This study discuss the music industry mainly as the record sales of music albums or singles, while right now basically it is combined of two different product type, tradition printed products and digital online products. The global overall music sale was increased by 0.2% in year 2012, the first time growth since year 1998. And the total revenue accounts for 16.481 billion USD in 2012, while the printed music products are still dominant, account for 57.1% although it is the only subject that are decreased with a 5%. In addition, digital music account for about 35.2%, with a growth for 8%, the other two growing subjects are performance rights revenue and synchronization revenues, accounts for 5.7% and 2.0%, see Figure 2.1.
Despite the decline of the global music market in these decades, revenue and market share of digital music has been growing every year, since the first year the IFPI started to gather statistics. Digital music accounts for only 0.4 billion revenue
57.10%
35.20%
5.70% 2.00%
Printed 57.1%
Digital 35.2%
Performance rights revenue 5.7%
Synchonization revenue 2%
Source: RIT Figure 2.1: Global Music Sales in 2012
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and 2 percent in the total market in year 2004, however, as mention, the revenue has reached 5.6 billion and account for a 35.2% percent in the market in year 2012, the growth rate is a remarkable 1400 percent within a decade (Figure 2.2).
Figure 2.2: Global Digital Music Sale
But in some areas, digital music sale take the majority of the country’s total revenue. In the top 20 global markets ranked by IFPI, America ranked No.1 market, and digital music revenue accounts for 58% out of the total 4,481.8 million (USD);
Australia No. 6, 47% out of the 507.4m; Sweden No. 12, 59% out of the 176.7m;
India No. 14, 60% out of the 146.7m; and China ranked No.20, out 82% of the 92.4m, see Figure 2.3.
Figure 2.3: Digital Music Dominant Countries in 2012
4.3 4.7 4.8 5.1 5.6
America(1) Australia(6) Sweden(12) India(14) China(20) Global Unit: million USD
Printed Digital Others
Source: RIT
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Furthermore, Japan is the biggest market in Asia, the total revenue is a great 4,422m USD, just slightly behind America and ranked the second largest market in the world, yet digital music only account for 17% of the whole. The ranking of South Korea is rising at No. 11 worldwide in 2012 comparing to No. 18 in year 1997. And Taiwan, in 2012, ranked No.6 in Asia and No. 28 in the world, far slide from previous No. 13 in 1997 globally, only account for 27% out of the 58.3 million USD, also lower than the global average 35.2 percent of the overall revenue (Figure 2.4).
Figure 2.4: Music Sales of main Asia Countries
Actually, Taiwan was ranked No. 2 in Asia market, No. 13 in the world back in the year 1997, the highest peak in Taiwan’s recorded music industry. Even though Taiwan is the headquarters of the mandarin music, accounts for 80% of the production of which, the revenue has been a depressing decline since 1997. Exchange the currency back to TWD, at the most prosperous period the revenue was even more than 12 billion of the total Taiwan market, and rapidly shrank more than half in only 5 years (Hsien, 2004.), then in 2012, it comes to the 14.3% left of the number in 1997, see Figure 2.5.
3526.4
102.7
45.4
16.9 24.6
39.8 9403 755.8
79.8
88.4 75.5 35.2
16 5798
352.2 5 12.9 1.6 2.5 1280
10%0%
20%30%
40%50%
60%70%
80%90%
100%
Unit: million USD Printed Digital Others
Source: RIT
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Figure 2.5: Over all Music Sales in Taiwan
However, regardless of these disappointing numbers, it is true that the market is shrinking, but it may not necessarily means it is dying, in other words actually, it is altering. If we look at the statistics data by the RIT, the sales of digital music in Taiwan is growing, especially in these few years. The revenue grew 11% in 2008, which accounts for 13.8 percent of the total music sales, then drop 7 and 4 percent till year 2010, the market share of total revenue also drop slightly to 12.2 percent.
Whereas it grew up to a large 39% to 344.7 million TWD, 17.4% of the total sales in 2011, and then grew another 38% to 475.8 million in 2012, the market share also grew to 27% at the same time (Figure 2.6).
Figure 2.6: Taiwan Music Sales by Product Type
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000
Unit: million TWD
Source: RIT
0 500 1000 1500 2000 2500
2008 2009 2010 2011 2012
Unit: million TWD Printed Digital
Source: RIT
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Furthermore, as a matter of fact, if we take a closer look at the Taiwan market reports by the Record Industry Foundation (RIT) in Taiwan, there are two factors that might make the printed market looks better, the first one is the sales of vinyl records, the other one is parallel imports. According to British Phonographic Industry (BPI) and BBC Newsbeat’s report, the vinyl sales in the U.K. has reach a highest level,
“Almost 550,000 LPs have been snapped up by music fans so far (Oct. 17) in 2013, already giving vinyl its most successful year since 2003”, while at the end of 2013,
“BPI is estimating that more than 700,000 units could be sold by the end of the year, the highest total sales since 2001” (Figure 2.7). IFPI also confirm this statement:
within these 5 years, the global vinyl sales revenue has increased from 66 million USD to 171 million USD, the growth rate is a wonderful 21% though the proportion is still minute, these messages could all shows the trend of revival of vinyl product.
Figure 2.7: UK Vinyl Sales, 2003-2013
Follow by this trend, plus the “Vinyl Renaissance” event by Eslite since 2007 (ETtoday, 2013), the unit sale of vinyl in Taiwan has a massive growth as well.
According to RIT’s market report, the annual unit sale of vinyl is only 1.11thousand in 2009, and then started to grow constantly to 12.66 thousand units in 2012, account for a incredible growth rate for more 11 times within 4 years, and especially in year 2012 (see Figure 2.8).
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Figure 2.8: Taiwan Vinyl Sales, 2008-2012
And the other factor in RIT’s report is that all the sales figures are excluded the parallel imports, which means the overall consumption for music products of Taiwan customer could be higher than those numbers. Just like digital music, parallel imports would cut down the sales of records released officially by the local music labels, but at least some of the local importers can have benefits of it.
Though it is hard to estimate exactly how many copies by parallel imports are sold annually in Taiwan, we can still quote some data to show that the parallel imports items are really taking some quantities in Taiwan’s record market. Here takes the weekly and annual chart announced by one of the largest local music retailer, 5music (www.5music.com.tw), to demonstrate this circumstance by organize the chart of Japanese & Korean category from 2011 to 2013. As the Korean pop culture getting more and more popular these years (Liao, 2013), Korean made music products which are parallel imported by local retailer are also started to occupy a few places in the weekly chart since the early 2010. On average, the first half year of 2011 has 5.7 parallel import items on the chart that account for 30.9% of the total sales in the weekly top 20 chart, and in the second half year of 2011, the parallel imports has 6.7 items on the chart and account for 35.7% of the total sales. In the first half year of 2012, there are around 8.1 items in the top 20 ranking every week, account for 45.7%
0 2 4 6 8 10 12 14
2008 2009 2010 2011 2012
Unit: thousand
Source: RIT
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of sales in the top 20 selling items totally. While looking more directly at the annual chart of 2013, the parallel import items take 8 places in the top 10 ranking, total 14 places in the top 20 chart, account for a large 82.46% of sales in the annual top 20 selling items, organized and shown as Table 2.1 and 2.2.
Table 2.1: 5Music weekly chart 201101 to 201226, Japanese & Korean category
Week
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Table 2.2: 5Music annual chart 2013, Japanese & Korean category
Ranking Title Artist Sale% Publisher
1 4th Album “I Got A Boy”
(Korea Import Ver./Group Cover)
Girl’s Generation 16.98 S.M.
INFINITE 8.23 Woollim Label
4 2ndSingle Album “DESTINY” (Korea Import Ver.)
INFINITE 6.76 Woollim Label
5 Re: BLUE(Korea Import Limited Edition/ Jeong Yong Hwa Ver.)
CNBLUE 5.61 FNC
Entertainment 6 3rd Album “Chapter 1: Dream Girl/The
misconception of you”
(Korea Import Ver.)
SHINee 5.59 S.M.
Entertainment
7 ONE SHOT (Taiwan Printed Ver.) B.A.P 4.92 SONY MUSIC 8 Special Album “Miracles in December”
(Korea Import Korean Ver.)
EXO 4.91 S.M.
Entertainment 9 3rdAlbum “Chapter 2: Why So Serious?”
The Misconceptions Of Me” (Korea Import Ver.)
INFINITE H 2.21 Woollim Label
15 18 3rd Japanese Album “LOVE&PEACE”
(Taiwan Printed Deluxe Edition)
Girls` Generation 2.17 Universal Music
19 Chapter 1. “Dream Girl-The
misconceptions of you” (Taiwan Printed Ver.)
SHINee 2.16 avex
20 GALAXY SUPERNOVA
(Taiwan Printed Limited Edition)
Girls` Generation 2.05 Universal Music
The parallel import items’ chart performance is sum up in Figure 2.9.
Figure 2.9: Parallel Import Items' Chart Performance
2.1.1 Printed Music Products
In this research, the tradition music product is defined mainly focus on its physical characteristics comparative to the virtual digital item. Compact discs is the most dominant type of tradition music products, include the normal CDs, high definition Super Audio CDs (SACD), DVDs, VCDs, and Blu-Ray Discs and so on, which accounts for 99.7% of the total printed market, while the vinyl record takes the 0.3% remaining (RIT market report, 2012). Most of consumers buy music products in brick-and-mortar record store, included department store, wholesaler store and book
5.7
2011 1st. half average 2011 2nd. half average
2012 1st. half average 2013 annual places in chart percentage of sale
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store, etc. And still some will buy music product on the online stores (Ministry of Culture, 2011). Comparing to online music, printed music products are considered more worthy to collect for music fans, and also used to provide more contents than online music especially the gifts like posters, postcards, or folders that let its buyer can really hold the products they consume. Again, as mentioned, printed music product is still the dominant product type in Taiwan music market.
2.1.2 Online Music Products
To the contrary, the online music product is defined as the virtual product or service transaction in the world of Internet, while this category of product type basically combine online streaming and digital download. The concept of online streaming is like to rent a legal account, a certification monthly to access the database unlimitedly of the service providers, and charge the subscriber the subscription fees very month. And for digital download is more like to purchase items, just like purchasing printed products, but in the virtual way, the consumer still pay for that item, but getting the virtual digital files. Although the idea between these two is sort of different from each other, this research is trying to combine these two business models as a category of online music product.
Therefore, music products that are sold or streamed through the Internet can be considered as the applications to the so called “cloud computing”. And at the same time, it is the characteristics of “cloud” that make the distinctness of online music so different than the tradition printed music. Referring to the definition of National Institute of Standards and Technology, U.S. Department of Commerce, by Mell and Grance (2011), they define the cloud computing with five essential characteristics, which are:
1. On-demand self-service: “A consumer can unilaterally provision computing
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capabilities, such as server time and network storage, as needed automatically without requiring human interaction with each service provider.” This characteristic make music consumers can link to the online music server themselves to reach the music they want, and the server are running automatically by computer instead of store human clerk, the music is always available, 24/7. In addition, people can get the music they want right away, which makes no time limit to purchase music.
2. Broad network access: “Capabilities are available over the network and accessed through standard mechanisms that promote use by heterogeneous thin or thick client platforms (e.g., mobile phones, tablets, laptops, and workstations).” This feature make music consumers can use any devices, no matter it is a computer at home or a portable tablet, to access to online music rather than go to a brick-and-mortar store for their goods. Moreover, it make the consumer can both buy and play their music within one device, in other words, it makes no space limit to purchase music.
3. Resource Pooling: “The provider’s computing resources are pooled to serve multiple consumers using a multi-tenant model, with different physical and virtual resources dynamically assigned and reassigned according to consumer demand. …. Examples of resources include storage, processing, memory, and network bandwidth.” The databases of online music providers are like a extremely large pool that contains plentiful music data that can be access by any consumer no matter where the resources at. This characteristic make online music can provide way much more music items than a physical store, such as the items that are out of print or the items which do not release in certain country.
4. Rapid elasticity: “Capabilities can be elastically provisioned and released,
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in some cases automatically, to scale rapidly outward and inward commensurate with demand. To the consumer, the capabilities available for provisioning often appear to be unlimited and can be appropriated in any quantity at any time.” This characteristic make online music can be sold or be streamed as many times as consumers want, which also means the music is always available, never sold out.
5. Measured service: “Cloud systems automatically control and optimize resource use by leveraging a metering capability (Typically this is done on a pay-per-use or charge-per-use basis) at some level of abstraction appropriate to the type of service (e.g., storage ….). Resource usage can be monitored, controlled, and reported, providing transparency for both the provider and consumer of the utilized service.” The last characteristic let the traditional record business model also work in digital way, and even brings out a new one. Online music consumer’s consumption is measurable either by streaming or downloading. As mentioned, online streaming will be controlled by time (usually a month), while mp3 downloading can be measured either by a single track or by a whole album. Purchasing a single track is popular among digital music buyer because it is much easier and reasonable for people to buy the music they like, people will not have to buy other tracks that they are not really want but is also contained in the whole album. As The Nielsen Company & Billboard’s 2012 Music Industry Report (2013) state that digital tracks had sold 1.34 billion units in 2012,
which account for 80% of the overall music unit sales.
In brief, all these five characteristics above by Mell and Grance show the attributes of online music that can make consumers easier to access music comparing to a traditional printed record.
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