Impact on other sectors

The growth in music streaming and download services has also had a knock-on effect on suppliers of audio equipment for home studios, which were worth more

Top 20 countries for AC/DC according to Spotify listeners—7 December 2018-6 December 2019. Source

Figure 2.22 Top 20 countries for AC/DC according to Spotify listeners—7 December 2018-6 December 2019. Source: Soundcharts.

Top 20 countries for Sia according to Spotify listeners—7 December 2018-6 December 2019. Source

Figure 2.23 Top 20 countries for Sia according to Spotify listeners—7 December 2018-6 December 2019. Source: Soundcharts.

Necessary conditions analysis plot of the logarithm of YouTube views against foreign income/total income. Source

Figure 2.24 Necessary conditions analysis plot of the logarithm of YouTube views against foreign income/total income. Source: Australian Music Industry Exports Survey.

Necessary conditions analysis plot of the logarithm of Spotify streams against foreign income/total income. Source

Figure 2.25 Necessary conditions analysis plot of the logarithm of Spotify streams against foreign income/total income. Source: Australian Music Industry Exports Survey.

than $US 1.2 billion in 2018 (Futuresource Consulting, 2019). In Finland, this even exceeds the sales from other music-related sectors. Music Finland estimated that audio equipment companies, as well as start-up companies using music technology, accounted for as much as 54% of Finland’s music-related export revenue in 2017 (Music Finland, 2019).

60The economics of music exports

Millennials and emerging markets

What is noticeable in the geographic distribution of all these streaming services is that there are some large markets which do not figure significantly in the top countries according to recorded music sales reported by the IFPI. For example, Russia and Turkey are the 3rd and 9th ranked countries by YouTube usage but do not appear at all among the top 20 countries by record sales. This suggests that digital music and video streaming services are capturing large segments of markets worldwide that are not being captured by traditional recorded music.

One of the reasons for the significant shift to online music is the difference in behavioural characteristics of millennial audiences compared to previous audiences. Baida and Mora (2011) summarise the qualities of millennials to include the following traits: The need for experience, trust, mistrust of organisations, able to multitask with ease, sharing, familiarity with interactive technologies, socially conscious about global issues. Within this context, it is understandable why the rise of the YouTube star phenomenon and their dedicated audiences is seriously challenging the more established approach to music export. As Arnold (2017) writes: “millennials in large part don’t watch TV and don’t care much what mainstream celebrities have to say about products or services. They trust their social media tribes and peer-to-peer advice the most”. This approach can be seen with Australian millennial artists L-FRESH The LION and Troye Sivan, who are bypassing all conventional marketing strategies. Using their own YouTube channels and social media networks to engage with their audiences, they have reached epic stardom independently (see Chapter 4).

The rapid growth of social media usage, particularly among millennials, can also be attributed in no small part to mobile technologies that enable music to be played on mobile devices such as mobile phones. As such mobile devices are more affordable and easily accessible worldwide compared with desktop and laptop computing devices, streaming also increases the potential worldwide audience who can access the song, such as less-developed countries, which are the fastest-growing music markets. This has created new opportunities for new music streaming providers, and in many emerging markets, local streaming services are also increasingly emerging as significant players. An example is the Chinese market, where the music industry is growing at a rapid rate, in the past two years moving from 12th to 7th position in the IFPI global recording rankings, largely on the back of digital streaming (Soundcharts, 2019a). Other examples are Yandex Music and Zvuk in Russia, Gaana and JioSaavn Music in India, Melon in Korea, BoomPlay Music in Africa and Anghami in the Middle East and North Africa. Established streaming services from developed countries such as Spotify, Apple and YouTube Music have also been targeting emerging markets but the different nature of the markets has hindered their uptake while creating opportunities for local players. For example, in China, the market growth has been driven by local streaming platforms such as KuGou, QQ Music, KuWo and NetEase Cloud Music, helped by the banning of global Internet players such as Google and Facebook by the Chinese government (Soundcharts, 2019b). However, the uptake of music streaming differs across countries. In Japan, while physical sales have been declining for the last eight years, streaming has failed to penetrate the Japanese market like it has done in Western markets, owing to a lack of local content on streaming markets and a preference of many Japanese consumers for other- platforms such as video-on-demand and physical CDs (Soundcharts, 2019a).

 
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