Intellectual Property The New Frontier: A look at the Vincentian music industry and its comparative advantage

by Richard McLeish

Part II of V

Chapter II

WORLD MUSIC INDUSTRY

To analyze the music industry of St. Vincent & the Grenadines we must first position that industry on the global landscape, within which it operates, contributes and competes. In 2003, the global music market was worth $US32 billion (28.5 billion Euros) with total unit sales (including music videos) of 2.7 billion. US and the UK featured at number one and number three in the world’s top 10 major music markets, accounting for 37% and 10% of world sales. Germany ranked fifth in the global music rankings.

Canada had the highest broadband uptake in North America (46%). Denmark had the highest broadband penetration in Europe (44%) and Chile had the highest broadband penetration in Latin America (8%).{{more}}

Taiwan had biggest number of mobile phones per household (110%) – at least one for every person in the country. Mobile penetration reached 100% in three other markets in 2004 – Czech Republic, Portugal and Sweden (2).

In 2004, well over 100,000 album titles, both new and re-issues were released. Per capita album sales are higher in the UK than anywhere else in the world, with an average 2.9 albums bought by every man, woman and child in the country every year. Norway is second at 2.7, with the USA third at 2.6.

The top ten markets for music DVD sales are USA, Japan, Germany, France, UK, Brazil, Netherlands, Canada, Australia and Spain (3).

In 2004, Universal maintained its position as the world’s biggest recording company, with a 25.5% share of the world market. Sony BMG was next with a 21.5% share followed by EMI at 13.4% and Warner at 11.3%. The independent sector held a 28.4% global share.

Performance rights collections totaled $US493 million, up 4.5% on 2003 and up 19% over the past five years. IFPI estimates that potential revenues from this sector could more than double its current value over the next five years. The figures include licensing income from webcasting and simulcasting as well as traditional radio and TV broadcasting, and public performance revenues from bars, hotels, nightclubs and restaurants.

In 2004 there was sharp growth of digital services with over 180 legitimate music download services launched globally. IFPI estimates that there are now well over 300 sites in total, with at least 200 in Europe. Music catalogue available on the major services doubled in 2004 to over one million tracks, while subscriber figures now top 2.2 million.

Sales of digital music players continued to increase, spurring growth in online music.

The launch of 3G services by major operators gave a boost to the download music to mobile market. In addition, sales of physical product over the internet grew rapidly reaching 15% in Germany, 10% in the UK and 6% in the US. The internet was the fastest-growing retail channel for CD sales in 2004 (4).

In Canada, a 2004 survey points to statistics that reflect the developments in the global music industry (5):

• 25% now owned MP3 Players

• 27% male and 23% female now own some sort of digital, portable device

• 46% use “Text Messaging”

• 51% female and 43% male now own Cellular phones

• 18% download Ringtones to their Cellular phones

• 25% will probably purchase “Master Tones” (the new, high quality ring tone that uses actual, original recorded music)

• 46% said they want to be able to buy the songs they like without buying the entire album

• 45% said they would prefer to support the artists by going to their live concerts and merchandising purchases.

(To be contined next week)