J’son & Partners Consulting presents the research of online music market, results of 2012
During the report preparation we used the interviews prepared by our consultants with experts in the music industry, such as Yandex.Music representatives and others (for example: JSON.TV interview with a teacher and business trainee of RMA business school who has a pull of implemented projects for music business companies – Alexey Nikolaev
World online music market current situation
In 2012 the worldwide music market was 16.5 bln.USD, that include digital and physical sales. As a result of 2012 Digital format was 5.8 bln.USD (8% higher in comparison with 2011).
US music market is still keeping the leading position in the world rating in 2012, it presents 4.48 bln.USD by all segments – the ratio decreased for 0.5% in comparison with the previous year. Japan is the second market with 4.42 bln.USD, UK is the third one with 1.33 bln.USD and South Korea occupies the 11th place with 188 mln.USD.
Mobile apps for music download is gaining popularity all around the world due to the convenience and portability of audio content digital purchases, and also the apps functions are increasing each year.
Number of pay music services subscribers increased by 44% in 2012 and present 20 million of people.
Current state and forecasts of the Russian online music market
According to J’son & Partners Consulting the volume of Russian digital sales of music content market in 2012 was 3.1 mln.USD vs 2.55 mln.USD in 2011. This amount includes direct sales (over 65% of Russian music digital content market) plus advertising revenues and subscription model.
Until the end of 2012 the situation on the Russian market was very complicated, due to the leave of the local market players, such as Yota Music, Fidel, Stream, etc. They refused to develop this business branch. It happened because of the very high level of “piracy”, secondly it is very difficult for the legal platform to “clean” copyrights and the policy of the largest copyright holders played its role. At the end of 2012 among the strong Russian market players who saved position was streaming-service Yandex.Music, that is not monetized directly in web-version (advertising model is being used).
However in 2012 happened what everyone (users, experts, market players) have been waiting for so long: Apple launched its shop iTunes in Russia.
The appearance of such strong market player changed the situation drastically. In particular, copyright holders, become more enthusiastic in promoting music products via digital shop iTunes rather than via small platforms with unclear future.
According to J’son & Partners Consulting, the year 2013 must be crucial for the Russian online digital music content distribution market. The total market volume will reach 8 mln.USD with growth rate of 158%. Such rates will lead Russian market to the unconditional and absolute leader among fast growing world markets of music industry.
According to Yandex data (use of Yandex.Music service) the following market trends could be emphasized:
- Users prefer Russian music (more than 50% of listening): despite the fact that the local content has only 1% in catalogue.
- The main platform for music listening remains - the web: proportion of listening in web and mobile versions is 95% and 5 % accordingly.
- Monthly number of unique visitors of Yandex.Music is around 13 million of people.
- After 1.5 months of Android mobile apps launch, number of listening increased more than twice
- The main barriers for service development are legislation in the copyright and associated property rights sphere and wide expansion of “piracy” content.
Factors about Yandex.Music service:
- In the beginning the service planned as part of “search” service. Around 4% of user’s searches were about music. The decision was made: reply to every search request with opportunity to listen the target content.
- Yandex.Music is a streaming service and tending to be more comfortable and to become intuitive online player for users
Independent expert in music market, teacher in business school RMA (“Management in music business and entertainment industry” department) Alexey Nikolaev, described the market development, its drivers and barriers:
- “Copyright holders start to revaluate the digital market and to structure their catalogues first” (about launch of iTunes)
- "В до-iTunes-овские времена артисты и лейблы раздавали права, не особо думая"
- “Before iTunes artists and lables provide the rights without thinking”
- “For any music services such moments as “discovering”, “recommendations” and “artist search” are crucial.
- Our market biggest problem is that we don’t have “community” that will collect fees for mechanicals rights from internet platforms for downloads and streaming”.
- “Google Music will be esier as iTunes standard tought lables how to work”
Full version of the interview can be watched on J’son TV Channel on YouTube.
Subscription will be the most fast growing method of monetization. This very model J’son&Partners Consulting considers as the most prospective for Russian and world digital music markets.
According to J’son & Partners Consulting tracks and albums sales share in 2016 will reach 80.3%, and the total share of subscription and advertising model will increase up to 19.7%.
The main market growth drivers will lay on iTunes services (J’son & Partners Consulting evaluates iTunes market share as 50%) and Google Music (launch is expecting soon on the Russian market).
J’son & Partners Consulting expects in 2014-2016 growth of Russian digital music content market. iTunes revenues will present over half of the market in 2013-2015.
Full results of the research of online music market in Russia and in the world, results of 2012 are presented in the report: “Digital Music Distribution Market, 2009 – 2016” (79 pages)
2. Sources and Methodology
3. Definition and classification of online-music market
4. Online music makret overview, 2009-2013
4.1. Online music services market – general overview
4.2. History of online music market development
4.3. Online music market in particular countries
4.4. Volume and dynamics of the Russian online-music market, 2009-2012
4.5. Online music market development forecasts for 2013-2015
4.6. Online music market drivers and barriers in Russia
4.7. Market structure, players
4.8. Main business models and ways to monetize
4.8.2. Online radio
4.8.3. Download services
4.8.4. Music apps and services for mobile devices
4.9. Level of piracy in the segment of online music in Russia, 2009-2012
4.9.1. General assessment of the level of piracy in the segment of online music
4.9.3. Web sites with direct download
4.9.4. “Pirate” content in social networks
4.10. Key market players profile
5. Adjacent markets
5.1. Broadband access wireless network in Russia and in the world
5.2. Mobile Internet market
5.3. Electronic payment systems
5.4. Smartphones market in Russia and in the world
5.5. Tablet PC market in Russia and in the world
List of Illustrations
Fig. 1. Volume and dynamics of the global market of online music, 2011-2012, mln. USD
Fig. 2. The number of subscribers of worldwide digital music distribution services, mln. people
Fig. 3. Shares of digital music content distribution in the world, %
Fig. 4. Market of digital sales in USA, $, 2009-2013E
Fig. 5. Structure of music market revenues in USA, 2010, 2012
Fig. 6. Market of digital sales in UK, $, 2009-2013E
Fig. 7. Structure of music market revenues in UK, 2010, 2012
Fig. 8. Market of digital sales in Japan, $, 2009-2013E
Fig. 9. Structure of music market revenues in Japan, 2010, 2012
Fig. 10. Structure of music market revenues in South Korea, 2010, 2012
Fig. 11. The volume and dynamics of the Russian online music market, 2010-2012, mln. USD
Fig. 12. The volume and dynamics of the Russian online music market: the distribution of content distribution
models 2010-2012, mln USD
Fig. 13. The volume and dynamics of growth of online music in Russia, 2010-2016, mln. USD
Fig. 14. Russian online music market: diversification by content spread models, 2010-2016, mln. USD
Fig. 15. Russian online music market: diversification by platforms, 2011-2016, mln. USD
Fig. 16. Model of the interaction of players in the Russian online music market
Fig. 17. Audiocontent structure on rutracker.org, 2012
Fig. 18. The total mobile data traffic in the world, Eb, 2010-2016
Fig. 19. The total active mobile subscriber base of cellular network in Russia, mln subscribers, 1Q2010 – 2Q2012
Fig. 20. The total mobile data traffic, bln. MB, 1Q2010 – 2Q2012
Fig. 21. The frequency of use of the mobile internet from a smartphone
Fig. 22. The use of different access technologies to the Internet, Russia, October 2012
Fig. 23. The total active subscriber base of mobile data transfer in Russia, mln subscribers, 1Q2010 – 2Q2012
Fig. 24. Total revenues from mobile data transfer services in Russia, bln.RUB, 1Q2010 – 2Q 2012
Fig. 25. The total mobile data traffic, bln. MB, 1Q2010 – 2Q2012
Fig. 26. Average cost of 1 MB of mobile data traffic by mobile operators, RUB for MB, 1Q2010 – 2Q2012
Fig. 27. Market turnover of remote financial services, bln.RUB, 2008А-2017F
Fig. 28. Total existent Park of smartphones in the world, bln.pcs, 2010-2016
Fig. 29. Total existent Park of smartphones in the world by operational systems, mln.pcs, 2010-2012
Fig. 30. Volume sales of smartphones in mln pcs., in Russia, 1Q2010 – 2Q2012
Fig. 31. Dynamics of average retail price of a smartphone in Russia, USD, 2008-2012
Fig. 32. Market structure: smartphones – telephones, %, natural value, Russia, 2009 – 2015
Fig. 33. Total existent Park of Tablet PC in the world, mln.pcs, 2010-2012
Fig. 34. Total existent Park of Tablet PC in the world by operational systems, %, 2010-2012
Fig. 35. Total existent Park of Tablet PC in Russia, mln. pcs, 2010-2012
List of tables
Table 1. The main stages of digital content development in the world, 1970-2011
Table 2. The system of penalties for the distribution of illegal content
Table 3. Pirate portals traffic
Table 4. Overview of the electronic payments market in Russia 2008A-2012E-2017F., bln.RUB
Table 5. Number of internet users and broadband access subscribers
Table 6. Population, mln.people
This Information Note is Prepared by J’son & Partners Consulting, We strive to provide factual and prognostic data that fully reflect the situation and are available to us before issuing the material. J’son & Partners Consulting reserves the right to revise the data after publication of new official information by the market players.
For additional information:
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