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2017 U.S. Market Update
Josh Friedlander
SVP Strategic Data Analysis, RIAA
jfriedlander@riaa.com
2
U.S. Music Business: 2 Consecutive
Years of Growth
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2...
2016 Growth Continues into 2017
2013 2014 2015 2016 2017
U. S. RETAIL
Physical Digital Download Streaming Synchronization
...
First Year With ~ 1 Trillion Streams
Ad-Supported
Video
26%Ad-Supported
Audio
8%
Subscription
Audio
31%
Internet Radio
35%...
Streaming Continued to Be Primary
Revenue Driver
2013 2014 2015 2016 2017
TOTAL U.S. STREAMING REVENUES
Paid Subscriptions...
Revenue Composition:
STREAMING
65%
DIGITAL
DOWNLOADS
15%
PHYSICAL
17%
SYNCH 3%
U.S. REVENUES 2017
STREAMING
4%
DIGITAL
DOW...
Paid Subscriptions Were the Biggest
Driver of Revenue Growth
2013 2014 2015 2016 2017
$Billions
PAID SUBSCRIPTION REVENUES...
U.S. Paid Subscriptions
9
2013 2014 2015 2016 2017
MILLIONS
6.2
7.7
10.8
22.7
35.3
2 Year: 225%
Source: RIAA
On-Demand Ad-Supported Revenues
2013 2014 2015 2016 2017
$MILLIONS
$221
$284
$372
$489
$659
2 Year:+77%
Source: RIAA 10
2013 2014 2015 2016 2017
SoundExchange
Distributions
Directly Paid
Digital and Customized Radio Revenues$MILLIONS
$803
$77...
Digital Downloads Continue Decreasing Quickly
$2.9
$2.6
$2.3
$1.8
$1.3
2013 2014 2015 2016 2017
2 Year: -43%
$BILLIONS
12S...
Physical Decline Continues
$2.5
$2.1
$1.9
$1.6 $1.5
2013 2014 2015 2016 2017
2 year: -20%
$BILLIONS
13Source: RIAA
Vinyl: Growth Continues at Slower Pace
$214
$249
$339
$360
$395
2013 2014 2015 2016 2017
$MILLIONS
14
2 year: +16%
Source:...
15
Coming Soon to RIAA.com
16
One More Thing
$8 Bil $143 Bil
17
0 1 2 3 4 5
US
Tennessee
GDP Contribution Ratio
1.9 million jobs supported
Global Music
Report 2018
Summary v1.0 IFPI, May 2018
 Published April 24th 2018 and covers calendar
year 2017.
 Free State of the Industry overview
supplemented by Data and ...
2017: Global Recorded Music
Industry
growth
compared to
2016
8.1%
global trade revenues for
the recorded music
industry in...
25.2
23.4 23.8
21.9
20.1 19.5
18.1
16.3
14.1
11.9
10.4
8.9 8.2 7.6 6.7 6.0 5.7 5.5 5.2
0.4
1.0
2.0
2.7
3.4
3.7
3.9
4.2
4.4...
Recorded music revenues by region
North America
36.8%
Europe
33.2%
Asia
22.7%
Australasia
2.8%
Latin America
4.1%
Rest of ...
Subscription
audio streams
$5,224 million
Ad-supported
audio streams
$548 million
Video streams
$857 million
8.3%
8.0%
6.1...
The value gap
Audio streams (paid and ad-supported) Video streams
AUDIO AND VIDEO STREAMING USERS Vs REVENUES 2017
Users (...
1 - USA
+12.8% - $5.92bn
4 - UK
+9.2% - $1.31bn
2 - JAPAN
-3.0% - $2.73bn
8 - AUSTRALIA
+13.4% - $412.9M
6 – SOUTH KOREA
+...
Free State of the Industry overview:
ifpi.org
Full Data and Analysis report:
gmr.ifpi.org
david.price@ifpi.org
Industry Composition
1997
CDs
Cassettes
Vinyl
Music Videos
27
2007
CDs
Cassettes
Vinyl
Music Video
Digital Downloads
Ringt...
Thank You!
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The Landscape of the Music Industry in the US and Across the World

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In this presentation, David Price, Director of Insight and Analysis at IFPI, and Josh Friedlander, SVP of Strategic Data Analysis at RIAA, will present and discuss the latest revenue trends in the music industry. In April 2018, IFPI published the Global Music Report, the definitive source of revenue data for the worldwide music industry, and analysis will focus on fresh data and analysis from this report and from the RIAA.

Friedlander will show how far audio streaming – particularly paid subscriptions – has transformed the U.S. music market in recent years. Price will move this analysis to the global landscape — Is audio streaming a solution for the music industry across the world? How does the industry in the US differ from neighbors like Canada and Mexico? What’s the potential success in countries like China, India, and Russia and how can record companies and artists best capitalize on those prospects?

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The Landscape of the Music Industry in the US and Across the World

  1. 1. 2017 U.S. Market Update Josh Friedlander SVP Strategic Data Analysis, RIAA jfriedlander@riaa.com
  2. 2. 2
  3. 3. U.S. Music Business: 2 Consecutive Years of Growth 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 $BILLIONS $15 $10 $5 3 Source: RIAA
  4. 4. 2016 Growth Continues into 2017 2013 2014 2015 2016 2017 U. S. RETAIL Physical Digital Download Streaming Synchronization $BILLIONS $7.0 $6.7 $8.7 2 Years: +30% $6.7 $7.5 4Source: RIAA
  5. 5. First Year With ~ 1 Trillion Streams Ad-Supported Video 26%Ad-Supported Audio 8% Subscription Audio 31% Internet Radio 35% 5 By number of streams Source: Nielsen SoundScan, BuzzAngle, Pandora public filings, RIAA estimates
  6. 6. Streaming Continued to Be Primary Revenue Driver 2013 2014 2015 2016 2017 TOTAL U.S. STREAMING REVENUES Paid Subscriptions Ad-Supported On-Demand (Audio & Video) SX Distributions & Direct Payments $1.5 $1.8 $2.3 $4.0 $5.7 $BILLIONS 2 Years: +143% 6Source: RIAA
  7. 7. Revenue Composition: STREAMING 65% DIGITAL DOWNLOADS 15% PHYSICAL 17% SYNCH 3% U.S. REVENUES 2017 STREAMING 4% DIGITAL DOWNLOADS 30% PHYSICAL 66% U.S. REVENUES 2008 7 Streaming Nearly 2/3 of Market In 2017 Source: RIAA
  8. 8. Paid Subscriptions Were the Biggest Driver of Revenue Growth 2013 2014 2015 2016 2017 $Billions PAID SUBSCRIPTION REVENUES $0.6 $0.8 $1.2 $2.5 $4.0 2 Year:+254% 8 Source: RIAA
  9. 9. U.S. Paid Subscriptions 9 2013 2014 2015 2016 2017 MILLIONS 6.2 7.7 10.8 22.7 35.3 2 Year: 225% Source: RIAA
  10. 10. On-Demand Ad-Supported Revenues 2013 2014 2015 2016 2017 $MILLIONS $221 $284 $372 $489 $659 2 Year:+77% Source: RIAA 10
  11. 11. 2013 2014 2015 2016 2017 SoundExchange Distributions Directly Paid Digital and Customized Radio Revenues$MILLIONS $803 $773 $590 $965 $914 2 Year: +14% Source: RIAA, SoundExchange 11
  12. 12. Digital Downloads Continue Decreasing Quickly $2.9 $2.6 $2.3 $1.8 $1.3 2013 2014 2015 2016 2017 2 Year: -43% $BILLIONS 12Source: RIAA
  13. 13. Physical Decline Continues $2.5 $2.1 $1.9 $1.6 $1.5 2013 2014 2015 2016 2017 2 year: -20% $BILLIONS 13Source: RIAA
  14. 14. Vinyl: Growth Continues at Slower Pace $214 $249 $339 $360 $395 2013 2014 2015 2016 2017 $MILLIONS 14 2 year: +16% Source: RIAA
  15. 15. 15 Coming Soon to RIAA.com
  16. 16. 16
  17. 17. One More Thing $8 Bil $143 Bil 17 0 1 2 3 4 5 US Tennessee GDP Contribution Ratio 1.9 million jobs supported
  18. 18. Global Music Report 2018 Summary v1.0 IFPI, May 2018
  19. 19.  Published April 24th 2018 and covers calendar year 2017.  Free State of the Industry overview supplemented by Data and Analysis section.  Data and Analysis section contains insight and detailed revenue data across all recorded music formats, including streaming, digital downloads, and physical.  Individual data pages for more than 50 markets worldwide.
  20. 20. 2017: Global Recorded Music Industry growth compared to 2016 8.1% global trade revenues for the recorded music industry in 2017 $17.3bil Third consecutive year of global growth after fifteen years of declining revenues
  21. 21. 25.2 23.4 23.8 21.9 20.1 19.5 18.1 16.3 14.1 11.9 10.4 8.9 8.2 7.6 6.7 6.0 5.7 5.5 5.2 0.4 1.0 2.0 2.7 3.4 3.7 3.9 4.2 4.4 4.3 4.0 3.8 3.2 2.8 0.1 0.2 0.2 0.3 0.4 0.4 0.6 1.0 1.4 1.9 2.8 4.7 6.6 0.6 0.7 0.8 0.9 0.9 1.0 1.2 1.3 1.3 1.4 1.4 1.6 1.8 1.9 2.0 2.3 2.4 0.3 0.3 0.3 0.3 0.3 0.4 0.3 0.3 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Global recorded music industry revenues 1999-2017 (US$ billions) Total Physical Digital (excluding streaming) Total Streaming Performance Rights Synchronisation Revenues Modest growth after a long decline PHYSICAL Sales of all physical formats, including CD and vinyl DIGITAL Permanent downloads, mobile revenues - EXCLUDES streaming PERFORMANCE RIGHTS Music used in broadcast and public performance SYNCHRONISATION royalties from recorded music use in television, films, or games $17.27 billion STREAMING Audio and video streaming revenues, paid and ad-supported
  22. 22. Recorded music revenues by region North America 36.8% Europe 33.2% Asia 22.7% Australasia 2.8% Latin America 4.1% Rest of the World 0.4% Asia & Australasia: 25.5%Each major region of the world reported revenue increase in 2017: North America: +12.8% $6.35bn Europe: +4.3% $5.73bn Asia: +4.5% $3.92bn Australasia: +13.4% $484.4m Latin America: +17.7% $709.4m REVENUES INCREASED WORLDWIDE REVENUES AS PER CENT OF GLOBAL TOTAL
  23. 23. Subscription audio streams $5,224 million Ad-supported audio streams $548 million Video streams $857 million 8.3% 8.0% 6.1% 12.8% 10.5% 8.7% 78.8% 76.1% 85.0% 76.8% 71.3% 80.7% 12.9% 15.9% 8.9% 10.5% 18.2% 10.6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Global North America Europe Asia Latin America Australasia Ad-supported Audio Streams Paid Subscription Audio Streams Video Streams Streaming Revenues by Format Global Revenue Breakdown Total: US $6.63 billion
  24. 24. The value gap Audio streams (paid and ad-supported) Video streams AUDIO AND VIDEO STREAMING USERS Vs REVENUES 2017 Users (millions) Revenue (US$ millions) 272m USERS 1,300m USERS US $5,569m US $856m
  25. 25. 1 - USA +12.8% - $5.92bn 4 - UK +9.2% - $1.31bn 2 - JAPAN -3.0% - $2.73bn 8 - AUSTRALIA +13.4% - $412.9M 6 – SOUTH KOREA +45.8% - $494.4m 9 - BRAZIL +17.9% - $295.8m 5 - FRANCE +1.7% - $925.1m 7 - CANADA +14.0% - $437.2m 10 - CHINA +35.3% - $292.3m Top ten markets Growth in: • 8 of top ten markets • 17 of top twenty markets • 50 of sixty-one markets tracked 3 - GERMANY -1.5% - $1.32bn
  26. 26. Free State of the Industry overview: ifpi.org Full Data and Analysis report: gmr.ifpi.org david.price@ifpi.org
  27. 27. Industry Composition 1997 CDs Cassettes Vinyl Music Videos 27 2007 CDs Cassettes Vinyl Music Video Digital Downloads Ringtones Subscriptions SoundExchange 2017 CDs Vinyl Music Video Digital Downloads Ringtones Paid Subscriptions Limited Tier Subscriptions SoundExchange Direct Paid Custom Radio On-Demand Ad-Supported Streaming Synchronization
  28. 28. Thank You!

In this presentation, David Price, Director of Insight and Analysis at IFPI, and Josh Friedlander, SVP of Strategic Data Analysis at RIAA, will present and discuss the latest revenue trends in the music industry. In April 2018, IFPI published the Global Music Report, the definitive source of revenue data for the worldwide music industry, and analysis will focus on fresh data and analysis from this report and from the RIAA. Friedlander will show how far audio streaming – particularly paid subscriptions – has transformed the U.S. music market in recent years. Price will move this analysis to the global landscape — Is audio streaming a solution for the music industry across the world? How does the industry in the US differ from neighbors like Canada and Mexico? What’s the potential success in countries like China, India, and Russia and how can record companies and artists best capitalize on those prospects?

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