, where users flock to stream music and watch videos for free.
The IFPI report is expected to throw more shade on the Google-owned video platform, which is facing licensing negotiations with the big three record labels.
YouTube’s deals with Universal Music Group, Sony Music and Warner Music have either expired or will this year, the Financial Times reported on Sunday.
Last month, the Recording Industry Association of America slammed YouTube in a separate report, saying it doesn’t pay its fair share of royalties despite surging usage. That report revealed the music labels derived more revenue from vinyl than all the ad-supported YouTube consumption created in advertising revenue.
The IFPI report is expected to add to the noise surrounding ad-supported services by showing that just 4 percent of global revenue, or around $600 million, is derived from ad-supported platforms, of which YouTube is by far the biggest.
By comparison, paid subscription services generated an estimated $2 billion in revenue in 2015.
Total paid-music subscribers grew to 68 million in 2015, up from 41 million the previous year, the IFPI report will show. But that’s dwarfed by YouTube’s 900 million users.
“The main concern is the fact that ad revenue is not climbing in line with views,” said a top industry source. “The value of a stream is dropping and we want to make sure there’s a floor in the per stream rate.”
YouTube’s chief business officer, Robert Kyncl, has been making the industry rounds to explain how the music business can better monetize its advertising on its platform. Kyncl’s has been preaching that “free is the future, ad supported is the future,” one source said.
“To date, Google has paid out over $3 billion to the music industry — and that number is growing significantly year on year,” YouTube said in a statement to The Post.
“Only about 20 percent of people are historically willing to pay for music. YouTube is helping artists and labels monetize the remaining 80 percent that were not previously monetized.”