Consumer and advertising revenue from recorded music in North America and Western Europe is expected to increase for the first time since 2010, according to a new report from research firm IHS.
IHS forecasts that by 2018, revenue will increase slightly from $12 billion to almost $13 billion as consumers shift towards streaming services.
?The business of recorded music in Western markets is currently undergoing a few tectonic shifts,? said Dan Cryan, director of digital at IHS Technology.
?The device landscape has changed from MP3 players to smartphones. As a result, music services must compete, not just with each other, but with new forms of entertainment such as video and apps that have entered the playing field.?
In 2010, streaming audio, excluding music videos, generated 2 percent of total recorded music revenues in the Western World. By 2014, that number jumped to 20 percent, driven by subscription revenue from Spotify and Deezer; and advertising revenue from Pandora.
?These changes to the broader ecosystem mean that the record business must continue to push forward, embracing ?access? models if it is to stay relevant to consumers,? Cryan said.
?From a business perspective, this will require developing better data-driven adverting techniques and innovative ways of promoting subscription services.?
YouTube?s rise as a major platform
One other trend noted by the IHS report was the rise of YouTube as a major music platform for legitimate usage. Nielsen Soundscan reports that music videos accounted for 85.3 billion streams in the US in 2014, up from 57.1 billion in 2013, equivalent to over half the on-demand music market.
However, for the top 10 audio and video streams, the difference is much more pronounced; with tracks in the video top 10 being streamed an average of 2.9 times more than the audio top 10.
