Gospel group Joyous Celebration is the most streamed artist by South African users of Web-based streaming service Deezer — a Paris-based company that is part of a now US$7bn industry.
Tecla Ciolfi, the editor of Deezer South Africa who is responsible for curating the best music talent the country has to offer, tells Moneyweb that other favourites are hip-hop stars Cassper Nyovest and AKA, but says Joyous Celebration is most popular “by a country mile”.
With sights set on the mass market, Deezer made its entrance into South Africa late last year in partnership with the country’s largest cellular network provider, Vodacom. It plans to include free streaming in data bundles and find other ways to make its product, at a monthly subscription fee of R59,99 on a premium basis (unlimited, ad-free music that can be made available offline), even more cost effective.
Mathieu Molinero, Deezer’s head of new markets, is exceptionally bullish on the South African market. That 20% of the population and growing has 3G-enabled smartphones, according to Molinero, means instant customers for Deezer (which has 6m paying subscribers in more than 180 countries), and excellent growth potential for streaming here.
With only a handful of albums released last year going platinum (selling more than a million physical copies), digital music revenues matched physical revenues for the first time ever in 2014, according to the International Federation of the Phonographic Industry (IFPI).
In its Digital Music Report 2015, released on Tuesday, the IFPI reveals that digital revenues rose by 6,9% in 2014 to $6,9bn, constituting 46% of all global music sales.
Representing the world’s major and independent record labels, the IFPI says the rise of streaming, rather than physical or digital ownership via downloads (as with iTunes), will define global music markets in 2015.
“Much of this is driven by young consumers with little or no experience of owning music and, therefore, less geared towards traditional ownership models,” the report notes.
According to PwC, streaming will account for 37% of total digital recorded music revenues by 2018, up from 23% in 2013. It estimates that paid streaming will generate revenues of $13,5bn come 2018, as physical sales and digital downloads decline.
It’s not clear how much artists themselves, rather than record labels, benefit financially from streaming. On its free service, which includes adverts, Deezer pays the rights owner for each stream, but would not provide the exact figure.
On the premium version, it pays around 70% of the monthly subscription price before VAT to the record label each time one of its artist’s songs is streamed. This applies to tracks played offline, too.
Last year, Taylor Swift decided to remove all her music from Spotify, the world’s largest streaming service, just months before she became the year’s best-selling artist. Swift sold 6m digital and physical albums. Scott Borchetta, CEO of Swift’s label Big Machine, told Business Insider that what Spotify had paid the label over a year for her music (roughly $2m) was the equivalent of fewer than 50 000 album sales.
Molinero, however, argues that artists need to understand that a once-off CD purchase has now become a lifetime value in streaming. “In the first months after the release of an album, it is probably true they [artists] are getting less money on streaming. But after a few months, when CD sales of a new album are decreasing, the artists are still being paid every time they are streamed, even 15 years later,” Molinero maintains.
A premium Deezer South Africa subscriber would be paying a subscription fee of R720/year, which amounts to roughly six CDs. “This is more than what the average South African music fan used to buy, so streaming is bringing back value to the music market,” he contends.
According to IFPI, artist royalties in 18 major markets outside Japan and the US in the five year period to 2014 declined in real terms but increased by 13% as a share of sales revenue. “Within the streaming sector, there is substantial untapped potential for growth within the paid-for category,” IFPI says.
- This article was republished from Moneyweb with permission
