Plummeting CD sales, the ongoing toll of digital piracy and a lack of big name acts on tour fuelled a £189m drop in UK music revenues last year.
The music industry saw revenues decline 4.8% to £3.8bn in 2010 as the post-party hangover kicked in following a bumper 2009 driven by Susan Boyle’s record-breaking debut and big-selling albums from Lady Gaga and Michael Jackson.
As consumers tightened their purse strings amid fears over the state of the economy, nervous band managers decided against launching tours for their big name acts in case they failed to fill venues.
After a decade of growth, live music revenues declined 6.8% to £1.48bn last year.
“A number of stadium- and arena-filling bands were not on tour and many of those that did tour opted to play smaller venues to limit their risk (Kings of Leon and Rod Stewart),” said the UK’s music royalties body, PRS for Music, in its Adding Up The UK Music Industry report for 2010.
Sales of CDs fell by 7.9% to £1.24bn as music piracy and the ongoing cultural shift to listening to music via digital services such as Spotify and Pandora (NYSE: P) continue to take their toll.
Despite increased growth in revenue from digital services in the UK, up almost 20% year-on-year to £316.5m, the report said the promise of legal streaming and download services appears to have been overstated.
“While steep falls in physical revenues continued apace in 2010, there were clear signs that growth in digital revenues slowed across the main international recorded music industry markets,” said the report, with global digital revenue growth halving year-on-year to just 5.3%.
“Put more bluntly, global digital revenues are not going to be the ‘$30bn baby’ people talked about five years ago. Indeed they may stabilise at a around $5bn.”
Trade bodies representing the UK music industry – as well as counterparts in the film and TV sectors – were disappointed after the government announced on Wednesday that the it has scrapped plans to introduce legislation to force internet companies to block websites accused of illegal filesharing.
A brighter note was provided by business-to-business revenues –which include royalty collections from businesses that play music, the licensing of music services such as Spotify, advertising and sponsorship – which rose 2.6% to £1.06bn.
“It comes as no surprise that the overall numbers are down 5% as consumers are feeling their wallets tighten,” said Will Page, chief economist for PRS for Music.
“However, the licensing revenue streams which lie outside of the conventional radar are not only displaying impressive growth but illustrating the pace of diversification now taking place in the UK music industry.”
This article originally appeared in MediaGuardian.