IBIS World Reports Sees Growth Ahead For Music Publishers
July 15, 2013 at 4:35 AM (PT)
The music publishing industry is in the midst of an important transition, finds a new report from IBIS WORLD. Falling physical album sales during the past five years have forced publishers to seek out new revenue sources and become less dependent on their traditional licensing platform.
"To meet the changing needs of the consumer, music publishers are continuously cultivating licensing agreements with newer revenue streams like mobile outlets, digital streaming services and wireless music subscription services," according to IBIS WORLD industry analyst JAMES CROMPTON. This transition has buoyed the industry in recent years, even facilitating a 7.4% jump in revenue in 2012. Adapting to these new models has helped mitigate the losses brought about by decreased consumer spending and lackluster album performances during the recession. Nevertheless, the effect of declining physical album sales and generally subdued consumer demand for music is still reverberating throughout the industry, resulting in an overall revenue decline of about 3.8% per year on average to about $4.2 billion in the five years to 2013. IBIS WORLD expects music publishing industry revenue to grow a mere 0.3% in 2013.
The shift toward digital platforms has helped operators in the music publishing industry unearth some new revenue streams, but the future performance of these mediums for publishers hinges on the ability to overcome some obstacles. For example, the widespread availability of music online, particularly for advertisers and other broadcasters, has made selling a song tougher than ever. Additionally, the internet’s accessibility has made it a viable vehicle for an artist to manage, distribute and promote his or her own songs and albums.
"Artists are becoming increasingly reluctant to rely on a major labels and their publishing to oversee management of their intellectual property," added CROMPTON. As a result, major companies in the industry, such as SONY CORP., VIVENDI and the WARNER MUSIC GROUP, have see revenue from their publishing segments fluctuate over the past five years. These three major players will generate over a third of industry revenue in 2013, indicating a moderate level of market share concentration for this industry. Mergers and acquisitions, as well as increasing opportunities for independent artists to publish and distribute their music without publishers, have made concentration volatile in this industry, however, as major entities attempt to mitigate a declining market by acquiring smaller, profitable competitors.
Even with some expected challenges, the report concludes the future remains bright for the music publishing industry. Over the five years to 2018, revenue is expected to grow. The digitization of music availability will continue to aid the industry’s growth. In addition, higher government oversight activity on preventing online music piracy will benefit publishers in the long run. This control will ensure music publishers capture licensing royalties that are eliminated through peer-to-peer file sharing and piracy. Additionally, with greater oversight and more media outlets, licensing a song in more ways will help bring profit margins up.