Streaming brings Swiss music labels higher revenues again

In terms of figures, streaming generated 34.4 million Swiss francs for music labels last year, according to figures published on Friday by the Swiss Music Label Association (IFPI Switzerland). This is just under 40 percent of total revenue and thus for the first time roughly the same amount as from the sale of sound recordings (35.6 million francs).

The almost 40 music labels that belong to IFPI Switzerland generated CHF 88.1 million last year. This is 4 percent more than in the previous year.

In contrast, revenue from the sale of CDs and other physical sound carriers fell again - by 11%. "This decline in sales was to be expected and corresponds to the general trend of CDs being replaced by music consumption on the Internet. Nevertheless, the CD will remain important for the music market for the foreseeable future," writes the industry association.

Revenues from the third segment - downloads - also shrank by 17 percent. However, because music consumption on the Internet has become so popular, sales from this segment more than offset the declining revenues from the other two segments for the second time in a row. The Swiss music industry is growing again, albeit at a low level.

Previously more than 300 million francs

The figures confirm the turnaround from the previous year, when the industry halted its downward slide for the first time since 2000 with growth of 1%. Nevertheless, revenues are still miles behind the income that the market was generating before the digital transformation.

In 2000, for example, Swiss music labels had a turnover of more than 300 million francs. By 2010, this figure had fallen to half that amount. The reason for this was downloads. Apple launched the iPod in 2001, followed two years later by the launch of the US company's iTunes Music Store. The downloading of songs massively boosted sales of CDs, DVDs, records, VHS cassettes and singles.

But the new driving force is streaming. Listening to music online via a streaming app such as Spotify or Apple Music has become so popular that it is replacing downloading songs. "It's impressive how quickly the digital market is being replaced: While streaming hardly generated any revenue five years ago, in 2017 it was already practically the same as downloading in its best year," IFPI Switzerland President Ivo Sacchi comments on the figures.

Little revenue from video streaming

In contrast, the industry association is surprised by the development of video streaming. Music labels' income from advertising on YouTube channels is still falling short of expectations. It is true that revenue more than doubled last year. Nevertheless, they only contribute around 4.6 percent.

Given the high level of music consumption on YouTube and Vevo, this is surprisingly low. Lorenz Haas, Managing Director of IFPI Switzerland, says: "Because these platforms do not offer music videos themselves, but through their users, they take the position that they do not need permission from the rights holders and give them a more or less one-sided share of their advertising revenue."

Developments will continue to be monitored. Haas explains that it may be necessary to consider adapting the legal framework in Switzerland. (SDA)