Know all about what’s going an at Midem without being in Cannes

Actually, going to Midem should be mandatory for anybody who wants to cover the music business. There is probably no other place where one can find as much expertise and inside stories as in mid-January at the Côte d’Azur. That’s bad for me, because I didn’t go this year. If you need to know what’s going on over there in France I recommend you check one or all of these sites: 

• BBC News summary
• music ally blogstravaganza
• MusikWoche Midem coverage
• paidContent goes MidemNet
• and Billboard is there, too
• Music Week stays busy as well

IFPI: Global digital music business grew 25% in 2008 to $3.7 billion

International music trade body IFPI on January 16 released their Digital Music Report 2009 – right in time for the industry gatherings MidemNet and Midem in Cannes. According to these latest figures, the digital music business grew for the sixth consecutive year. In 2008, the increase in global sales was approximately 25% to a trade value of $3.7 billion. 

This is of course against the backdrop of an overall global decline in recorded music sales of around 7% last year. The Digital Music Report ‘09 goes on to specify that by now digital platforms account for 20% of all recorded music revenues – up from 15% last year. Sales of single track downloads, which still are the key driver in the digital business, grew 24% to 1.4 billion units with Lil Wayne’s “Lollipop” ending up being the international topseller of the year at 9.1 million units. Digital albums experienced a growth of 36% in copies sold. 

The most important global territories for digital sales are basically the same as in the physical world with the United States leading the way ahead of Japan, UK, Germany and France.

• Approximately 50% of the worldwide market value in digital music is generated in the U.S., according to IFPI. Single tracks grew 27% last year to 1.1 billion units, digital albums were up 32% to 66 million copies. 
• Japan, while being predominantly a mobile market, saw 140 million digital singles being sold in 2008 (up 26%).
• The British market experienced an overall digital growth of 45% last year with the singles bracket garnering 110 million sold units (up 42%) and the albums category ending the year with 10.3 million copies (up 65%).
• In Germany the track business only saw an increase of 22% to 37.4 million singles. But digital album sales grew by 57% to a sales total of 4.4 million copies. 
• In France the overall digital market grew 49%.

In these markets digital growth happened at very different speeds. During the first half of 2008, digital accounted for 39% of recorded music sales in the U.S. That percentage was more than four times that of Germany (9%) in the same period. This corresponds with the differences in consumer spending for digital music. While American broadband users on average spent $12.50 on digital music last year, music consumers in the UK only spent $7.80 for downloads in 2008. It’s even less in other European territories.

Even though IFPI sees great improvements in the market, the digital business is still hampered by piracy. Chairman & CEO John Kennedy explained that record companies are transforming their business models “in an environment where 95% of music downloads are illegal and unpaid for”. According to IFPI estimates, more than 40 billion tracks were fileshared in 2008. 

Kennedy still plans to battle this issue by trying to come to agreements with ISPs on models of graduated response. Last year had seen a “tipping point” in that quest, he said. Meanwhile France, UK, Germany and the U.S. appear to be on the same track for this approach.

German record business expects single digit losses for 2008

With my sometimes anglocentric view on the business I almost forgot that German trade group Bundesverband Musikindustrie (BVMI) had issued a prediction on what their annual report for 2008 will look like. 

Managing Director Stefan Michalk expects the losses for the German recording industry to be in the single digits. This applies to revenues generated by all available recorded music formats, physical and digital. Additional revenues with any 360-type ancillary business (merch, synch, live, etc.) won’t be included in BVMI’s upcoming report. But Michalk said these new income streams have seen significant growth. 

The digital business in 2008 was up  somewhere between 30% and 40% but still trails behind leading markets like North America, UK or Japan. The share of digital in the overall German market is only around 8%. Michalk attributes this to more conservative consumption habits in the country. 

In 2007 the German business recorded revenues of €1.65 billion ($2.26 billion by today’s rates), down 3.2% from the previous year. Leading executives at EMI and Universal Music have already predicted revenue declines of around 7% for 2008.

Vivendi CEO: Recession? We don’t care

Interested in a recession-proof business? Look no further, the French have it. Vivendi, corporate umbrella of Universal Music Group, Activision Blizzard, Canal+ and other formidable companies, says it is not feeling the macro-economic changes happening everywhere around them. 

CEO Jean-Bernard Lévy told a media conference hosted by French newspaper Les Echos that the global economic crisis was “not a reality” for Vivendi at the moment. Christmas sales of “impulse-buy” products like CDs,video games and accessories were at normal levels. Wow, good for him. I guess size does matter in the case of UMG.

“It’s possible that there will be a gradual erosion of our markets and results. But we think we have a much higher than average level of resistance,” Lévy said, adding that Vivendi may make some acquisitions in the coming quarters. Europe’s biggest media group is looking for takeover targets that carry cheap market valuations. The company is especially interested in finding candidates in markets that are growing faster than France.

Sell more different merch, researchers tell music retail

Entertainment retailers will manage to weather the storm if they diversify. That’s the central message of a report by Verdict Research in the UK. It can’t be just about the music anymore for companies like Zavvi or HMV, the analysts say. Not exactly a revelation, but interestingly Verdict expects game sales to exceed music and video sales combined for the first time this year. 

As the music industry has been beset by piracy, and the price of DVDs has dwindled, the gaming market will grow by 42 per cent this year, and will be worth £4.6 billion in 2008, compared to £4.5 billion for music and video combined. 

More details here and here.

“Rock Band” sales help Viacom Q3 results

Viacom today reported financial results for its third quarter. Net income fell 37 percent to $401 million on revenues of $3.41 billion (up 4 percent). But the business of rhythm games is still going strong at the media networks division of Viacom.

Ancillary revenues at this division – mainly sales of the game “Rock Band” – increased by 36 percent to $313 million. The company said by now it had shipped some 7 million units of “Rock Band” and sold 26 million downloads for the game. 

Reminder: Here is some more detailed information on the business of music and games.

MTV and Harmonix bring Beatles to “Rock Band” platform – next year

“Apple Corps Ltd. and MTV to announce an exclusive agreement to develop a global music project,” was all the invitation to today’s press event said. Enough, to make everybody curious. How could a has-been in the music world (MTV, that is) reinvigorate the business?

Well, by going into game mode with “Rock Band”. Everybody is on board: EMI Music, Sony/ATV Music Publishing, Harrisongs, Apple Corps, Harmonix, MTV Games. 

Van Toffler, President of MTV, gave special thanks to Jeff Jones, the new CEO of Apple Corps, who seems to be the one who finally got the Fab Four to go digital. 

But here is the downer: The new product will NOT be available for this holiday season. The press conference gave only little detail about the specifics of the deal. Apparently this Beatles “Rock Band” will be ready for next year’s holiday season. As of now, MTV and Apple Corps won’t even say, if there will be downloadable Beatles content for existing “Rock Band” versions. Jeff Jones said, they are still negotiating the details for digital distribution of Beatles songs. 

The game will include songs recorded between 1962 and 1969 and it seems possible the entire catalog will be used. The game itself is still in development and will most likely be a stand-alone product. Not even clear, if it will be a “Rock Band” item. But compatibility should not be a problem. 

This is what the press release says:

The game will be an unprecedented, experiential progression through and celebration of the music and artistry of The Beatles. The game was creatively conceived with input from Sir Paul McCartney and Ringo Starr, along with Yoko Ono Lennon and Olivia Harrison, and enjoys their full blessing. In addition, Giles Martin, co-producer of The Beatles innovative LOVE project, will provide his expertise and serve as Music Producer for this groundbreaking Beatles project. 

Standard answer during the conference call: “We don’t give information on this, yet.”

All the excitement about this? Considering the age of most Beatles fans, it will have to be quite some game to lure the older demographic into the gaming world.