Digital-Music-Report-2014

LIGHTING UP NEW MARKETS

Contents4IntroductionPlácido Domingo, Chairman, IFPIFrances Moore, Chief Executive, IFPI6Facts, Figures and TrendsStreaming and subscriptions surge1216A diverse global marketA mixed economy of revenue streamsRevival in ScandinaviaUS stabilises as Europe growsLighting up developing marketsAttracting consumers to licensed servicesMost Popular Artists of 2013Top selling global albumsIFPI Global Recording Artist ChartTop global singlesThe importance of local repertoireLighting Up New Markets and ModelsThe move to mobileAccess & ownershipThe rise and rise of streaming and subscriptionMore discovery, more from mobileStreaming: “A sustainable income”Monetising music videoInternet radio — looking globallyEngaging in emerging marketsisps leverage the value of music: kpn-SpotifyRapid digital growth in Latin AmericaLocal services thrive in AsiaRussia shows potentialKKBOX: Asia’s local service fights its corner243436384044Long Live the Record LabelDaft Punk: A physical campaign in the digital worldAvicii: From club DJ to global superstarHunter Hayes: The YouTube orchestraPassenger and the Embassy of MusicEngaging fans in social networks in BrazilKaty Perry: A global phenomenonTommy Torres: Harnessing the power of TwitterSweden: A Market TransformedA return to growthA continuous revenue streamGrowing diversityWhat next in Sweden?China: New Hopes for a Licensed Music MarketMoving to the paid modelTackling piracyAfrica: Emerging OpportunityDigital services being establishedExpanding A&R activityImproving the Environment for Digital MusicConsumer attitudes to piracyWebsite blocking proves effectivevKontakte: Stifling a licensed business in RussiaStopping payments to pirate servicesCutting off advertising revenueSearch engines still have more to doInfringing links dominate search resultsLegal action against piracyUK’s City of London Police: Tackling crime onlineDigital Music Services WorldwideThis report includes new findings from a consumer study carried outby Ipsos MediaCT, commissioned by IFPI.www.ifpi.org@ifpi_orgDesigned by design to communicate© IFPI 2014All data, copy and images are subject to copyright and may not bereproduced, transmitted or made available without permission from IFPI.3

IntroductionPlÁcido domingochairman, ifpiThe technology changes: the music remainsI am very pleased to introduce IFPI’s latest Digital MusicReport which gives an excellent overview of how the musicindustry is investing and adapting in the digital world. I am nowin my third year as chairman of IFPI and during this time I havebeen able to witness close up the amazing transformation of ourmusic industry.My career in music has spanned more than four decades.The first recordings of my work were available on vinyl LPs orcassettes that had to be listened to on a record or tape player.Today, my music is available on a huge range of digital services.People can listen to an opera as they go about theireveryday lives. They can constantly discover new music onrecommendation services. They can engage with artists on socialnetworks. We no longer rely on physical delivery of the music welove to hear.governments around the world play their part in making surethe laws that protected creators in the physical delivery age areupdated for the digital delivery age.This is the message I try to convey when I travel the worldand talk to senior politicians.Copyright provides the basis of the modern digital musicmarketplace. Confidence in copyright enables rights holders tolicense exciting new services that music fans love.There are 37 million songs available today on these leadingdigital services. To listen to them all would take a lifetime. That isa source of cultural enrichment that we could not have dreamedof when I was a young artist beginning my career. We mustbuild on this success to create a genuinely sustainable digitalmarketplace that will continue to fund investment in artists sothat more great music can be created.“Copyright provides the basis of the moderndigital music marketplace.”This new digital world has brought great new ways to accessculture. At the same time, technological change has forced us toask a fundamental question — what does this mean for copyrightand the rights of creators?The answer is clear: while the formats have changed, themusic remains. In a world of constant change, music is somethingof lasting value.I want to see a digital world that provides young artists withthe kind of opportunities I was fortunate enough to have early inmy career. Artists still need to be able to benefit from investmentby record companies to build a career. That can only happen if4

Frances MooreChief Executive, IFPIThe digital music business is on the move and lighting up new marketsFrances Moore Photo by Graham FlackIFPI’s Digital Music Report 2014 shows a fast-changing, dynamicand optimistic global music industry. Recorded music revenuesin most major markets have returned to growth. Streaming andsubscription services are thriving. And digital music is movinginto a clearly identifiable new phase as record companies, havinglicensed services across the world, now start to tap the enormouspotential of emerging markets.There was a lot of good news in our industry in 2013 —albeit with some less good news as well. The US music marketcontinued to stabilise, growing slightly in trade revenue terms,helped by rising consumer demand for music streaming services.Europe returned to growth after 13 years, its top five marketsseeing revenues up. In Japan, however, the world’s number twomusic market, falling revenues had a significant negative impact onwhat was otherwise a largely positive global picture.New services with big global ambitions are launching, such asBeats and iTunes Radio — services that we hope will soon spreadaround the world. Meanwhile, the existing international services,such as Deezer, Google Play, iTunes, Spotify and YouTube aregenerating income in many new markets following their globalexpansion. The competition is intense and consumer choice isever-widening — these are very positive dynamics in thedevelopment of the digital music landscape.It is now clear that music streaming and subscription is amainstream model for our business. In 2011, there were eightmillion paying subscribers to subscription services — today thereare 28 million. Ad-supported and subscription streams are risingin most markets, helping grow overall digital revenues for recordcompanies and artists.The music industry has become a mixed economy of diverseconsumer channels and revenue streams. This has been anamazing transformation, dramatically expanding the way artistsreach their fans across the globe. Reflecting this shift, IFPI haslaunched its Global Recording Artists Chart, which highlights thesuccess of artists across physical sales, downloads and streaming.The chart, launched in 2014, is a new metric of success reflectingthe popularity of artists across the various ways consumers enjoymusic. Congratulations to One Direction for being the first act totop this unique new chart.These are all positive developments which, to some degree,extend the industry’s achievements of the last few years in ourcore markets. But this report goes further: it also shows howdigital music, on a global scale, is going to the next level. Emergingmarkets have huge potential, and, through digital, the musicbusiness is moving to unlock it. Most of these territories are seeinginternet and mobile music penetration soaring, with rising demandfor handheld devices. The great news is that a wide varietyof licensed music services are available to meet this demand.Emerging music markets also need new ways of thinking in thedigital world, particularly in countries with undeveloped paymentsystems and low credit card usage.It is early days, but in this report you can read about someof the early signs of progress. In China, we are licensing musicservices and bringing huge numbers of consumers into the digitalmarketplace. Record companies are stepping up their activity inAfrica as technology offers the opportunity to reach manyconsumers for the first time. In Latin America, labels arelicensing services in innovative ways such as pre-paid deals andspecial daily subscriptions packages, aimed to reach the widestpossible audience.“There is a pioneering spirit among recordcompanies as they expand into these newterritories.”None of these exciting developments changes the fact thatthere is still one overriding obstacle to market development inmost emerging markets — and that is rampant digital piracy. Thisis a top priority for IFPI and our national groups around the world.Our focus on creating a fair playing field, supported by strong lawsand effective enforcement, remains undiminished.This report shows an industry on the move. Most of our majortraditional markets have stabilised and the challenge now is to tapthe huge potential of emerging markets and achieve sustainableyear-on-year global growth. As the digital entertainmentrevolution moves from one phase to the next, the music businesscontinues to lead the way for other creative industries.5

FACTS, FIGURESAND TRENDSThe music business continues to expand into new marketsand create new business models, attracting more usersto digital music services and bringing artists to a widerglobal audience.The industry’s digital revenues grew by 4.3 per cent in 2013 toUS$5.9 billion. There was steep growth in both revenues and usernumbers for subscription services, continued revenue growth fromad-supported services and stable income from download sales inmost markets. Globally, digital now accounts for 39 per cent of totalindustry global revenues and in three of the world’s top 10 markets,digital channels account for the majority of revenues.Overall, recorded music revenues grew in Europe and LatinAmerica and continued to stabilise in the US, growing 0.8 per centin trade terms¹. Music sales on a global scale, however, were sharplyinfluenced by a steep 16.7 per cent fall in Japan, the world’s secondlargest market. Outside Japan, global music revenues were down0.1 per cent; including Japan, they fell 3.9 per cent to an estimatedUS$15 billion.1. US recorded music sales are reported in retail terms in the US while IFPI’s globalfigures are reported in terms of trade value. US revenues declined 0.5% in retail valueUS$5.9Bnthe industry’sdigital revenues in 201339%the proportion of theindustry’s revenues fromdigital channelsFigure 1: Global digital revenues 2008 –13 (US$ Billions)5.65.14.44.64.05.9Pharrell Williams photo by Mimi Valdes200820092010201120122013Source: IFPI6

Streaming and subscriptions surgeSubscription services, part of an increasingly diverse mix ofindustry revenue streams, are going from strength to strength.Revenues from music subscription services — including freeto-consumerand paid-for tiers — grew by 51.3 per cent in 2013,exceeding US$1 billion for the first time and growing consistentlyacross all major markets.Global brands such as Deezer and Spotify are reaping thebenefits of geographical expansion, while regional servicessuch as Rdio, KKBOX and WiMP continue to attract new users.New entrants including Beats Music and YouTube launched, orannounced plans to launch, subscription services in early 2014.The subscription model is leading to more payment for musicby consumers, many of whom appear to be shifting from pirateservices to a licensed music environment that pays artists andrights holders. The number of paying subscribers to subscriptionservices rose to 28 million in 2013, up 40 per cent on 2012 andup from only eight million in 2010.“Music has always been at the forefrontof the digital revolution, leading the wayfor other creative industries and definingthe future of digital entertainment. Todaymusic’s digital revolution is moving tothe next phase as consumers embracestreaming and subscription models inmarkets around the world.”— Edgar Berger, Chairman and CEO, International,Sony Music EntertainmentRevenues from advertising-supported streaming services,such as YouTube and Vevo, are also growing — up 17.6 per centin 2013. Music video revenues in particular increased as theindustry extended the monetisation of YouTube to more than50 countries, adding 13 territories in 2013. Vevo has performedstrongly, hitting 5.5 billion monthly views in December 2013, a46 per cent year-on-year increase, and attracting 243 millionunique viewers worldwide.Record companies have adapted their business to a modelincreasingly based on access to music, and not only ownershipof music. This reflects in the growing share of subscription andstreaming revenues as a percentage of digital revenues globally.The industry now derives 27 per cent of its digital revenues fromsubscription and ad-supported streaming services, up from14 per cent in 2011.The digital download model remains a key revenue stream,however. Downloads still account for a substantial two-thirds ofdigital revenues (67 per cent) and are helping to propel digitalgrowth in certain developing markets such as South Africa, HongKong, Philippines and Slovakia. Downloads have seen a slightdecline in overall value globally, although digital album sales remainon an upward curve as consumers still show strong demand forowning the album format. Revenues from downloads globallyfell slightly by 2.1 per cent in value, the decline being offset byincreases in streaming and subscription revenue to generateoverall digital revenue growth in the majority of markets.Revenue from performance rights — generated frombroadcast, internet radio stations and venues — saw stronggrowth. Performance rights income was us$1.1 billion globally in2013, increasing by an estimated 19 per cent in 2013, more thandouble the growth rate in 2012, and accounting for 7.4 per centof total record industry revenue.Income from synchronisation deals, in which music is placedin advertisements, films or television programmes, declined by3.4 per cent in 2013, and now accounts for 2.1 per cent of totalindustry revenue.Despite the overall transition to digital, physical music salesstill account for a major proportion of industry revenues in manymajor markets. Gifting and deluxe box sets remain popular whilevinyl continues to grow as a niche product. Physical formatsaccount for more than half (51.4 per cent) of all global revenues,compared to 56.1 per cent in 2012. Although global physical salesvalue declined by 11.7 per cent in 2013, major markets includingGermany, Italy, the UK and the US saw a slow-down in the rate ofphysical decline. France’s physical sales increased by 0.8 per cent,helped by a local repertoire boom which saw French repertoireaccounting for 17 of the French top 20 albums of 2013.While vinyl sales account for only a small fraction of theoverall industry revenues, they have seen an increase in recentyears in some key markets. In the US, vinyl sales increased by32 per cent in 2013 (Nielsen Soundscan), and in the UK, theyincreased by 101 per cent in 2013 (BPI).51.3% 28mincrease in subscriptionstreaming revenuespaying users ofsubscription services7

A diverse global marketGeographically, the world music marketis highly diverse, with markets growing atdifferent speeds and favouring differentconsumption models. This is borne outby consumer research conducted byIpsos MediaCT for IFPI in November2013 (see Figure 3). It shows contrastingpreferences for service types in Germany,UK and US (where downloads are morepopular) and in France, Italy and Sweden(where streaming is the favoured model).A mixed economy ofrevenue streamsAmid the wide variations, there are threeperceptible groups of markets: first,countries in northern Europe, wherestreaming and subscription services aredominating; second, the major marketsof North America and Europe wherestreaming is growing fast but downloadscontinue to deliver the major revenue;and third, a swathe of other countriesincluding emerging markets, such asBrazil and Mexico, where both downloadsand ad-supported streaming are growingrapidly from a lower base.Figure 2: Digital revenue breakdown by format, 2008–201326%6%3% 1%8%1%64%Downloads Mobile SubscriptionAd-supported streams OtherSource: IFPI200819%5%2013Subscription and ad-supported streaming serviceshave grown from 9% to 27% of digital revenues inthe last five years.Figure 3: % Internet users using music subscriptions* / download servicesin past 6 months67%4773693215232722331221Paula Fernandes Photo by Guto CostaSweden France Italy USA UK GermanySubscriptions DownloadsSource: Ipsos MediaCT *Also includes free users of subscription services9

Revival in ScandinaviaScandinavian countries Denmark, Norway and Sweden are a showcase ofmusic industry revival, demonstrating the regenerating potential of thestreaming model. Sweden’s market grew by 5.7 per cent in 2013, Denmark’sgrew by 4.7 per cent, and Norway’s by 2.4 per cent (see Figure 4).Figure 4: Music market 2008–13 (US$ Millions) in Sweden, Norwayand Denmark409392John de Sohn photo by Gustav Modér Wiking361361Source: IFPI2010 2011 2012 2013US stabilises as Europe growsDigital revenues in the US, the world’s largest digital market, grew by3.4 per cent in 2013, with digital now accounting for 60 per cent of the USmarket. This helped sustain the stabilisation of the US market over recentyears. In 2013 overall US market revenues grew slightly by 0.8 per cent intrade terms, whilst declining 0.5 per cent in retail value.Europe saw digital growth of 13.3 per cent, helping that region post itsfirst overall market increase since 2001. Five of the region’s largest markets,France, Italy, Germany, Netherlands and the UK, returned to overall growth.Japan, the world’s second largest national market which accounts for afifth of global revenues, is in a challenging phase of transition to digital.In 2013, sharp declines in physical sales were coupled with declines in legacymobile products such as ringtones. Given the relatively recent launch ofsmartphone-supported download stores, the potential of subscription radio,and the expected arrival of more subscription services in 2014, prospectsappear better for the future of the Japanese digital sector. In 2013 there wassharp growth in subscription revenue (up 204 per cent) and download sales.13.3%digital growthin europe“The recorded music business remains challenging — good news includes the growthof streaming/subscription, and the continuing explosion of mobile devices means wecan reach millions of consumers in emerging markets for the first time. The world istransitioning at different speeds in different regions and 2013 was a set-back in the world’ssecond biggest market — Japan. In time Japan will bounce back as more digital businesspartners enter this vibrant market.”— Max Hole, Chairman and CEO, Universal Music Group InternationalLighting up developing marketsWith the spread of digital services across the world in the last three years,record companies are intensely focused on the potential of developingmarkets. These are territories with a vast potential consumer base but withlittle previous retail infrastructure and traditionally high levels of piracy.Growth is also driven by increasing smartphone penetration, and increasinginvestment in local record companies and domestic repertoire.10

Outside the global top 10 markets, 15 territories saw overall growthin 2013: Argentina, Central America, Chile, Colombia, Denmark, Greece,Iceland, Netherlands, Norway, Paraguay, Peru, Russia, Sweden, Taiwanand Venezuela. Some of the emerging economies in this list postedsignificant increases in digital revenue, including Argentina (+69 per cent),Colombia (+85 per cent), Indonesia (+112 per cent), Peru (+149 per cent),South Africa (+107 per cent) and Venezuela (+85 per cent). Overall, LatinAmerica experienced 27.6 per cent digital growth in 2013.61%proportion of internetusers using licenseddigital music servicesAttracting consumers to licensed servicesOne of the key hallmarks of digital music today is the high level of consumerawareness and engagement in digital services. Record companies arelicensing a diverse range of services, successfully meeting differentconsumer preferences. This is illustrated in research undertaken by IpsosMediaCT across ten leading music markets for this report.Now in its second year, the research shows 61 per cent of internet usersaged 16 –64 engaged in some legitimate digital music activity in the past sixmonths. Among younger consumers (16–24) this figure is higher at 77 per cent.The research also finds that consumer satisfaction with digital servicesremains high. Three-quarters of licensed services’ customers (76 per cent)describe them as “excellent”, “very good” or “fairly good” while even themajority of those using unlicensed services (56 per cent) recognise “thereare good services available for legally accessing digital music.”The findings also identify a range of reasons why consumers choosedifferent services, and what qualities of those services they most value.People mainly choose subscription services to discover new music (41 percent), with 39 per cent saying they offer a “legitimate environment.”37 per cent like the ability to listen, without having to buy each song.The most common reason people use download services is the security/ease of payment (46 per cent), while 41 per cent value the guarantee oflegality and 39 per cent cite “trust” in the company.The ability to listen for free (69 per cent), music discovery (46 per cent),were the main drivers for video streaming services.The study also shows that the vast majority of consumers are awareof the availability of licensed services and the range of choice available.The table below compares awareness levels in the 10 selected marketssurveyed by Ipsos MediaCT (accounting for the fact that services are notlaunched in all those markets).“Emerging markets willremain a priority for theindustry because of thesheer size of the opportunity.The potential of thesemarkets is unlocked by thewidespread adoption oftechnology and the creationof models that monetisemusic in ways that fit withlocal demand for — andattitudes towards — music.”— Stu Bergen, President, International,Warner Recorded MusicFigure 5: Consumer awareness of licensed services in 10 selectedmarkets in 20139173615940 38YouTube iTunes Amazon MP3 Spotify Deezer VevoSource: Ipsos MediaCTCountries where awareness was asked on survey: iTunes – All except South KoreaSpotify – All except Brazil (launching in 2014), Japan and South KoreaVevo – All except Japan and Mexico Deezer – All except Japan, South Korea, Sweden, USAmazon MP3 – only Germany, UK, Italy, Japan and US (out of the countries surveyed)Imagine Dragons photo by Nick Walker11

Most popularartists of 2013Top selling global albumsOne Direction topped the globalalbums chart, with MidnightMemories selling four million units.The album was the fastest selling of2013 in the UK and sold more than a millioncopies in its first five weeks of release in theUS. It topped the charts in dozens of countriesworldwide, from Australia to Sweden.Eminem’s The Marshall Mathers LP 2 tookthe runner-up spot on the global albums chart,selling 3.8 million units. The album debuted atnumber one in the Billboard Top 200 chart andEminem became the first American artist toachieve seven consecutive number one albumsin the UK. The album also topped the charts incountries from Austria to Canada.Figure 6: Top ten best selling albums of 2013Rank Album & Artist Total sales (m)Midnight Memories1 One Direction 4.02The Marshall Mathers Lp2Eminem 3.83The 20/20 ExperienceJustin Timberlake 3.64Unorthodox JukeboxBruno Mars 3.25Random Access MemoriesDaft Punk 3.26 PrismKaty Perry 2.87To Be LovedMichael Bublé 2.48Night VisionsImagine Dragons 2.49 ArtpopLady Gaga 2.310 BeyoncéBeyoncé 2.3Source: IFPIEminem courtesy of UMG Bruno Mars photo by Kai Z Feng Lady Gaga photo by Meeno12Michael Bublé courtesy of Warner Music

ifpi Global Recording Artist ChartIn 2014, IFPI published its first ever global recording artists chartto accurately capture the popularity of artists across a widerrange of channels, including digital downloads, physical formatsales and streaming services. The chart gives a fuller picture ofthe popularity of artists across the many different formats andchannels through which fans now listen to music.The inaugural chart was topped by One Direction, the IFPIGlobal Recording Artists of 2013, on the back of the success oftheir third studio album Midnight Memories, which containedthe hit singles Best Song Ever and Story of My Life. The albumtopped the US Billboard Top 200 chart, making One Directionthe first group in the charts history to debut at No. 1 with its firstthree albums. The video for Best Song Ever attracted almost200 million views on YouTube and Story of My Life more than100 million views. The band’s music was also heavily streamedon services such as Deezer and Spotify.The second spot was claimed by Eminem, driven by thesuccess of his eighth studio album The Marshall Mathers LP 2,which featured the singles Berzerk, Survival, Rap God andThe Monster. The albumfeatured guest appearancesfrom Skylar Grey, KendrickLamar, Rihanna and NateRuess. The album toppedthe charts in many majormusic markets includingthe US, UK, Germanyand Australia.The IFPI Global RecordingArtist AwardFigure 7: IFPI Global Recording Artist Chartwv1One Directionphoto courtesy of Sonyv6 P!nkphoto by Andrew Macpherson2 Eminemphoto courtesy of UMG7 macklemore &ryan Lewisphoto by John Keatley3JustinTimberlakephoto by Tom Munro8 rihannaphoto courtesy of UMG4BrunoMarsphoto by Kai Z Feng9michaelbubléphoto courtesy of Warner Music5katyperryphoto by Cass Bird10Daft Punkphoto by David BlackSource: IFPIThe compilation of the IFPI Global Recording Artist Charthas been independently verified through certain agreedprocedures by BDO LLP. BDO LLP has verified that IFPIhas compiled the chart correctly in line with the outlinedprocedures. The certain agreed upon procedures carried outby BDO did not constitute an audit or review.One Direction photo by JM Enternational 13

Top global singlesThe 2013 global singles chart was toppedby Robin Thicke, the American-Canadiansinger whose Blurred Lines topped thecharts in 14 countries. The song was takenfrom his sixth studio album, also calledBlurred Lines. The track, which featuredTI and Pharrell Williams, was promotedwith a video directed by Diane Martelthat featured models Elle Evans, JessiM’Bengue and Emily Ratajkowski andattracted more than one million viewson Vevo in its first day of release. Thickeperformed the song with Miley Cyrus atthe MTV Video Awards, in the processsetting the record for an event generatingthe most tweets per minute (360,000).Blurred Lines attracted morethan one million views onVevo in its first day of releaseMacklemore and Ryan Lewis’ ThriftShop was the second best performingsingle. It was the fifth single from the hiphop duo’s debut studio album The Heist.The track went to number one in ninecountries and the accompanying videoattracted more than 485 million viewson YouTube.Figure 8: Top global singlesRank Single & Artist Total units* (m)blurred lines1 robin thicke 14.82thrift shopmacklemore & ryan lewis 13.43wake me upavicii 11.14just give me a reasonP!nk Feat. nate ruess 9.95 roarkaty perry 9.96get luckydaft punk ft. pharrell williams & nile rogers 9.37 radioactiveimagine dragons 8.68when I was your manbruno mars 8.39scream & shoutwill.i.am 8.110 stayrihanna 7.9Source: IFPI *Units include single-track downloads and track-equivalent streams.The importance oflocal repertoireInvestment in local repertoire remainsthe lifeblood of the international musicindustry. Album charts in individualmarkets demonstrate the continuingstrength of local repertoire as a share ofoverall music sales. In many markets, localartists account for the vast majority ofthe top selling albums of 2013. In France,for example, 17 of the top 20 sellingalbums of 2013 were local repertoire, upfrom 10 in 2011. In Germany, seven of thetop 10 selling albums in 2013 were localrepertoire, a trend reflected in 13 selectednon-English language markets (see Figure9). Record companies are also focused onpromoting locally signed artists aroundthe world. Warner Music points to itsJapanese breakthrough artist KyaryPamyu Pamyu undertaking her secondworld tour, while a new wave ofScandinavian artists aspire to follow thecareer trajectory of David Guetta, signedin France and now a global phenomenon.Figure 9: Percentage of top ten albums in2013 that were by locally signed artistsCountry %South Korea 100%Japan 100%Brazil 90%Italy 90%Sweden 90%France 80%Denmark 80%Netherlands 80%Germany 70%Norway 60%Spain 60%Portugal 50%Malaysia 50%Source: IFPI, National GroupsLars Winnerbäck photo by Jonas Linell 15

digital music in 2014LIGHTING UPNEW MARKETSAND MODELSThe music industry is continuing its transformationinto a global digital business, expanding into newmarkets and extending new access models to moreterritories across all continents. Record companiesare successfully delivering music through digital channels,broadening the world of licensed music, and innovating tobring artists to a global audience. Music still leads the wayfor other creative industries — including books, films and TV— in monetising its core product for the digital world.The move to mobileUnderpinning these developments is the global shift ofmusic consumption to smartphone-based mobile platforms.Digital music has moved rapidly from a fixed line desktopPC experience to on-the-go consumption on wirelesssmartphones and tablet devices. Record companies are nowmonetising the consumption of music in ways that were notpossible a few years ago.“The advent of the smartphone as a musiclistening device has been profound for themusic business.”— Ole Obermann, Sony Music EntertainmentThe smartphones boom is an unprecedented opportunityfor the music business. At the end of 2012, just 12.9 per centof mobile devices worldwide were classed as smartphones.With penetration forecast to reach 36.2 per cent by the endof 2016 (Portio Mobile Factbook), there is huge potential formobile to increase the reach of music services. Accordingto Ole Obermann, executive vice president, digital partnerdevelopment at Sony Music Entertainment: “The advent ofthe smartphone as a music listening device has been profoundfor the music business. With 30 per cent plus of the world’spopulation projected to own a smartphone by 2016 thatequates to over two billion potential music service customersworldwide.”Record companies are harnessing the power ofsmartphones with a new generation of partnerships.For example, Warner Music has signed a deal with Shazamto boost its marketing and A&R activity. The record companyrecently launched Linkin Park’s single Guilty All The Sameexclusively on Shazam, with users who had previouslyShazamed the band getting advance notification of therelease and all those using the service on the day of thelaunch getting a link to the track.Increased competition between the Android and AppleiOS platforms has opened the market and widened consumerchoice. Streaming services, in particular, are thriving onAndroid devices. According to Stephen Bryan, executivevice president, digital strategy and business development,Warner Music Group: “Android has created a number of newopportunities for us to reach consumers with different suitesof services. As consumers are moving to the Cloud, many ofthem are ending up in the Android eco-system where we havea lot of very high quality services waiting for them.”Access & ownershipDigital music is also moving from a model based largely onownership to a more multifaceted model built around access.This is breaking down the traditional distinctions between the“Android has created a number of newopportunities for us to reach consumerswith different suites of services.”— Stephen Bryan, Warner Music Group16

Kingson Jin photo by Zheming ZhangGLOBAL SMARTPHONEPENETRatiON13%“Each market is different . . . The transitionis always going one way — it is just aquestion of how fast it’s going to happen.”— Rob Wells, Universal Music Groupmajor services. Rob Wells, president of global digital businessat Universal Music Group, says: “There’s a blurring of the linesbetween the models. iTunes Radio is a stream. iTunes Match isa subscription, and on the back of it is a download service.“Service definitions are getting more and more complicated,but this is to the benefit of the consumer, who is getting moreand more choice. The greater the variety of consumer offeringsthere are in the marketplace, the more they will spend on musicand the more engaging their experience will be.”In the last three years record companies have licensedservices to operate in more than 150 countries. Thoseservices are now growing in markedly different waysinternationally. Rob Wells says: “Each market is differentaccording to socio-economic factors, infrastructure, creditcard penetration, the willingness of carriers to implementcarrier billing, anti-piracy legislation. These are all in the mix.The transition is always going one way — it is just a questionof how fast it’s going to happen.”While the biggest growth area is music subscription(revenues up 51.3 per cent globally in 2013), downloadsremain substantially the largest revenue segment of thedigital music business (67 per cent). They are seeing stronggrowth, especially in certain developing markets where iTuneshas relatively recently arrived — notably, South Africa, Taiwanand countries in South East Asia. The arrival of iTunes morethan doubled the value of the South African digital musicmarket within the space of one year.2011 (770M)The rise and rise of streaming andsubscriptionSource: Portio36%2016 (3067M)Record companies’ revenue streams continue to diversify,with streaming and subscription accounting for a growingproportion of income. The industry has licensed theexpansion of global services, such as Deezer and Spotify,and backed regional services such as Muve, Napster, Rdio &WiMP. Asian subscription service KKBOX is expanding to newmarkets while streaming is growing in Africa with THE KLEEKand Deezer.The impact of streaming, alongside an improvedenforcement environment, in helping revive markets inScandinavia is well-documented (see Sweden case study,page 34). Research also shows that streaming services aresuccessfully helping to reduce piracy. GfK research in Swedenin 2013 showed nine in 10 paying users of Spotify downloadillegally less often. For consumers, streaming services’unlimited access and specialist playlists encourage discovery.17

More discovery, more from mobileA few years ago depth and volume of catalogue were keybattlegrounds among digital services. Today, with major servicesoffering up to 37 million tracks, competition has shifted torecommendation and discovery. Francis Keeling, global head ofdigital business, Universal Music Group, says: “To fully engageusers, services need to provide a well-curated experience.Music fans love to discover new music, and digital services needto be experts at music recommendation.” Streaming servicesare particularly focused on developing a mobile-first offer andincreasing scale through ISP partnerships.With smartphones now the primary point of internet accessfor many people, Spotify recently introduced a free mobile tierwhich aims to encourage more users to engage and ultimatelysubscribe to the full Premium service. A new ‘Discover’ featureoffers enhanced recommendations as well as playlisting. Spotifyalso introduced the Browse editorial pages, which curate playlistsby mood, genre or news item. Spotify entered 38 new marketsin 2013, including Argentina, Hong Kong, Malaysia, Mexico,Singapore and Taiwan, as well as countries across EasternEurope. The service is now live in 55 markets and has a payingsubscriber base of more than six million.Ken Parks, chief content officer at Spotify, believes musicsubscription has hit a tipping point. “This is the way peopleare consuming music, so the debate about whether it’s amodel to embrace has been put to rest over the last year.Unlike the distribution of physical product we can reach everyperson on the planet, at least every person with a smartphone.It opens up huge opportunities in the developing world, wherecountries have leapfrogged fixed line internet and gonestraight to wireless.”“This is the way people are consuming music,so the debate about whether it’s a modelto embrace has been put to rest overthe last year.”— Ken Parks, SpotifyAlready present in more than 180 territories, Deezer hasfive million paying subscribers, 12 million active unique usersand partnerships with mobile operators across 31 territories.CEO Axel Dauchez says good editorial is vital to bring throughnew acts and meet the long-term needs of the consumer —both of which are critical for the long-term future of the musicbusiness. He says Deezer’s focus on editorial — with emphasis oncurating new, domestic repertoire through a network of editors— is a compelling point of difference. “Being a jukebox solves theshort-term need. But in the long run you have no differentiationversus your competitors or piracy. If you want to thrive it cannotbe a market of what you already know, but helping people buildtheir own musical identity by cracking the discovery process.”“If you want to thrive it cannot be a marketof what you already know, but helpingpeople build their own musical identity bycracking the discovery process.”— Axel Dauchez, DeezerGoogle Play Music All Access was the fastest-growingsubscription service in 2013. Having launched the subscriptionservice in the US in 2013, Google Play Music now has threecomponents — the Play Music Store (à-la-carte downloads),Scan and Match (locker) and now All Access (subscription) —live in 21 countries on four continents by early 2014.All Access is designed to work seamlessly alongside theexisting Google Play free scan-and-match locker service thatallows users to store their existing music library in the cloud andstream it remotely or access it offline from any Android or iOSdevice. Zahavah Levine, director of global music partnerships forAndroid, says the rapid take up of Google’s smartphone operatingsystem has driven the success of Google Play as it provides easyaccess to a massive global smartphone audience. “Subscribersare the best music customers we have. 120 dollars a year issubstantially more than the average user spends on purchasingtracks. Relative to the industry’s overall revenue, subscriptionrevenue is still a small piece but it’s growing fast.”Beats Music, an offshoot of the consumer electronicscompany owned by Dr Dre and Jimmy Iovine, launched itssubscription service in 2014. CEO Ian Rogers believes the paid-forUS music subscription business is achieving only a fraction of itshuge potential. “There are 100 million people paying for cableFigure 10: Total paying subscribers worldwide (m)281382010 2011Source: IFPI estimates2020122013will.i.am photo by The Bridge18

and satellite TV subscriptions in the US, but only a few millionmusic subscribers today. We see the US subscription marketgrowing to 50 million and beyond.” Unlike most subscriptionservices, Beats Music will not offer a free tier. It believes its rootsas an artist-oriented company focused on curation will providea point of difference that encourages people to pay for apremium product.“We’re aggressively marketing a uniqueoffer for the entire family to mainstreamAmerica.”— Ian Rogers, Beats MusicRogers says partnership with AT&T will have a major impactand allow them to market the service to customers on familypackages. “Until recently, major US operators have only dabbledwith music services rather than using music as a marketingdifferentiation. With AT&T, we’re aggressively marketing a uniqueoffer for the entire family to mainstream America.” The serviceintends to expand internationally.Subscription services are also opening up new opportunitiesbeyond mobile handsets and tablets. rara has recently launchedEurope’s first integrated in-car on demand music streamingservice with BMW. Available in virtually all new BMW models acrosssix European markets, rara with BMW Online Entertainmentstreams directly to the vehicle’s embedded SIM with no need toplug in a smartphone. The service, which offers instant access toover 24 million tracks and more than 200 curated music channels,includes a cross-border unlimited data roaming package and costs€390 in the first year and €220 in subsequent years. It is believedthat the market for integrated in-car audio streaming will growexponentially in the next few years.38Streaming:“A sustainable income”Artists in countries with high rates of streaminghave recognised the benefits to them, both financialand creative.Carl Vernersson is from the managementcompany At Night Management who managethe international best-selling Swedish DJ Avicii.He points to three key benefits to artists ofstreaming services. First, financial: “From a financialperspective, streaming gives songs a longer life andsustainability, meaning that you receive incomeover a long time. It may not be as much as when youget something peaking on a download service inthe first three or four weeks. But with streaming, itgenerates income for ten, fifteen or twenty years,and that is royalties, not just publishing income.Looking outside Sweden, I think that once serviceslike Spotify are established for a couple of yearsit will show artists that streaming is a sustainableincome, not a six-month-per-album income.”A second benefit Vernersson points to is creative:“With the streaming revenue model, it’s even moreimportant to deliver a solid album and not just abundle or a single. That is something that I likeabout streaming from a creative perspective. Peoplearen’t forced to go for a bundle-only download toget a single. They can make their own playlist andexplore music in a way that wasn’t possible before —even though the concept of playlists has existed fora very long time.”Third, Vernersson says streaming services havehelped revive a market formerly driven by piracy:“The big success for piracy was the accessibilityit gave — people didn’t have to go to the recordstore, they could download the single and have it.Now, streaming services have achieved the sameaccessibility as piracy and more — but the differenceis that they are making money and are able to payartists. And that is great in so many ways.”new marketsin 20135mpayingsubscribersAvicii photo by Alex Wessely21Streaming has driven a revivalSwedish market with increasedinvestment in A&Rcountries19

Monetising music videoRecord companies are making big stepsforward in music video, often helped bythe resolution of publishing rights thatuntil now have delayed the monetisationof music video in some key markets.YouTube, the most used music service inthe world, is now licensed and monetisedin virtually every country with twelvemarkets added in 2013, including Sweden,South Korea and Chile. YouTube is thebiggest single access point to music forconsumers internationally, with one billionusers worldwide.Improvements in the handling of usergenerated content (UGC) are helpingrights holders grow income from YouTubeand other licensed platforms. Google’sContentID system (and other systemsused by other platforms) has made iteasier for rights holders to differentiatebetween video types, allowing thestreaming of non-official user-generatedcontent such as mashups to be licensedand monetised, rather than removed forinfringing copyright. YouTube’s TrueViewtool for advertising is also having apositive impact in monetising musicvideos. According to YouTube, revenuesgenerated from UGC on its platform havenow overtaken those generated byofficial videos.crew to Cyrus’ performance. Another film,by Steve Kardynal, features the beardedcomedian dressed in drag and lip synchingCarly Rae Jepsen’s Call Me Maybe to thealternating delight and horror of the usersof webcam-chat service Chatroulette.Since both videos featured original soundrecordings, their many millions of viewstriggered payments to rights holders.YouTube, until now an exclusivelyadvertising-supported service, is planningwhat many see as a highly significant moveinto paid-for subscription. Plans for apremium service, which will offer a highervalue experience to YouTube’s users,were announced in mid-2013 with launchexpected in 2014.Vevo also made significantdevelopments to its service in 2013,launching in Germany, the Netherlandsand Poland. The service is now availablein 13 countries. Vevo also launched a24-hour MTV-style digital channel withvideo premieres, live concerts and musicthemedoriginal shows. Initially live in theUS and Canada, Vevo TV is expected toroll out to more territories in 2014.Internet radio —looking globallyRecord companies are licensing internetradio services, which are tailored to the‘lean back’ consumer, specialise in musicdiscovery and create playlists based on aspecific artist or genre.In September 2013, iTunes developedits service with iTunes Radio, seen bymany as an opportunity to globalise aninternet radio model which has beenpredominantly restricted to the US. A keyfeature of the iTunes Radio service is the‘buy’ button that directs listeners to theiTunes store. Stephen Bryan of WarnerMusic says: “We’ve always thought thatdigital radio is a category that has greatpotential around the world. And the factthat Apple is getting into that business isSteve Kardynal’s Call MeMaybe Chatroulette videohas been viewed more than14m timesImprovements in thehandling of user generatedcontent are also helpingrights holders generateincome from use of theirworks on licensed platformsOne such mashup saw footage from theoriginal 1960s series of Star Trek splicedwith Miley Cyrus’ performance at the 2013MTV Video Music Awards — presenting anastonished reaction by Captain Kirk and hisCarly Rae Jepsen photo by Reid Rolls5 13countries in 2010 countries in 201420

a sign that the global digital radio businessis going to start to heat up. There are agreat number of consumers who listen toradio and are casual buyers of CDs anddownloads, and digital radio will provide ahuge opportunity for us to better targetand reach these fans.”“We’ve always thought that digitalradio is a category that has greatpotential around the world.”Stephan Bryan, Warner MusicUS internet radio service Pandora, alsoavailable in Australia and New Zealandis the best-known standalone internetradio service with more than 70 millionusers. Subscription services such as Rdio,Rhapsody and Spotify also provide freead-supported, radio-based services toattract new users.Engaging in emergingmarketsWith underdeveloped payment systems,high piracy rates and little tradition ofpaying for music, many large globalmarkets are yet to reach their vastpotential. The growth of smartphonesand licensed music services, however,is starting to change that and emergingmarkets are a key focus for internationalrecord companies in 2014.Dennis Kooker, president, globaldigital business & US sales at Sony MusicEntertainment, says: “We see growth inemerging markets significantly outpacingthe rest of the world with the frictionaround distribution and reaching theconsumer removed because of mobiletechnology and properly licensed musicservices. Tackling piracy and making theshift to licensed consumption remainsvery challenging in some of the marketswith the highest potential. Expansionof services focused on pre-paid billingmechanisms is also critical as the vastmajority of consumers are accustomed topaying bills by pre-paid methods versususing credit cards.”isps leverage the valueof music: kpn-SpotifyMusic services looking for access to the massaudience can partner with ISPs to offer a musicservice bundled with phone and data packages.These are commonplace in Europe and North America,offering streaming services access to a vast audience,an established and convenient payment system andadding value to ISP services. Spotify’s partnership withKPN in the Netherlands is often held up as a textbookexample of a successful ISP agreement.For ISPs, a successful partnership in musicstreaming brings considerable rewards. One ofthe most talked-about successes of 2013 has beenSpotify’s cooperation with ISP KPN. Marnix Laurs,head of content and partnerships at KPN, says thecooperation between the ISP’s “Triple Play” service,which bundles Spotify’s premium tier for free in thetop two propositions, has exceeded expectations.The partnership is one of the measures KPNhas taken to increase customer acquisition, andadvance customer loyalty. With that, it helps KPN tocompete with its two larger competitors, Ziggo andLiberty Global. Customer acquisition and stimulatingloyalty are the key metrics of success for any ISP.“There is fierce competition among ISPs, not justin the Netherlands but everywhere. We partneredwith Spotify because we were looking for a way todistinguish ourselves from the others. We looked athow we could engage music subscriptions to boostcustomer acquisition and grow customer lifetimevalue. We wanted something that was innovative, thatcovered the whole Dutch market and that showed offthe strength of our network. Putting all that together,we saw music streaming as the answer.”The Netherlands is one of the fastest-growingmarkets for music streaming services, with overalldigital revenues up 56.1 per cent in 2013, with muchof the credit going to success of the KPN-Spotifypartnership.“KPN definitely believes that the Spotify service,and streaming services in general, can be appealingto all customer target groups”, Laurs says. “Forthe over-45 age group we are convinced we canestablish a high level of penetration. This will grow ascustomers use, and start to love, the service. Youngertarget groups are growing up in a world in which theopportunities they are being offered now will be onesthey use for the rest of their lives — that is why KPNthinks there is a huge potential for streaming services.”21

Rapid digital growthin Latin AmericaMarkets in Latin America are alreadyconfirming this potential, with digitalrevenues growing 124 per cent over thelast three years, compared to a globalaverage of 28 per cent. To build on thisgrowth and unlock value across the massmarket is requiring new ways of thinking.Key strategies include collaboration withmobile operators and ISPs, bundled musicpackages and pre-paid music subscriptionon devices. In Latin America a numberof new partnerships were launched orextended in 2013 as digital revenuesgrew by 28.1 per cent.Figure 11: Digital growth in LatinAmerica, 2013, Selected CountriesCountry% growthPeru +149%colombia +85%venezuela +85%Source: IFPISpotify announced a partnership inMexico with Telefonica which bundlestheir music service with phone and dataservices. Deezer partnered with ISP Tigoto cover Central America and the Andeanregion and Napster partnered with ISPTerra to bring the Rhapsody-owned service124% 28%digital growth in latinamerica 2010–2013to Latin America for the first time. USservice Muve offers daily or weekly prepaidmobile music subscriptions startingfrom 50 cents a day and launched in Brazilin cooperation with TIM, the country’ssecond largest ISP. Alejandro Duque, vicepresident, business development anddigital, Latin America at Universal MusicGroup, says: “It’s important to rememberthat credit card penetration is still notvery high in this region so when a serviceonly allows credit card billing they’recatering for a small percentage of thepopulation. That is why doing deals withcarriers, or with any company that is goingto enable mass billing, is absolutely thekey to success.”Piracy remains a huge problem in theregion. Luis San Martin, director generalof Multimusic, Mexico’s leading musiccontent broker for independent artists,says: “We’re fighting piracy on the streets,our robots are searching the internet andwe’re campaigning to get the governmentto deal with the issue. Before, when wedidn’t take action, people thought that itwas OK to break the law. Now we’re anindustry that is taking responsibility forits content.”average global digitalgrowth 2010–2013Local services thrivein AsiaRecord companies are engaging activelyin markets across Asia. In the lasttwo years, the region’s larger marketsoutside Japan have seen the rollout ofall the major download, subscriptionand streaming services, combined withincreased competition from local servicessuch as Taiwan-based KKBOX. Servicessuch as Deezer, iTunes and Spotify areseeing healthy growth in sales amonga largely higher income, credit cardowningdemographic, complementingad-supported services that arefree-to-consumer.In China, licensing agreements are inplace with eight major digital platforms,part of a push towards a paid-for onlinemodel (see China case study, page 36).In India, already Asia’s second largestmusic market after Japan, local streamingservices Gaana and Saavn, which targetdomestic and international higher-incomeIndian customers, are growing fast.Sandy Monteiro, president, South-East Asia for Universal Music Group,sees enormous growth potential in Asiamarkets. “Last year was a milestone year,Anitta photo by Washington Possato Armin Van Buuren photo by Chris Davison22

ecause in 2013 we saw the arrival ofmajor global services in Asia. So for thefirst time we are seeing the kind of digitalservices available that already exist inAmerica and Europe. The global serviceshave been very diligent in ensuring theyhave a huge domestic repertoire basebefore they launch in Asia markets, butKKBOX has taken the fight to them byexpanding around the region.”In a region with historically rampantlevels of piracy, record companies and legalservices in Asia have been working to openup the mass market. As in Latin America,they are partnering with ISPs. Deezer’spartnership with Thailand’s second largesttelecom company Dtac has been hailed asa major success. For Universal, Monteirosays more telco partnerships will followwhen operators see the competitiveadvantage in linking with music services:“Somewhere along the lines the telcoswill come around and understand how tobetter monetise their platforms.”Russia shows potentialRussia remains an underdevelopedmarket, but one of huge opportunity.Music revenue rose by 12 per cent toUS$69 million in Russia in 2013 after thearrival of iTunes, illustrating the potentialin that country. Record companies havelicensed more than a dozen digital musicservices, including local services suchas Yandex, Trava and several mobileoperators. While the industry is trying tofind licensing solutions, these services arestruggling to fulfil their potential becauseof high rates of digital piracy. Russia’slargest online social network, vKontakte,operates a heavily used unlicensed musicservice, which has been the subject oflegal action by rights holders. While suchservices continue to operate in disregardof music copyrights, it is difficult toestablish a sustainable licensed digitalmusic market in Russia.KKBOX: Asia’s local servicefights its cornerAlthough international services have made moreheadlines in 2013, Asia is home to one of the world’sfirst music subscription services, KKBOX, which isnow competing against the global players with itsown locally-branded freemium service. The service,along with iTunes, helped fuel strong digital salesgrowth in its native Taiwan in 2013, with revenuesup 46 per cent.Founded in 2004, KKBOX is one of Asia’s leadingdigital music services. It provides limited freestreams for its 10 million-plus free users, and anunlimited, fully-portable, integrated mobile, tabletand desktop service for its 1.5 million-plus payingsubscribers. The service is now available across Asiain Hong Kong, Japan, Macau, Malaysia, Singapore,Taiwan and Thailand.Like other digital services, KKBOX is competingon music discovery and curation as it is ondistribution. Chris Lin, founder and CEO of KKBOXset out from the start to create a superiorexperience for consumers used to free unlicensedservices. It has built a differentiated music brandwith quality magazine-style editorial, a move thathas seen the company extend its brand into printedmagazines and TV programming. The servicebecame a hit in Taiwan and quickly launched in HongKong and other Asian markets. In 2013, it launchedanother innovation, ‘Listen With’, which allowsusers of the service to listen live with others with“70–80 per cent” of domestic artists using KKBOX.“We’re trying to build our service into a premiumbrand. You can get free music from YouTube, frompiracy, but there’s something that you cannot getwhich is a closer feeling, closer distance withartists . . . interaction. That’s what we’re trying tobuild — a VIP-club type of feeling.”All players in the legitimate digital music marketacross Asia agree that piracy remains a huge problemfor the sector. Chris Lin says he is competing with15 or 20 illegal services from China that are active.“People call us the leading platform in Asia, but I infact would say the leading platform is still piracy.”23

Long live therecord labelDaft Punk: A physical campaign in the digital worldDaft Punk’s Random Access Memorieswas one of the most significant globalreleases of 2013. The band delivered asophisticated contemporary record thatits record label backed with an innovativemarketing campaign.John Fleckenstein, EVP, Internationalat Sony Music Entertainment, saysthat it was the trusted partnershipbetween the band and recordcompany that enabled them tocreate a campaign as excitingas the album itself. “In thesummer of 2012, around ten of usconvened in a Paris studio to meetDaft Punk, listen to the album andunderstand their vision for howthey wanted it released to the world.It was immediately apparent that themusic was truly exceptional and weneeded a campaign that matched thescale of their vision.”Having over six months betweenthe first meeting and the album’srelease meant Sony Music had timeto put together a sophisticated globalcampaign. “Fundamental to oursuccess was our ability to communicateinternally within Sony the vision behindthe project and the power of music.We visited every key market — usuallywith the group themselves and theirmanager. We played them the full albumand evangelized the concepts behindour launch.”Certain elements made the campaignunique. First, the artists are two Robots.They do not have a ‘public’ voice — theydo not do interviews or have Twitteraccounts. Second, they had a globallycharged fan base rabid for more musicand information. And, third, Sony neededto be creative knowing it did not haveunlimited funds.In answer to this, first Sony musicemployed scale and timing — everythingglobal, everything simultaneous. Second,in tune with the group’s vision, SonyMusic employed an interesting approach:every action was to be carried out in thephysical world, but get reflected into tothe digital/social media world.This came out of the group’sinspiration from some of the film andalbum premieres of the ’70s and ’80swhose launch campaigns were ‘largerthan life.’ Campaigns that left fanswondering and wanting more — drivenby a compelling sense of mystery thatmade the debuts immensely exciting.“We needed a campaignthat matched the scaleof their vision.”— John Fleckenstein, Sony Music“Our campaign started with tightlycoordinated outdoor advertising placedin known worldwide locations and ashort mysterious TV teaser using a rifffrom Get Lucky. Fans saw these things,recorded them and shared them likecrazy. Billboards were placed in highlyrecognisable locations around theglobe — in London, in Los Angeles, inTokyo — fuelling this ‘it’s happeningeverywhere’ excitement amongst fans.For the teaser, Columbia Records inthe US premiered the piece during SNL.Sony UK bought ‘road blocks’ acrossTV at a specific time. In response, fansimmediately began generating theirown content and conversing — one ofthem even created a popular 10-minuteaudio loop of the riff in the teaser video.This larger than life approach wasalso taken all the way through tothe album launch. “For instance,in Australia, our local companydecided to debut the albumat the Wee Waa county fair— which because of globaltime zones, technicallybecame our first play. Theyfirst announced the event inthe local printed newspaper,which then sent the internetinto a frenzy of speculation aspeople asked: why would Daft Punklaunch their album in a town in themiddle of the Australian outback? Theintrigue generated global headlines andultimately media even travelled to thesmall town for the event.”The album was released across allformats simultaneously. Random AccessMemories was the biggest ever preorderedalbum on iTunes at that point.It hit number 1 in 97 iTunes stores —while simultaneously breaking therecord for the most streamed albumof all time on Spotify.The Random Access Memoriescampaign highlights how artists andlabels can work together to generate aphenomenal level of global interest inan album launch. It also showcases howactivity in the physical world can be usedto motivate fans to be in the vanguard ofan artist’s digital campaign.Daft Punk photo courtesy of Sony Music24

Avicii photo by Jocob SchulmanAvicii: From club DJ to global superstarAvicii has gone almost overnight frombeing a club DJ in Sweden to a global artistwho plays in the world’s biggest arenas.He worked with his management andrecord company on a world conqueringcampaign fuelled by innovative electronicdance music (EDM) and harnessing onlinesocial networks.Per Sundin, senior vice president,Nordic region, Universal Music GroupInternational, first discovered Avicii onYouTube, where he had posted a song,Bromance, the instrumental version ofwhat later became Seek Bromance, underthe pseudonym Tim Berg. Sundin wassearching for EDM acts after witnessing thepopularity of a new generation of artists atthe Pacha nightclub in Ibiza.Sundin was impressed by the songand the harmonies and, of course, theamount of views the unreleased song hadgained and approached Avicii’s manager,Arash Pournouri, signing a deal to releaseit across the Nordic region. It was asuccessful hit and they followed up withthe single Fade Into Darkness. Sundin wasencouraged by the reaction to these twotracks to energise Universal Music’s globalnetwork to promote Avicii’s single Levels,which became his first global hit sellingmore than five million copies.In January 2013, Avicii launched acampaign in partnership with Ericsson, tocreate the world’s first ‘crowd sourced’hit song. Fans sent basslines, effects,melodies, rhythms and vocals to Avicii forhim to edit and release as a finished track.He also released the track Three Million tomark the acquisition of his three millionthFacebook fan.Avicii and his record label then preparedto promote his debut album True and itslead single Wake Me Up. The album wasunveiled at the Ultra music festival in Miamiin a live performance featuring a range ofartists who had collaborated on the album,“Avicii has built his loyalglobal fan base throughonline social media.”— Per Sundin, Universalincluding Aloe Blacc, the vocalist on WakeMe Up. EDM fans at the festival dislikedthe album that featured elements of othergenres, including country music, and therewas strong hostility across online socialnetworks over the next 24 hours.Sundin says: “This is where we had tohold our nerve. We knew we had a greatalbum. We knew this was a shock tohardcore EDM fans, but we were convincedthis album would take Avicii to a wholenew level.”This judgment proved correct as WakeMe Up topped the charts in more than20 countries and has now sold more than8.5 million copies worldwide. The singlealso proved a huge success on Spotify,becoming the most streamed track in theservice’s history with more than 190 millionstreams to date. Avicii’s single Hey Brotheralso proved another global hit on Spotifyand in download sales.Per Sundin says: “The campaign hasbeen a game changer for the whole musicindustry. Avicii has built his loyal global fanbase through online social media. We’vefocused our marketing resources ontargeting the under 30s in the world theylive in. That means focusing much moreon social media, rather than traditionalnewspapers and linear television.”Sundin also points to the successof Avicii’s brand partnership deals withthe likes of Ericsson and Ralph Lauren.“Business understands that music is thefrontrunner of change in society and theywant to harness its emotional power.Artists know that working with brandshelps them reach a broader audience.EDM is built around the collaboration ofDJs, songwriters and artists and this is anextension of that. Collaboration is thenew creation.”The campaign to take Avicii fromSwedish club DJ to global superstarunderlines how online social media,properly harnessed, can help artists andrecord companies speed up the process ofbuilding a global fan base. It also highlightsdaring to be innovative can help take anartist to a whole new audience.25

Great soundand great stories.In 2013 we successfully introduced our losslessstreaming product – WiMP HiFi. Alongside the bestsound quality, we have now included our magazinein our apps. Combining the two makes the ultimatemusic moment, where you can listen withoutcompromise and read great music stories.WiMP HiFi is a premium product for people who careabout sound and music. It has been introduced at ahigher pricepoint and has given the opportunity toimprove revenue for labels and artists.Why? Simply because music matters.www.wimpmusic.com

Hunter Hayes photo by Guzman for StocklandMartel.comHunter Hayes: The YouTube orchestraWarner Music Nashville/Atlantic Recordsrecording artist Hunter Hayes released anew version of his song Everybody’s GotSomebody But Me featuring label-mateJason Mraz as part of the Encore editionof his eponymous debut album. Atlanticand Warner Music Nashville wanted to useYouTube to help attract new audiencesto Hunter’s music. They felt there was anopportunity to reach Generation C, createa compelling piece for Hunter’s fans, andextend the reach to new audiences.Jeremy Holley, senior vice president,consumer and interactive marketing,Warner Music Nashville, says that digitalchannels such as YouTube are centralto the label’s promotion of Countryartists. “There is a misconception thatCountry music fans are not digitally savvy,but that’s just not true. Hunter and hisaudience are highly engaged in the spaceand we thought it would be a great way togive them a campaign that was engaging.”The label contacted YouTube andsounded the platform out about aninteresting campaign.Rather than film in Nashville, Warnerarranged to shoot in Los Angeles atYouTube’s own creative space, theYouTube Hangar. This enabled the labelto pull together a range of the ‘YouTubeStars’ who post their own versions ofhit songs onto the platform togetherand invite them to perform with Hayesand Mraz.Content creators ranging from TylerWard to Kina Granis submitted theirown versions of Hayes’ song and WarnerMusic Nashville along with Huntercreated a mash-up of the results. It then“There is a misconception that Country music fans arenot digitally savvy, but that’s just not true.”— Jeremy Holley, Warner Musicbrought together Hayes, Mraz and allthe ‘YouTube Stars’ to create a one-shotmusic video featuring all of them, dubbedthe ‘YouTube Orchestra’, for the mash-uptrack. Holley said: “Hunter and Jason hada blast. They even partially recreated thevideo when they played the track at theCountry Music Awards.”This unique approach to filmingYouTube material for a song meantthat Warner Music Nashville couldrun a lengthy campaign that engagedsignificant numbers of music fans. Theindividual ‘YouTube Stars’ released theirown versions of the track and then the‘YouTube Orchestra’ video was releasedahead of the official music video. Holleysays: “This enabled us to build excitementand expectations around the multiplevideo releases. It allowed us to extend thetypical runway of a music video by onemonth. We received a significant spikein views, engagement, and built morefamiliarity around the track than we wouldnormally have.”The whole approach was built aroundthe Nashville mantra, “It all starts with asong.” Holley says: “It’s really cool to hearsuch different variations of the track fromacoustic to a capella. A powerful songtranscends all formats and demographics.”Holley says the campaign saw digitalteams from across Warner Music Group(Warner Music Nashville, Atlantic Recordsand Warner Bros. Records) work togetherto make it a success. He believes thatmajor labels and publishers are still at theheart of the music industry. “There is areason YouTube Stars — who are hugelytalented — cover our songs. Living inNashville and seeing how much work goesinto the creative process is inspiring. Wehave writers and artists in town that crosscollaborate and extending this to othermusicians in the YouTube ecosystem onlyadds more value.”27

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Working in partnership: Passenger and the Embassy of MusicBritish singer-songwriter Mike Rosenberg,better known as Passenger, first cameto the attention of German independentlabel Embassy of Music in early 2012.Once the frontman of the UK-basedband of the same name, Rosenberg hadmoved to Australia in 2010 as a solo artist,before signing to leading independentlabel Inertia Records. Wanting to build onRosenberg’s Australian success, Inertiaworked with Embassy of Music to launchhis career in continental Europe.Embassy of Music MD Konrad vonLöhneysen says Passenger had alreadybuilt up a strong following on Facebook,but a combination of social media withtraditional marketing helped take himfrom a little-known singer-songwriterwith a small but loyal following totop-ten success across Europe andAustralasia. Before breaking the artist intheir native Germany, the label used itsnetwork leverage a successful campaignin the smaller Dutch market working inpartnership with Sony Music Netherlands.“German radio is really fragmented.Even though we knew we had a potentialhit in Let Her Go it’s hard to create animpact with an unknown artist from astanding start. The radio market is farsmaller in the Netherlands. Workingclosely with a top Dutch radio plugger,we helped get the record to numberone in November 2012. That was theturning point.”This success gave the label a platformto reach the German market, with apromotional campaign, again focused onradio, followed in the New Year.Von Löhneysen said while Facebookwas also a critical channel in thecampaign, the label didn’t view it solelyas a sales channel. Embassy of Musicused Facebook’s geo-IP technology tofilter updates by territory, enabling themto work with the artist to provide fanswith useful updates on tour dates andnew releases, without compromising hisartistic integrity. “Passenger had built arelationship with fans, we didn’t want totake over the page and compromise that— it’s all him.”Passenger’s Facebook following inGermany grew to 140,000 through 2013,as the label capitalised on its success inthe Netherlands to launch him in Germanyand across Europe. Having topped theGerman singles chart in February 2013,Let Her Go went to number 1 in Austria,Belgium, Sweden, Switzerland, Australiaand New Zealand, as well as number 2 inthe UK. Album All the Little Lights enteredthe top ten in a dozen global markets,“A record label’s experience in marketing, plugging, andbreaking artists is still a vital complement to what the artistcan do on social media, not an alternative.”— Konrad von Löhneysen, Embassy of Musicgoing Platinum in Germany and Australia,as well as Gold in the UK.“Any artist can upload a YouTube video,put out an album, talk to their fans. Andit’s best when it all comes from them.”adds von Löhneysen. “But traditionalmedia is also important to take them tothe next level. Not every artist can belike Radiohead, who had years of labelsupport helping them build their fanbase.A record label’s experience in marketing,plugging, and breaking artists is still a vitalcomplement to what the artist can do onsocial media, not an alternative.”29

“We can do things that were unthinkable”: Engaging fans in social networks in BrazilRecord companies are increasinglypartnering with brands and, in some cases,becoming valuable brands themselves.One example has been the strategy ofSony Music in Brazil. The company says ithas built up its digital presence, becomingthe number one record label in the worldon Facebook, with more than 7.8 millionfans (consolidating Sony Music Braziland Sony Music Gospel pages) and morethan 63 million fans on the co-managedBrazilian cast Facebook pages. It is alsothe leader on Google+, with more than1.1 million followers, as well as Instagramand Foursquare. This gave Sony MusicBrazil a platform that was attractive toboth brands and artists.Alexandre Schiavo, president, SonyMusic Brazil, says: “We decided in 2005 tobecome fully focused on digital channels.My own background was in digital and Irealised that the new generation of socialmedia would be revolutionary for us.We knew it would give us direct contactwith music fans on a scale that wasunimaginable before.”“We ran competitions for brands andhelped them connect with music fans ona huge scale. Our partnership with SonyElectronics Brazil saw the company gofrom 180,000 to two million Facebookfans in just seven months. We replicatedmusic content on their Facebook page andgenerated exclusive content for them.We effectively became their digitaladvertising agency focused on music andentertainment.”The record label paid artists for thework they delivered for brands, butbecause it had a long-term relationshipwith the performers, it could often delivermore for the brand than a regular agencycould. The partnerships also benefitedartists. “If the artist wanted to do a thirdor fourth music video that wasn’t in theoriginal plan, we could generate moneyfrom the brand partnerships to makethat deliverable.”One example of such a partnershipwas the campaign for local rock bandCapital Inicial involving Sony Electronics.The band shot a music video in the desertin Chile using a 360° camera, withSony Electronics paying for the shoot.The band also ran a competition on SonyElectronics’ Facebook page that saw thewinner go on a trip to São Paulo with theband to go shopping for musical products.This approach is also being takento a global audience. Sony is one ofthe sponsors of the 2014 World Cup,with Sony Music producing the officialsoundtrack album. The record companyworked with Sony Corp on a competitionfeaturing Ricky Martin which invitedfans worldwide to write a song for himto sing. The winner of the “SuperSong”competition is to have their workrecorded by Ricky Martin and be includedin the official soundtrack, before travellingto the World Cup final.Schiavo says: “Our work is aboutengaging people and having fun. Offeringthem something that money can’t buy andexciting them about artists and brands.We’re now taking this work from Brazil toa global market.”Sony Music Brazil has also run socialmedia campaigns for brands includingCoca Cola, Nestlé, Skol Beer, Gol Airlines,Puig Fragrances and Telecom Italia. Thecompany has developed a presence acrossa range of additional digital and socialnetworks including Vine, Flickr, Tumblr,Twitter, YouTube and Vevo.Schiavo says: “We’re projecting furtherhuge growth in this area over the nextfew years. Brands are looking for music“Music fans are starting to see record companies in acompletely different way — they never had this level ofengagement in the past.”— Alexandre Schiavo, Sony Music Brazilcontent and artists can benefit fromthe right strategic partnerships. Wecan do things that were unthinkable afew years ago. We can fill up a stadiumwith fans of a band without placing asingle advertisement — only using digitalactivations. Music fans are starting tosee record companies in a completelydifferent way — they never had this levelof engagement in the past.”Capital Inicial photo by Marcelo Rossi Ricky Martin photo by Omar Cruz30

Katy Perry: A global phenomenonKaty Perry photo by Cass BirdKaty Perry is a global phenomenon —her latest album topped the charts in 100countries and she is the most followedpersonality in the world on Twitter.PRISM, her third studio album, wasreleased in 2013 and featured a numberof tracks that had promotional campaignsbuilt around them. Bob Semanovich, SVP,marketing at Capitol Music Group says:“Our plan for Katy is not built around atraditional album release cycle, wherewe concentrate our promotional effortaround one date. There are lots of singleson PRISM and there will be lots of Katycampaigns for the next 18 months andbeyond.”The lead promotional single Roar wasreleased in August. Katy released fourshort teaser videos heralding the newstage in Perry’s creative development.A lyric video was released in which,unusually for a star of her stature, Katyappeared. She spelled out the lyricsto Roar in emoticons, and the videogenerated almost 70 million views. Theofficial video was promoted using a classic1930s-style Hollywood movie poster anda series of online teasers. The video wenton to be viewed around 360 million timeson YouTube alone, while Roar topped thecharts in 97 countries.Perry works tireless to promote hermusic and the domestic and internationalteams at Capitol Music Group helpharness her social media platforms topromote her wide range of appearances.She performed Roar at the close of theMTV Video Music Awards in the US, inaddition to embarking on four majorinternational promotional trips in the spanof just a few months, including Australia,Canada, France, Germany, Italy and Japan.Meredith Gardner, VP, digitalmarketing, Capitol Music Group, says:“Katy’s really authentic and that’s whatmakes her Twitter so powerful. Shetweets in her own voice about what she’sseeing and doing. She’s also good atsurprising her fans, jumping on Twitter foran impromptu Q&A or sharing Twitpics ofwhat she’s up to.”The team helps identify greatopportunities to showcase her musicand uses social media to highlight herappearances. Kieran Thurgood, director,international, Capitol Music Group,adds: “Katy is a global superstar, but it’sincredibly important for us to executemarketing and promotional strategy ona local level so fans around the worldcan truly connect with her and her musicin a very natural way. We work hard toensure Katy has the most impactful globalmedia platforms to do what she does.Examples of this include Katy’s stunningperformance on the X-Factor finalein the UK, performing alongside localcontestants on Germany’s The Voice, aspecial Sunrise performance in front ofSydney Harbour Bridge in Australia,a major TV promotion with MSN & Visa inCanada, a landmark visit to China with theprestigious China National Orchestra anda phenomenal performance at the MTVEuropean Music Awards in Amsterdam.”Katy Perry also announced her new albumvia a giant gold-plated truck with ‘KATYPERRY — PRISM — 10.22.13’ inscribedacross the sides. The campaign wasreplicated in Mexico and also in the UK,where Perry-branded gold-plated taxischauffeured artists and celebrities to the2013 iTunes Festival in London.Hot on the heels of Roar, a brandpartnership deal with MTV, who in turnpartnered with Pepsi resulted in a major“Our plan for Katy is not built around a traditional albumrelease cycle, where we concentrate our promotionaleffort around one date.”— Bob Semanovich, Capitol Musicpromotion of PRISM. Fans were given theopportunity to unlock song titles, lyricsand snippets from the album by tweeting#KATYNOW. They could also listen topreviews of the tracks Dark Horse andWalking on Air and vote on which theywanted to have early release on iTunes.The second single from PRISMwas Unconditionally. This wasbacked by the promotional campaign#KatyUnconditionally that invited fans toshare an Instagram of what unconditionallove meant to them and upload it withtheir story and location to appear in anonline PRISM map of the world.Capitol Music Group’s campaigns tosupport Katy Perry highlight how musiccompanies have transformed theirmarketing and promotional strategies.The success of the PRISM campaigns alsohighlights how important multiple hitsingles are to continuously drive ongoinginterest in an artist and keep them inthe spotlight.31

Tommy Torres courtesy of Warner MusicTommy Torres: Harnessing the power of TwitterTommy Torres is a Puerto Rican bornsinger-songwriter who, until recently, washighly respected by his peers but had notyet become established in the mainstreammusic market. Warner Music Group (WMG)helped him break through to a broaderaudience of music fans through thecreation of an innovative Twitter campaign.Gaby Martinez, vice president,marketing, Warner Music Latin America& General Manager, Warner Music Latinaexplains that Torres was able to harnessTwitter to create a debate around oneof his songs, giving his fans a sense ofownership of it. “His song Querido Tommywas inspired by a fan who wrote to himand said that he loved his girlfriend butcould not put this feeling into words andasked for the artist’s help to expresshimself. He launched a campaign onTwitter to ask his fans if he should helpthis man express his feelings to hisgirlfriend.”Torres generated more than 3,000interactions in this online debate andthen posted his song on Twitter before itwas released to radio stations for airplay.WMG promoted the campaign acrossits online properties, generating extraattention from music fans. Other stars,such as Ricky Martin and Alejandro Sanz,retweeted his messages.Martinez says: “It was an example ofhow an artist can use social media totake the pulse of their fans. People feltthey were part of Tommy’s story and hadownership over the song.”Torres released his next two singles onTwitter ahead of their first radio airplayand found that on each occasion hegenerated more interactions. He now hasa total Twitter follower base of more than500,000 people.The whole campaign helped Torresbreak through into the mainstream musicscene. His album 12 Historias debuted atnumber one the Nielsen Soundscan Latinchart in the US.Gaby Martinez says it is not unusualto see Latin artists use digital channelsto promote themselves and that wholemarket for Latin music is increasinglyevolving in terms of revenue generation.“In the US, we see younger urban Latinartists generating more interest throughdigital channels, while traditional LatinCountry artists tend to have more of abias towards physical sales. In Mexico, themarket is split almost 50:50, as iTuneshas proved extremely successful in acountry where it can price its music inlocal currency. Other markets, includingTorres’ native Puerto Rico, are still moredominated by physical sales.”Martinez says that digital platformsare now central to all the artist campaignsWMG runs for its Latin artists. “Withchannels such as YouTube you can reallysee which songs music fans are engagingwith. Radio stations may choose to heavilyplay certain tracks, but unless people aresearching for them on YouTube, you arenot really connecting.”“People felt they were partof Tommy’s story and hadownership over the song.”— Gaby Martinez, Warner Music,Latin AmericaDespite this, Martinez believes thatdigital channels tend to follow markettrends, not lead them. “Yes we’re signingmore urban Latin artists these days, andthey perform well on digital channels, butthe trend towards such performers washappening anyway. Digital is reflectingthe market. While we see new platformscome into the market and more diversifiedrevenues are starting to come in, our keyjob is still to scour the market for talentand sign the best artists we can.”32

YeARs hAve pAssed,And nothing’s the sAMebut You’Re the one thingthAt ALwAYs ReMAinswww.MusicReMains.oRgMusic ReMains — A 90-second race through time filmed at London’sworld-famous Abbey Road studios, Music Remains is a celebration of recordedmusic at the centre of people’s lives.

swedenA markettransformedA return to growthThe Swedish music industryhas a seen an encouragingrevival in just three years,from a low of US$144.8 millionin 2008, revenues grew to US$194.2million in 2013. During the same period,digital’s share of total revenues increasedfrom 8 per cent to 70 per cent, withsubscription services accounting for94 per cent of the digital market.The turnaround dates back to 2009when the combined effect of The PirateBay trial and a new anti-piracy lawpersuaded many consumers to try thenew Spotify service. Many preferredstreaming to illegally downloading music.Streaming and subscription has helpedmigrate music consumption from piracyto the licensed environment. Consumerresearch published by GfK in September2013 showed that nine out of 10 payingsubscribers to Spotify say they downloadillegally “less often”; seven of 10 of theservice’s free users say the same.Spotify’s success was also boostedby a partnership with telcoms firm Telia,whose bundled deal offered customersthree months’ free access to the service.The majority continued to pay afterwards.Having benefited from reduced churn,Telia later rolled out the deal acrossScandinavia.“For recorded music,streaming is by far the biggestrevenue source for me.”— DJ John de SohnA continuousrevenue streamThe subscription revolution has changedthe way rights holders are paid, withartists whose music is continuouslylistened to on Spotify benefiting from aconstant revenue stream. Jacob Key, vicepresident, digital strategy and businessdevelopment, Europe, Warner Music,says: “Repertoire can now make moremoney over a longer period of time.The consumption model enables a muchlonger product life cycle, and generatesmore revenues over time for most artists.”“If you look at business modelsover 20 years, you have thepotential to get much morerevenue with streaming.”— Jacob Key, Warner MusicPer Sundin cites Lars Winnerbäck, one ofthe top-selling Swedish artists over manyyears. “He has remained in the Spotifytop ten for years without releasing anew album. His management thinks thatSpotify is fantastic.”Another Swedish artist, DJ John deSohn, has had four hit singles, the latestbeing Taking It Back, and is considered a‘Spotify phenomenon’. He says: “Streamingservices have been a key part of reachinga new audience with my music. My lastthree singles have accumulated over30 million streams in Sweden, and Spotifyhas been an instrumental part of buildingmy artist brand and live business. Forrecorded music, streaming is by far thebiggest revenue source for me.”“Ten years ago, the vastmajority of our revenuecame from a smaller numberof artists.”— Jacob Herbst, Sony Music EntertainmentSubscription services have alsoremoved a barrier to music discovery.Jacob Herbst, head of digital sales andbusiness development (Sweden), SonyMusic Entertainment, says: “The barrierto listen to a new artist is lower than itwas when you had to buy their album.We now pay out royalties to more artistsnow than ever before. Ten years ago, thevast majority of our revenue came from asmaller number of artists.”Growing diversityNew artists have benefited from theyounger audience that streaming attracts.Label executive say streaming usersare younger and that is having an effecton A&R. Urban music and electronicdance music consistently ‘over index’ onstreaming services, which means thatrecord companies are striving to signmore artists performing in these genres.Per Sundin says: “Streaming is the mostdemocratic tool we have ever been partof. The range of artists being listened to iswider. Swedish hip-hop artists are makingmoney again. We’ve been able to invest inthem because of Spotify.”34

John de Sohn photo by Gustav Modér Wiking89% 34%of spotify subscribersdownload illegally less oftenoverall marketgrowth 2008–2013Dance music, too, leans towards digital.Jonas Sjöström is CEO of PlaygroundMusic Scandinavia AB, an independentrecord company which owns the digitalonlydance label Uniform Beat, home toartists such as Adam Rickfors. He says:“The entire dance market is 98 per centdigital. It means we can sell musicglobally without licensing deals and nomanufacturing costs, but we still have topromote it everywhere and pay for thelocal expertise to do that.”“Streaming is the mostdemocratic tool we haveever been part of”— Per Sundin, UniversalSubscription services have paved theway for the rise of the playlist. JacobHerbst of Sony says: “We built a strategyaround playlists that evolved into the Filtrbrand. It’s all about building up the labelas a trustworthy source of music. Labelsnow run large above-the-line advertisingcampaigns promoting playlist brands.”IFPI Sweden has changed its charts toinclude streaming, also bringing it into itsGold and Platinum award certifications,which traditionally went to artists whocrossed a certain sales threshold. JacobHerbst says: “As an industry, we’re nowincreasing the number of units requiredfor Gold and Platinum awards after morethan 10 years of bringing them down.And even with that, we are giving awaymore Gold and Platinum awards than formany years.”What next in Sweden?Few in the industry think the evolutionof the Swedish market is over. The focusnow is on how streaming is benefitingA&R and marketing. Per Sundin ofUniversal says: “We have seen theconsumption revolution, but now we’reseeing radical changes in A&R andmarketing as record companies adapt toa changed environment.” Jacob Key citessinger Robyn, who launched three minialbumswith several singles, promotingthem over 18 months before releasing heralbum. “Marketing strategies are changing.You need to keep investing for two,three or four years to get people to keeplistening to an album.”Digital services themselves continueto evolve. WiMP has become the firststreaming service to launch a superpremium service with higher audio qualityand others are talking about new dealssuch as family packages. Meanwhile, alandmark was reached in October 2013when YouTube became monetised for thefirst time in Sweden.Avicii photo by Alex Wessely35

chinaNew hopesfor a licensedmusic marketChina is a market of enormouspotential, long stifled by piracy.Ranked just 21st in the world,2013 revenues were estimatedat US$82.6 million.Yet the landscape for the musicindustry in China is changing. Over thelast two years, major record companiesand some independents have licensedeight of China’s major online musicservices, most of them previouslycopyright infringing. The deals traceback to a landmark agreement struck in2011 between three international recordcompanies and internet giant Baidu, thatinvolved the settlement of anti-piracylitigation and a commitment by Baidu toclose its infringing ‘deep links’ service.The opportunity for the music industrylies in China’s vast internet population,with 618 million users in 2013, with81 per cent connected to mobile.Sunny Chang, president, Greater China,Universal Music Group International, says:“The Baidu deal was a trigger that ledto other internet companies changingtheir approach and becoming licensed.We believe that in three to five years themarket will be open and China could beone of the top markets in the world.”Moving to the paid modelThe government is providing more vocalsupport for the paid model. Vice MinisterYan Xiaohong of the National CopyrightAdministration of China (NCAC) says:“The time for paying for music in Chinahas already come — this is not just aprinciple, but also a necessary practice.But what is also important is that,whichever we choose, whether it be thepaid or advertising-supported model, wemust make sure that rights holders arerewarded.” Independent record companiesagree. Mike Songke, vice president ofthe CMIC, the organisation representinglocal Chinese labels, says a paid modelwill encourage investment in local artistsand help develop a thriving Chinese musicbusiness.“The time for paying formusic in China has alreadycome — this is not justa principle, but also anecessary practice.”— Vice Minister Yan Xiaohong, NCACThere are challenges ahead, however.Along with competition from hundredsof unlicensed services, CMIC seesthe low share of revenues going ofmusic rights holders in China as a keybarrier to development of the sector.A study published by CMIC in 2012estimated the total value of the digitalmusic sector in China at RMB30 billion(US$4.9 billion), but the study estimatedthat a very small share of that revenue(less than 3 per cent) was being sharedwith copyright holders. Songke makescomparison with China’s booming filmindustry where box office returns arebeing ploughed back for re-investmentinto local film productions. “Nowadays itisn’t just piracy that is our problem — wehave to get a fairer distribution systemthat motivates our industry, just like in thefilm industry.”“We have to get a fairerdistribution system thatmotivates our industry, justlike in the film industry.”— Mike Songke, CMICChina’s licensed digital services arefast-evolving, with some expectations ofconsolidation in the sector at the timeof this report’s publication. One of theleading services that run a paid offering36

21world rankingmusic market618Mactive internet users in 2013500Mmobile web usersFan Fan courtesy of Linfair Recordsalongside its free streaming service isKuwo. CEO Lei Ming, says: “In China themajority of people now use legal music— that’s a very good environment to bein, but the big question is how can wetransfer consumers from free to paid, andhow to do that without pushing users toillegal sites?” Another leading service isTencent, which has amassed three millionpaying subscribers for its subscriptionservice Green Diamond. Pursuing adifferent strategy is Baidu, China’s largestsearch engine. Baidu offers a free musicstreaming service and, in addition, a paidfortier offering expanded cloud storagespace and high quality larger files. As withKuwo, the vast majority of Baidu’s userschoose the free-to-consumer option.Kaiser Kuo, director of internationalcommunications, says: “Baidu has anad-funded model and our core strategyis based on online advertising anddominating at consumers’ main points ofentry to the internet.”The largest digital service is ChinaMobile, with 700 million users in totaland 50 million active paying ringbacktone customers. In addition, there are20 million paying subscribers to theoperator’s subscription and limiteddownloadmusic service, Migu Music.Liu Yu Xing, assistant of the generalmanager of China Mobile Music Base, says:“It is not just recording companies andmusicians in China who want to get to thispaid-for model — it is the objective of theoperators too.”Record companies also want to stepup artist development in mainland China.In the short term this is a challengingtask due both to undeveloped productionfacilities and to regulations limiting non-Chinese investment both in productionand in distribution of music.In the absence of a developed marketfor sales of recordings or performancerights, labels working in China rely heavilyon management and live performanceincome. Most big-selling artists aredeveloped out of Taiwan, dubbed the‘Hollywood’ of the region. One of theleading indies active in China is TaiwanbasedLinfair Records. The label’s topartists include Fan Fan, a judge on China’sgrowing and influential TV talent shows,and Yu Chen Ching (Harlem), a Taiwanesesinger who is the label’s top male artist.Linfair Records chairman DenverChang says that CD sales andmanagement income cannot be the longterm future for record companies inChina: “The paid model is the foundationto run a record company. The good newsis that we know that the platforms wantto have paid services, and the governmentrecognises that too. The interests ofthe music industry and the internetcompanies are aligned.”Tackling piracyRecord companies and digital servicesagree on the critical continued roleof copyright enforcement in turningaround the Chinese market. Followingthe licensing deals that some repertoireowners have struck with the major digitalplatforms, the government now has avital part to play in tackling the thousandsof remaining small and medium sizedinfringing sites.NCAC Vice Minister Yan Xiaohongsays the government has steppedup actions both in enforcement andpromoting consumer awareness ofintellectual property rights. “Nine yearsago when I started in this role, we weretalking about copyright theoreticallybut since then dramatic changes havehappened. Criminal penalties for copyrightinfringement have been strengthenedand enforcement against illegal sitesintensified.”37

africaEmergingopportunityDespite its huge influence onmusic repertoire across theglobe, most countries in Africahave not historically beensignificant markets for the internationalmusic industry. Today, that is beginningto change. Digital technology is enablingthe recording industry to effectively reachmass numbers of consumers across Africafor the first time. Across the continent,international record companies areworking to establish innovative servicesand invest in A&R.Africa’s economies are growingrapidly and smartphone penetration,though small, is soaring. The InternationalTelecoms Union reported in March 2013that mobile broadband penetrationin Sub-Saharan Africa increased from2 per cent in 2010 to 11 per cent in 2013.Sean Watson, managing director of SonyMusic Entertainment Africa, says: “Theforecasts for smartphone growth in Africaover the next few years are staggering.”“The forecasts forsmartphone growth inAfrica over the next fewyears are staggering.”— Sean Watson, Sony MusicEntertainment AfricaDigital services arebeing establishedInternational services are opening forbusiness, domestic platforms are growingstronger and new services are beingdeveloped. Ulrik Cahn, VP digital businessemerging markets, Universal Music Group,says: “You can really feel that somethingimpressive is happening with digital musicin Africa now. Two years ago, the digitalbusiness was almost all ringtones, todayproducts and services are taking off andinterest from our global partners in thecontinent is greater than it has ever been.”“You can really feel thatsomething impressive ishappening with digital musicin Africa now.”— Ulrik Cahn, Universal Music GroupAfrica already had a domestic digitalmusic business, partnered with leadingregional and national telco operators.These include MTN Nigeria, with 17 millionsubscribers, and Safaricom, with 10 millionsubscribers, have helped build a sizeableringback tone market. International recordcompanies are establishing strong localdirect relationships with local partners— telcos, aggregators, local services,publishing societies and independentlabels. Digital revenues to internationalcompanies in Africa are currently smallbut fast-growing: South Africa, theregion’s largest market has seen digitalmusic revenues take off in 2013 followingthe arrival of iTunes and several musicstreaming services, such as Deezer, raraand Simfy. Digital revenues doubled in theyear, accounting for 14 per cent of a totalmarket worth US$63 million.International services such as Deezer,iTunes, Simfy and YouTube are now alsooperating across the continent, and whilethey are still small compared to the telcos,insiders estimate iTunes now accountsfor 40 to 50 per cent of digital revenuesin South Africa. Other established localservices include Spinlet and iRoking inNigeria and Mdundo in Kenya.THE KLEEK, a pan-African mobilemusic streaming service, backed byUniversal Music and electronics giantSamsung, and licensed by Sony Music,launched in March 2013. THE KLEEK offersan interactive voice response service aswell as an app featuring a huge rangeof playlists. The app is preloaded onSamsung smartphones whose owners canuse it free of charge. Randall Abrahams,managing director, Universal Music Southand sub-Saharan Africa, says: “Music fansin Africa have never had access to such arich and engaging licensed service before,THE KLEEK marks a sea change in thedevelopment of the digital market inthe region.”Guillaume Quelet, VP, digital businessdevelopment, Sony Music Entertainment,who looks after three Francophonemarkets in North Africa, says partnershipswith mobile carriers are key. “It’sabout creating services that appeal toconsumers in pre-paid markets who oftenhave limited disposable incomes. I thinkthere will soon be exciting new deals thatwill also include unusual features such aslive tours.”38

mobile broadband penetrationin subsaharan africa2%201011%2013Xtatic photo by Erik FosterExpanding A&R activityRecord companies are increasing theirA&R activity across the region. SeanWatson says: “Sony Music Entertainmenthas already made a significant investmentin the development of the phenomenaltalent in Sub-Saharan Africa and we arecommitted to continuing to partner withAfrican artists to endeavour to bring theirmusic not only to the world, but to Africanmusic lovers across their own continent.”Recent signings by Sony Music includeNigerian artist D’Banj and Rose Muhando,a Tanzanian gospel artist. Exciting, newyoung artists include Ugandan style iconKeko; and Kenyan rapper and singersongwriterXtatic.Randall Abrahams of Universal says:“We’re engaging with artists acrosssub-Saharan Africa and in particular withindependent labels and entrepreneursas they are at the cutting edge of artistdevelopment in the region. We have asignificant long-term commitment toinvesting in African artists and takingthem beyond the continent to aninternational audience. Universal’s labelshave long invested in African music andare home to artists such as South Africansuperstar Zahara, Joey B and Shatta Walefrom Ghana, MadTraxx and NecessaryNoize from Kenya and Mozambican artistLizha James with tracks produced byrising South African star Uhuru.Guillaume Quelet says he is alsoinvesting in local artists. “Many Frenchurban artists have roots in North Africaand are hugely popular, but we are alsolooking to develop more local talent.”107%digital music growth insouth africa (2013)Keko photo by Bicepts Photography39

Improving theenvironment fordigital musicThe music industry is a business whose successdepends on certainty in the legal environmentand on copyright law. This is a constant andever-changing challenge — the music marketinternationally continues to be distorted by unfair competitionfrom unlicensed services.IFPI estimates, based on comScore/Nielsen data, that26 per cent of internet users worldwide regularly accessunlicensed services. This estimate applies only to desktopbaseddevices: it does not include the emerging, but as yetunquantified, threat of smartphone and tablet-based mobilepiracy as consumers migrate to those devices.Digital piracy is the biggest single threat to thedevelopment of the licensed music sector and to investmentin artists. It undermines the licensed music business acrossmany forms and channels — unlicensed streaming websites,peer-to-peer (P2P) file-sharing networks, cyberlockers andaggregators, unlicensed streaming and stream ripping andmobile applications.The industry is responding not with a single strategy, butwith a comprehensive, multi-pronged approach. It includes:consumer education on copyright and the value of music;working with law enforcement agencies to tackle onlinepiracy; litigation against online pirate services; and engagingwith policymakers and legislators worldwide to create anenvironment in which the music sector can grow. The industryis also working with online stores to remove infringing appsand to ensure that apps cannot access illegal websites.The industry believes all parties in the digital economyhave a responsibility to support legitimate digital commerceand help tackle piracy in all its forms. Record companies arelooking work with advertisers, domain registrars, internetservice providers (ISPs), payment providers and searchengines to achieve this goal. Courts around the world arefinding that the law also requires greater cooperation fromonline intermediaries.Consumer attitudes to piracyIt is not just music rights holders who believe thatintermediaries have responsibilities to tackle piracy.Consumers believe this too. According to research fromIpsos MediaCT across ten countries, more than half of allinternet users think search engines should prioritise licensedservices in search results, a proportion that increases to57 per cent among those who use unlicensed services. Asimilar proportion of internet users (52 per cent) think thatcompanies should not advertise on unlicensed services,a figure that increases to 55 per cent of those who useunlicensed sites.Figure 12: Consumers agree that intermediaries should ...Search engines should give priority to licensed digital music servicesover pirate services in their search results55%55%52%57%Accessing music through services that don’t have the copyright owner’spermission is unfair to those creating and producing the content55%Companies should not advertise on websites that offer music withoutthe copyright owner’s permissionAll internet usersSource: Ipsos MediaCTPirate users55%40

Website blocking proves effectiveActions by ISPs have become a widely-accepted and effectiveway of curbing piracy online. Increasingly common is the blockingof websites that make available infringing content. In recentyears, courts in 10 EU countries have ordered ISPs to block users’access to specific services that structurally infringe copyrightlaw. Courts and authorities in other countries including India,Indonesia, Malaysia, Mexico, Norway, South Korea and Turkeyhave made similar orders. On the legislative front, in 2013, Norwayadopted new website blocking legislation and Italy became thefirst country in Europe where an administrative body — the Italiancommunications authority AGCOM — is empowered to authorisewebsite blocking.bit torrent use-11%in eu countries withwebsite blocking+15%in eu countrieswithout blocksvKontakte: Stifling a licensedbusiness in RussiaRussia is a vast potential market stifled by rampantcopyright infringement. At the centre of the Russianmusic scene is vKontakte, the country’s dominantonline social network and its largest distributorof music. vKontatke operates an unlicensed musicservice allows users to upload and store music andvideo files, which then become available for all otherusers of the service to search and stream.vKontakte is providing access to tens ofthousands of the most popular songs by local andinterntional artists. This is damaging the licensedbusiness and preventing investment in Russia’smusic sector. Searches for the Top 20 Billboardsingles, the Top 20 UK singles and the Top 20Russian singles generates thousands of results formost tracks.In February 2014, the scale and harmful impactof vKontakte’s music service was illuminated by theUS Trade Representative (USTR) in its “NotoriousMarkets list”, a respected barometer of respectfor copyright in countries around the world. Forthe fourth year in a row, the Russian internetgiant was included for its record on copyrightinfringement. The US government report says:vKontakte’s business model “appears to includeenabling the unauthorized reproduction anddistribution, including streaming, of music and othercontent through the site and associated softwareapplications.”Despite misrepresentation by some anti-copyrightcampaigners, courts have consistently found that the blockingof sites providing illegal content achieves an appropriate balanceof fundamental rights. In November 2013, the Advocate Generalat the Court of Justice of the European Union said that websiteblocking is available under EU law.Website blocking measures implemented by ISPs have beeneffective. Between January 2012 and July 2013, Europeancountries where blocking orders are in place saw BitTorrent usedecline by 11 per cent, while European countries without suchorders saw BitTorrent use increase by 15 per cent (comScore/Nielsen). The effect was especially pronounced in two countries,Italy and the UK, where the highest number of illegal services havebeen blocked. In Italy, BitTorrent traffic declined by 13 per cent in2013 and in the UK BitTorrent traffic declined by 20 per cent overthe same period. The industry believes that website blocking is aneffective tool to help tackle digital piracy and should be availablein more countries worldwide. It also needs to be extended tocover mobile networks.Additionally, rights holders work with ISPs on notificationprogrammes aimed at educating users about the value ofcopyright. Such schemes exist in Chile, France, Ireland, NewZealand, South Korea and the US. Account holders are notifiedthat their account is being used unlawfully, with the possibility ofdeterrent consequences such as fines if warnings are repeatedlyignored. These programmes have proven effective where55Maverage daily usersOF VKONTAKTE41

implemented, with use of unlicensed P2P networks declining by27 per cent since September 2010 in France (Nielsen) and by 19per cent since August 2011 in New Zealand (comScore).Stopping payments to pirate servicesThe music industry’s anti-piracy work with payment providers,leading to the withdrawal of payment services to infringing sites,has been a positive example of successful cooperation. Since2011, leading international providers such as American Express,MasterCard, PayPal and Visa have been responding to actionby rights holders and the City of London Police to ensure theirservices are not abused by illegal businesses wherever theyoperate (see box opposite).Cutting off advertising revenueAdvertising is a major source of income for many online pirateservices worldwide. In February 2014, the Digital Citizens Alliancepublished research conducted by MediaLink which showed 596infringing sites generated US$227 million in advertising revenuesin 2013, with adverts appearing from blue chip brands includingAT&T, Lego and Toyota.Rights holders are working on the issue with the advertisingindustry and intermediaries in all possible ways available to them.Advertisers recognise that the appearance of their branding onpirate sites can be damaging for their reputation. However, manybrands do not know or cannot control where their advertising isbeing placed, and there can be several intermediaries betweenthe brand and the websites on which their advert appears.227m(US$) pirate sites’estimated ad revenues in 2013The advertising industry is engaged on this issue in a numberof countries. In Australia, Music Rights Australia (MRA) is workingwith the Audited Media Association of Australia (AMAA) to raiseawareness of the damage ad-supported pirate sites have on thecreative industries and develop a code to stop the placement ofadvertising on known sites associated with piracy. “We recognisethis is an issue that needs to be tackled. Brands don’t want toappear on inappropriate sites and that is why we are workingclosely with rights holders to ensure we have a strategic solutionfor all,” says Paul Dovas, CEO of AMAA. Discussions are also atvarious stages in other countries including Italy and Mexico.In the UK, rights holders and advertising bodies are workingwith the City of London Police (PIPCU) to reduce adverts on“This is an issue that needs to be tackled.Brands don’t want to appear oninappropriate sites”— Paul Dovas, AMAApirate sites. In 2013, a successful pilot study was carried out bytechnology company White Bullet on behalf of the police. Theproject led to a fall in the number of mainstream ads appearingon such sites. This success has led to the police launching apermanent programme in 2014.Search engines still have more to doSearch engines have pledged to do more to tackle onlinepiracy, but there is still a long way to go. In August 2012, Googleannounced that it was altering its algorithm to take account ofnotices received from rights holders to place infringing siteslower down in search results.74%consumers introduced to pirateservices through searchUnfortunately, this seems to have had little impact. A searchfor the name of any leading artist followed by the term ‘mp3’ inthe leading search engines still returns a vast proportion of illegallinks on the first page of results.Search engines continue to be a major gateway to piratecontent. In September 2013, a MillwardBrown Digital studyfor the Motion Picture Association of America revealed thatbetween 2010 and 2012, almost three-quarters of consumers(74 per cent) said they used search engines as a discovery ornavigational tool when first using unlicensed services.Infringing links dominate search resultsAlthough rights holders are able to submit requests to removeinfringing content to Google and other search engines, thenumber of requests accepted is capped and so rights holders areonly able to report a fraction of the infringing links available.For instance, by January 2014, the global recording industryhad sent more than 100 million requests to Google to removelinks to infringing content, an amount that would have beenFigure 13: Infringing links on the first page of search results byartist name and ‘mp3’Artist Google Yahoo! BingPharrell Williams 80% 90% 80%Katy Perry 100% 80% 80%Jason Derulo 80% 90% 90%John Legend 100% 70% 80%Beyoncé 90% 90% 90%Source: IFPI Top five artists in the Billboard Top 100, 8th March 201442

considerably higher were it not for the cap on the number ofrequests that Google imposes on individual rights holder groups.While Google has taken some steps to develop licensedservices and improve its reaction to anti-piracy noticesfrom rights holders, the music industry believes it has thetechnological expertise to do more. In January 2014, IFPIissued a statement calling on search engines to take a numberof measures: including fulfilling the promise to demote sitesreceiving extensive numbers of piracy notices and ensuringthat the “take down” of a song is effective and does not meantemporary removal — to be replaced two seconds later.Courts are finding that the law requires search engines to domore to curb piracy. In 2012 the French Supreme Court requiredGoogle to eliminate terms associated with piracy from itsAutocomplete function. In November 2013, the Paris High Courtordered a number of search engines, including Google, to ensurethat links to 16 unlicensed streaming sites do not appear insearch results regardless of whether a user specifically searchedfor these websites.100M+requests to remove infringinglinks TO GOOGLE in 2014Legal action against piracyIn some circumstances, the recording industry has to takenlegal actions against large scale online piracy services.The industry has been engaged in litigation against theoperator of the BitTorrent service isoHunt, one of the largestunauthorised BitTorrent sites in the world, with millions ofusers and a vast catalogue of music and films. Action taken bythe film companies in the US found the site liable for copyrightinfringement. In October 2013 the site reached a separate legalsettlement with the US movie industry. Action by the recordindustry is continuing.Action also continues to be taken against cyberlockersthat are providing a platform for music piracy. In January 2012,action by the FBI led to the closure of Megaupload. In Germany,the authors’ collecting society GEMA was successful in a casebrought against Rapidshare, where the Federal Court of Justiceordered the service to prevent further infringements of over4,800 titles of GEMA’s repertoire. In the US, the movie industrywas successful in a case against cyberlocker Hotfile where acourt found the service liable for copyright infringements. Afteragreeing to pay US$80 million damages to the film studios, thesite shut down. The industry will continue to pursue enforcementaction against the operators of other similar services. Streamingservice Grooveshark has been blocked by ISPs in Denmark andSouth Korea as a result of music industry action.UK’s City of London Police:Tackling crime onlineIn the UK, the City of London Police has played akey role in tackling international organised crimebecause of its location in one of the world’s leadingfinancial centres. It has recently established thePolice Intellectual Property Crime Unit (PIPCU) tofocus specifically on IP crime. The unit is funded bythe Intellectual Property Office, which is part of theDepartment of Business, Innovation and Skills, untilJune 2015.Britain’s strict anti-money laundering legislationenables the police to seek and confiscate revenuesgenerated by criminals through illegal activity.PIPCU has worked with rights holders and paymentproviders on an evidence-based approach thatencourages payment providers to proactivelyremove services from illegal websites.Following this success with payment providers,the unit also began to look at the placement ofadverts on illegal websites. DCI Andrew Fyfe, thehead of PIPCU, says: “Advertisers didn’t realisethey were funding criminal enterprises, that everytime an ad appeared revenue went to the criminalorganisations behind these sites.“The aim was to educate the industry aboutthe problem. Some people argued that piracy isnot a serious crime and we shouldn’t spend timetackling it, but you don’t tackle one type of crimeon the internet and exclude another. This is aboutcorporate responsibility and setting the socialparameters of what is acceptable online.”PIPCU is also expanding its activities to workwith domain registrars, ISPs and search enginesto tackle digital piracy. The borderless nature ofinternet crime means that the City of London Policeis working with law enforcement agencies aroundthe world on its various cases. The unit also workswith rights holders across all creative industries,as well as brand owners, to tackle a wide range ofintellectual property crime.43

Digital MusicServicesWorldwideThe featured list of licensed digital music services appears on the Pro-Music information resource (www.pro-music.org) at the time ofthe report’s publication and it is the most comprehensive directory of the world’s legal digital music services. The list numbers over 450*licensed services in over 100 territories.ABCDEAfghanistan: Deezer Albania: Deezer Algeria: Deezer Andorra: Deezer, Spotify Angola: Deezer, THE KLEEK Anguilla: iTunesAntigua & Barbuda: Deezer, iTunes Argentina: BajáMúsica, Batanga, Cien Radios, Daily Motion, Deezer, Faro Latino, Ideas Musik,iTunes, Larala, Movistar, MTV, Personal, Rdio, Spotify, Ubbi Música, Xbox Music, YouTube Armenia: Deezer, iTunes Aruba: DeezerAustralia: 7digital, Bandit.fm, Beatport, BigPond Music, Blackberry World, Deezer, Getmusic.com.au, Google Play, Guvera, iHeartRadio, iTunes, JB Hi Fi NOW, MOG, Music Unlimited, Nokia Mix Radio, Optus, Pandora, rara.com, Rdio, Samsung Music Hub, Songl,Spotify, The InSong, Vevo, VidZone, Xbox Music, YouTube Austria: 3Music, 7digital, A1 Music, AmazonMP3, Ampya, Artistxite,Classical.com, Deezer, DG Webshop, eMusic, Finetunes, Google Play, iTunes, Jamba, JUKE, Ladezone, Last.fm, Mediamarkt,Musicload, MySpace, MyVideo, Napster, Naxos, Nokia Mix Radio, Preiser, Qobuz, rara.com, Rdio, Saturn, Schlager.tv, Simfy, SMS.at,Soulseduction, Spotify, Telering, T-Mobile, VidZone, Weltbild, Xbox Music, YouTube, Zed Azerbaijan: Deezer, iTunesBahamas: Deezer, iTunes Bahrain: Deezer, iTunes Bangladesh: Deezer Barbados: Deezer, iTunes Belarus: Deezer, iTunes, YandexMusic Belgium: 7digital, Beatport, Bleep, Bloom FM, Deezer, DJTUNES, Downloadmusic, eMusic, Fnac, Google Play, iTunes, Jamba,Jamster, Juke, Junodownload, Legal Download, Music Unlimited, Muziekweb, MUZU.TV, Napster, Qobuz, rara.com, Rdio, Simfy,Skynet, Spotify, Traxsource, VidZone, Xbox Music, YouTube Belize: Binbit, Deezer, Digicel, iTunes, Movistar, YouTube Benin: DeezerBermuda: Deezer, iTunes Bhutan: Deezer Bolivia: Batanga, Deezer, iTunes, Rdio, Spotify, YouTube Bosnia and Herzegovina: DeezerBotswana: Deezer, iTunes Brazil: Deezer, Digital Virgo, Ideas Musik, iMusica, iTunes, Kboing, Mercado da Musica, Mundo Oi, MusicUnlimited, Nokia Mix Radio, Power Music Club (GVT), rara.com, Rdio, Samsung Music Hub, Terra Musica Powered by Napster, TIMMusic Store, Toing, UOL Megastore, Vevo, Vivo Musica by Napster, Xbox Music, Yahoo! Musica, YouTube British Virgin Islands: Deezer,iTunes Brunei: Deezer, iTunes Bulgaria: 4fun, 7digital, Akazoo, Deezer, eMusic, iTunes, M.Dir.bg, Mobiltel, Spotify Burkina Faso:Deezer, iTunes Burundi: DeezerCambodia: Deezer, iTunes Cameroon: Deezer Canada: 7digital, Archambault, ArtistXite, AstralRadio, Bell Mobility, Blackberry MusicStore, CBC Music, Classical Archives, Daily Motion, Deezer, eMusic, Galaxie Mobile, HMV Digital, iTunes, Mediazoic, Motime, MTV, MusicUnlimited, Naxos, Nokia Mix Radio, Qello, rara.com, Rdio, Siren Music, Slacker, Songza, Vevo, Xbox Music, YouTube, Zik Cape Verde:Deezer, iTunes Cayman Islands: Deezer, iTunes Central African Republic: Deezer Chad: Deezer Chile: Batanga, Bazuca, Claro, Deezer,Entel-Napster, iTunes, Movistar, Portaldisc, Rdio, Spotify, YouTube China: 1ting, Baidu, China Mobile, China Telecom, Douban, Duomi,Kugou, Kuwo, Netease, Nokia Mix Radio, Tencent, Xiami Chinese Taipei: Emome, Far Eastone, Hami+ Music, HiNet Funplay, iNDIEVOX,iTunes, KKBOX, MTV, muziU, myMusic, Omusic, Spotify, Taiwan Mobile, VIBO, Vimeo, YouTube Colombia: Batanga, Binbit, Codiscos,Deezer, ETB Musica, Ideas Musik, iTunes, Movistar, Prodiscos – Entertainment Store, Rdio, Spotify, Tigo, YouTube Comoros: DeezerCosta Rica: Batanga, Binbit, Deezer, Digicel, iTunes, Movistar, Rdio, Spotify, YouTube Croatia: Cedeterija, Dallas Music Shop, DeezerCyprus: 7digital, Deezer, eMusic, iTunes, Spotify Czech Republic: 7digital, Bontonline, Clickmusic, Deezer, eMusic, Google Play, iTunes,Koule, Mix_r.cz, MusicJet, O2, rara.com, Rdio, Spotify, Supraphonline, T-Music, Vodafone, YouTubeDemocratic Republic of Congo: Deezer Denmark: BibZoom.dk, CDON, Deezer, eMusic, iTunes, M1, Music Unlimited, Napster,rara.com, Rdio, Shop2download, Spotify, TDC Play, VidZone, WiMP, Xbox Music, YouSeeMusik (JUKE), YouTube Djibouti: DeezerDominica: Deezer, iTunes Dominican Republic: Deezer, iTunes, Rdio, SpotifyEast Timor: Deezer Ecuador: Batanga, Binbit, Deezer, Ideas Musik, iTunes, Movistar, Rdio, Spotify, YouTube Egypt: Alamelphan, Anghamy,Deezer, iTunes, Mazzika Box, Yala Music, YouTube El Salvador: Batanga, Binbit, Deezer, Digicel, iTunes, Movistar, Rdio, Spotify, YouTubeEquatorial Guinea: Deezer Eritrea: Deezer Estonia: 7digital, Deezer, eMusic, iTunes, muusika24.ee, rara.com, Rdio, Spotify Ethiopia: Deezer*450 – although services are listed in every country they appear, they are only counted once in the overall figure e.g. iTunes is counted once in the figure of 450 etc.44

FGHIJKLLaos:MNOOman:Fiji: Deezer, iTunes Finland: 7digital, CDON, City Market CM Store, Deezer, Digianttila, eMusic, Google Play, iTunes, Musa24.fi,Music Unlimited, Napster, Nokia Mix Radio, NRJ Kauppa Mobile, rara.com, Rdio, Spotify, VidZone, Xbox Music, YouTube France:121 MusicStore, 7digital, Altermusique, AmazonMP3, Beatport, cd1d, Daily Motion, Deezer, Echopolite, eMusic, Ezic, FNAC Jukebox,Google Play, iTunes, Jamendo, Jazz en ligne, Last.fm, Music Unlimited, musicMe, Musicovery, MyClubbingStore, MySurround,Napster, Nokia Mix Radio, Qobuz, rara.com, Rdio, Samsung Music Hub, SFR Music, Spotify, Starzik, Vevo, VidZone, Virgin Mega,Xbox Music, YouTube, ZaozaGabon: Deezer Gambia: Deezer, iTunes Georgia: Deezer Germany: 7digital, AmazonMP3, Ampya, Artistxite, Beatport, boomkat,Classics Online, Clipfish, Col-legno, Deezer, digital-tunes, DJ Shop, DJTUNES, elixic.de, eMusic, e-Plus unlimited, Eventim Music,Finetunes, Google Play, Highresaudio, iTunes, Jamba, Juke, Junodownload, Last.fm, Linn Records, Make Music TV, Maxdome,Mediamarkt, Medionmusic, MTV, Music Unlimited, Musicload, MUZU.TV, MyVideo, Napster, Naxos Music Jazz Library, Nokia MixRadio, O2, Putpat, Qobuz, rara.com, Rdio, Samsung Music Hub, Saturn , Schlager.tv, shop2download, Simfy, Spotify, tape.tv,T-Mobile, Tonspion.de, trackitdown, traxsource, Vevo, VidZone, Vodafone, Weltbild, whatpeopleplay.com, WiMP, Xbox Music, zwo3.net Ghana: Deezer, iTunes, THE KLEEK Greece: 7digital, Akazoo, Cosmote, Daily Motion, Deezer, eMusic, HOL Music Club, iTunes,Juno Download, mpGreek, MTV, MySpace, Napster, Naxos, Spotify, Vimeo, Wind, YouTube Greenland: DeezerGrenada: Deezer, iTunes Guatemala: Batanga, Binbit, Deezer, Digicel, iTunes, Movistar, Rdio, Spotify, YouTubeGuinea: Deezer Guinea-Bissau: Deezer, iTunes Guyana: DeezerHaiti: Deezer Honduras: Batanga, Binbit, Deezer, Digicel, iTunes, Movistar, Rdio, Spotify, YouTube Hong Kong:1010, 3Music, CMHK Soliton, Eolasia.com, hifitrack, iTunes, KKBOX, Moov, Musicholic, MusicOne, Newsic Daily,OleGoK, Qlala, rara.com, Rdio, SmarTone iN, Soliton, Spotify, YouTube Hungary: Dalok, Deezer, Google Play,Hungaroton, iTunes, Muzzia, rara.com, Rdio, Songo, Spotify, YouTube, Zene! 24/7Iceland: 7digital, Bedroom Community, Deezer, Gogoyoko, Rdio, Spotify, Tonlist.is India: 7digital, Artist Aloud, Gaana,In, IndiaONE, iTunes, Meridhun, My Band, Nokia Mix Radio, Raaga, Saavn, Saregama, Smash Hits, TeluguOne Indonesia:Arena Musik, Deezer, Guvera, iTunes, Langit Musik, Melon Indonesia, Musikkamu, Ohdio, YouTube Iraq: Deezer Ireland: 7digital,ArtistXite, Bleep, Blinkbox, Deezer, eMusic, Golden Discs, Google Play, iTunes, Last.fm, Music Unlimited, MUZU.TV, MySpace,Napster, Nokia Mix Radio, Qobuz, rara.com, Rdio, Spotify, Vevo, VidZone, Xbox Music, YouTube Israel: iTunes, Rdio, YouTube Italy:7digital, AmazonMP3, Azzurra Music, Beatport, CUBOMUSICA, Deezer, eMusic, Google Play, IBS, InnDigital, iTunes, Jamba, Juke,Last.fm, MP3.it, Music Unlimited, Napster, Net Music Media World, Nokia Mix Radio, Playme, rara.com, Rdio, Samsung Music Hub,Spotify, Vevo, Xbox Music, YouTube Ivory Coast: DeezerJamaica: Deezer, REGGAEinc Japan: Beatport, BeeTV, Best Hit J-Pop, clubDAM, Dwango, FaRao, GyaO!, ICJ, iTunes, KKBOX,Konami, Lismo, Listen Japan, Listen Radio, mora, mu-mo, Music Airport, Music Chef, Music Unlimited, Music.jp stream, Musing,MySound, Naxos, NOTTV, NTT DoCoMo Music Store, Oricon ME, Reco-Choku, Tsutaya Musico, Utapass, UULA, Xbox Music,YouTube Jordan: Deezer, iTunesKazakhstan: Deezer, iTunes, Yandex Music Kenya: Deezer, iTunes, Mdundo, THE KLEEK Kiribati: Deezer Kuwait: DeezerKyrgyzstan: Deezer, iTunesDeezer, iTunes Latvia: 7digital, Deezer, eMusic, iTunes, rara.com, Rdio, Spotify Lebanon: Deezer, iTunes Lesotho: DeezerLiberia: Deezer Libya: Deezer Liechtenstein: 7digital, Deezer, Google Play, Rdio, Spotify Lithuania: 7digital, Deezer, eMusic,iTunes, rara.com, Rdio, Spotify Luxembourg: 7digital, Deezer, eMusic, Google Play, iTunes, Napster, Qobuz, rara.com, Rdio, Spotify,VidZoneMacau: iTunes, KKBOX Macedonia: Deezer Madagascar: Deezer Malawi: Deezer Malaysia: Akazoo, Deezer, DigiMusic, Infogo,iTunes, KKBOX, Maxis Music Unlimited, rara.com, Rdio, Spotify, The Cube, Wowloud, YouTube Maldives: Deezer Mali: Deezer Malta:7digital, Deezer, eMusic, iTunes, Spotify Marshall Islands: Deezer Mauritiana: Deezer Mauritius: Deezer, iTunes Mexico: Batanga,Corona Music, Deezer, Entretonos Movistar, EsMas Movil, Flycell, Google Play, Ideas Musik, Ideas Telcel, iTodo, iTunes, MientrasContesto de Iusacell, Mixup Digital, Movistar, Music Unlimited, Nextel , Nokia Mix Radio, rara.com, Rdio, Spotify, Terra Live Music,Terra TV, Xbox Music, YouTube Micronesia: Deezer, iTunes Moldova: Deezer, iTunes Monaco: Deezer, Rdio, Spotify Mongolia:Deezer, iTunes Montenegro: Deezer Morocco: Deezer Mozambique: Deezer, iTunesNamibia: Deezer, iTunes Nauru: Deezer Nepal: Deezer, iTunes Netherlands: 7digital, Countdownload, Deezer, Downloadmusic,eMusic, GlandigoMusic, Google Play, iTunes, Jamba, Juke, Last.fm, legal download, Mikkimusic, MSN, MTV, Music Unlimited,Muziekweb, Napster, Nokia Mix Radio, Qobuz, Radio 538, rara.com, Rdio, Spotify, Talpadownloads, TuneTribe, Vevo, VidZone, XboxMusic, You Make Music, YouTube, zazell.nl, Ziggo Muziek New Zealand: 7digital, Amplifier, Bandit.fm, Deezer, Fishpond, GooglePlay, iHeart Radio, iTunes, Music Unlimited, MySpace, Pandora, rara.com, Rdio, Spotify, The InSong, theaudience, Vevo, Vodafone,Xbox Music, YouTube Nicaragua: Batanga, Binbit, Deezer, Digicel, iTunes, Movistar, Rdio, Spotify, YouTube Niger: Deezer, iTunesNigeria: Deezer, iRoking, iTunes, Spinlet, THE KLEEK Norway: 7digital, CDON, Deezer, iTunes, Jamba, Music Unlimited, Musicnodes,Musikk Online, Musikkverket & Playcom, Napster, Nokia Mix Radio, Platekompaniet, rara.com, Rdio, Spotify, VidZone, WiMP, XboxMusicDeezer, iTunes45

PQRSTUVYZPakistan: Deezer Palau: Deezer Panama: Batanga, Binbit, Deezer, Digicel, iTunes, Movistar, Rdio, Spotify, YouTubePapua New Guinea: Deezer, iTunes Paraguay: Batanga, Bluecaps, Claro, Deezer, Ideas Musik, iTunes, Movistar, Personal, Rdio,Spotify, Tigo, YouTube Peru: Batanga, Binbit, Deezer, Ideas Musik, iTunes, Movistar, Rdio, Spotify, YouTube Philippines: Deezer,Globe, iTunes, OPM2Go, Smart, Spinnr, Sun, YouTube Poland: 7digital, Daily Motion, Deezer, Empik.com, eMusic, Gaude.pl, interiamuzyka, iplay.pl, iTunes, Last.fm, Mood, MTV, Muzo, Muzodajnia, MySpace, Nokia Mix Radio, NuPlays, Onet Muzyka, Orange, PlayThe Music, Plus – Muzyka, rara.com, Rdio, Soho.pl, Spotify, T-Mobile, Tuba.pl, Vevo WiMP, wp.pl muzyka, YouTube Portugal: 7digital,Beatport, Deezer, eMusic, Google Play, iTunes, Jamba, Myway, Napster, Nokia Mix Radio, Optimus, Qmúsika, rara.com, Rdio, Spotify,VidZone, Vodafone, Xbox Music, YouTubeQatar: Deezer, iTunesRepublic of the Congo: Deezer Romania: 7digital, Cosmote, Deezer, Get Music, iTunes, Orange, Rimba, Trilulilu.ro, Triplu, Vodafone,YouTube, Zonga Russia: Beeline, ClipYou.ru, Deezer, Google Play, iTunes, iviMusic, Megafon (Trava), Muz.ru, Nokia Mix Radio, Svoy,Tele2, Yandex Music, YouTube, Zvooq Rwanda: DeezerSaint Kitts and Nevis: Deezer, iTunes Saint Lucia: Deezer Saint Vincent and the Grenadines: Deezer Samoa: DeezerSan Marino: Deezer Sao Tome and Principe: Deezer Saudi Arabia: Deezer, iTunes, Nokia Mix Radio Senegal: Deezer Serbia:Deezer Seychelles: Deezer Sierra Leone: Deezer Singapore: 7digital, Deezer, iTunes, KKBOX, M 1 Music Store, MeRadio, Nokia MixRadio, rara.com, Singtel AMPed, Singtel Ideas, Spotify, Starhub Music Anywhere, YouTube Slovakia: 7digital, Deezer, eMusic, iTunes,MusicJet, Orange, Spotify, Telekom, YouTube Slovenia: 7digital, Deezer, eMusic, iTunes Solomon Islands: Deezer Somalia: DeezerSouth Africa: Deezer, iTunes, Lookandlisten.co.za, MTN Play, MySpace, Nokia Mix Radio, rara.com, Rdio, Simfy, THE KLEEK, Vimeo,YouTube South Korea: Bugs, Cyworld BGM, Daum Music, Deezer, Genie, Groovers.kr, Helume, Hyundai Card Music, MelOn, Mnet,Monkey3, MPION, MUV, Naver Music, Ollehmusic, Soribada, YouTube Spain: 7digital, AmazonMP3, Beatport, Blinko (Buongiorno),DaDa, Deezer, eMusic, Google Play, iTunes, Last.fm, Mediamarkt, Movistar, MTV, Music Unlimited, MUZU.TV, Napster, Naxos, Nokia MixRadio, rara.com, Rdio, Samsung Music Hub, Spotify, Tuenti, Vevo, VidZone, Vodafone, Xbox Music, YouTube Sri Lanka: Deezer, iTunesSuriname: Deezer Swaziland: Deezer, iTunes Sweden: 7digital, CDON, Deezer, eClassical, eMusic, iTunes, Klicktrack, Music Unlimited,MySpace, Napster, Nokia Mix Radio, rara.com, Rdio, Sound Pollution, Spotify, Vimeo, WiMP, Xbox Music, YouTube Switzerland:7digital, Akazoo, AmazonMP3, ArtistXite, Cede.ch, Deezer, Ex Libris, Finetunes, Google Play, Hitparade.ch, iTunes, Jamster, Juke,Musicload, Napster, Nokia Mix Radio, Qobuz, rara.com, Rdio, Simfy, Spotify, Sunrise Joylife, VidZone, Weltbild, Xbox MusicTajikistan: Deezer, iTunes Thailand: 8 tracks, AIS, BEC-Tero Music, Daily Motion, Deezer, DTAC, H Music, i-humm, iTunes, KKBOX,MTV, Music Combo, Music One, MySpace, Qikplay, ThinkSmart, True Digital, True MP3 Combo, Vimeo, W Club, YouTube Togo:Deezer Tonga: Deezer Trinidad and Tobago: Deezer, iTunes Tunisia: Deezer Turkey: Avea, Deezer, Fizy.com, iTunes, MusicClub,Spotify, TTnetmuzik, Turkcell, YouTube Turkmenistan: Deezer, iTunes Tuvalu: DeezerUAE: Deezer, iTunes, Nokia Mix Radio Uganda: Deezer, iTunes UK: 7digital, Amazing Tunes, AmazonMP3, ArtistXite, Beatport,Bleep, Blinkbox, Bloom.fm, Boomkat, Classical Archives, Classical.com, Classics Online, Daily Motion, Deezer, Drum & Bass Arena,eMusic, Fairsharemusic, Google Play, Highresaudio, Historic Recordings, HMV Digital, Imodownload, iTunes, Jamster, Jango,Junodownload, last.fm, Linn Records, MixRadio (Nokia), Mobile Chilli, MSN, MTV, Music Unlimited, Musicovery, MUZU.TV, My MusicAnywhere, MySpace, Napster, Naxos, Nectar Music Store, O2 , Orange, Play.com, Pure Music, Psonar, Qobuz, rara.com, Rdio,Running Trax, Sainsburys, Samsung Music Hub, Spotify, Textatrack UK, The Classical Shop, trackitdown, Traxsource, TuneTribe,Vevo, Vidzone, Virgin, Xbox Music, Yahoo! Music, YouTube Ukraine: Deezer, iTunes, Last.fm, MusicClub, MUZon, Yandex Music,YouTube United Republic of Tanzania: Deezer Uruguay: Antel Musica, Batanga, Butia, Claro, Deezer, Ideas Musik, Movistar, Rdio,Spotify, Tmuy, YouTube USA: 7digital, Acoustic Sounds, Alltel Wireless, AmazonMP3, AOL Radio Plus, Arkiv Music, ArtistXite,AT&T Wireless, Beatport, Beats Music, Blackberry World, CD Universe, ChristianBook.com, Classical Archives, Cricket, DailyMotion, eMusic, Free All Music, Freegal Music, Google Play, Guvera, Hastings, Hdtracks, Hulu, Insound, iOldies, iTunes, iTunes Radio,Liquid Spins, MetroPCS, MTV, Music Choice, Music Unlimited, MusicGivz, Muve Music, MySpace, Myxer, Nokia Mix Radio, Nokia+,Pro Studio Masters, Qello, rara.com, Rdio, Rhapsody, Samsung Music Hub, Slacker, Spotify, Sprint, TheOverflow, T-Mobile, VerizonWireless, Vevo, Virgin, Xbox Music, Yahoo! Music, YouTube, ZUUS Uzbekistan: Deezer, iTunesVanuatu: Deezer Venezuela: Batanga, Binbit, Deezer, Digicel, Ichamo, iTunes, Movistar, Rdio, YouTube Vietnam: Deezer, iTunesYemen: DeezerZambia: Deezer Zimbabwe: Deezer, iTunesThisis a list of digital music services from around the world that appears onthe Pro-Music website (www.pro-music.org). Pro-Music is endorsed by an allianceof organisations representing international record companies (majors andindependents), publishers, performing artists and musicians’ unions.The list is compiled by IFPI based on information from its national groups attime of publication. It does not purport to be exhaustive and IFPI cannot guaranteeits 100 per cent accuracy. Readers should consult www.pro-music.org for the mostup to date information.46

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