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 <strong>Music</strong>,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 <strong>Music</strong>Per 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 <strong>Music</strong> EntertainmentSubscription services have alsoremoved a barrier to music discovery.Jacob Herbst, head of digital sales andbusiness development (Sweden), Sony<strong>Music</strong> 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 Playground<strong>Music</strong> 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.”<strong>Digital</strong> 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
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