MBW Views is a series of op/eds from eminent music industry people… with something to say. The following comes from Kim Bayley, CEO of the UK’s digital entertainment and retail association, ERA. On Thursday (February 29), ERA reported that recorded music revenues in the UK (the world’s third-largest recorded music market) recently hit a record GBP £2.223 billion (USD $2.761 billion, at the average exchange rate for 2023). The new high was achieved in the chart week ended Friday, February 23, according to numbers calculated by ERA on a moving-annual-total basis. It marks the first time the running annual total has exceeded the previous record set in October, 2001.
Unnoticed by much of the UK music industry, we’ve only just gone and done it: the UK music business has hit a new all-time high.
According to ERA research, in the chart week ended Friday 23 February, the UK music business completed its historic long march back from the wilderness and finally matched and then overtook its 2001 peak.
On an annualised basis, digital and physical revenues together hit £2,223m, just ahead of the £2,219m peak last seen in October 2001.
The significance of this moment should not be underestimated.
Virtually no one under 40 working in the music industry can remember the glory days of the business through the Nineties. With a typical career in the music business rarely exceeding 10 years, at least two generations have been and gone in that time.
It included 12 long years of decline until finally the bottom was reached and the industry began its equally arduous journey of growth which has brought us to today.
How many brilliant artists, inspirational songwriters and, yes, talented executives missed the opportunity to shine in that period we shall never know.
After sales crashed in the face of internet piracy, countless jobs were lost, businesses collapsed and careers were ruined. Within ERA’s own membership we lost storied names such as Woolworths, Our Price and Tower. We lost HMV twice until it was reborn in 2019.
It was an economic and human tragedy.
ERA’s research shows we have finally put those years of hurt behind us.
But in order to move on, we need to understand two things – how it is we came back from the brink and what we need to do next.
Music’s recovery has been almost entirely retail-led. The music business did not collapse because music somehow became worse and nor can its recovery be attributed to music getting better.
Music recovered first because entrepreneurs outside music saw a gap in the market that we missed or were unable to execute – for the subscription streaming model. They did so with their own money and they did it successfully. At the other end of the scale, the remaining hardcore of high street music shops that had somehow clung on identified another opportunity – that there was residual and growable demand for the then-derided vinyl format.
“Music’s recovery has been almost entirely retail-led.”
Kim Bayley, ERA
Both of these retail-led innovations not only turned out successful, they have disproportionately benefited the music industry. Which brings us to today and what we do next.
While recapturing the level of sales the UK music industry last enjoyed in 2001 is an important milestone of which we can be proud, it is far from the level of success we should be satisfied with.
Inflation means that rather than £2.2bn, UK recorded music sales should be at £3.9bn genuinely to match 2001’s success. That means we would need to grow nearly 80% in consumer spending terms to achieve the same level of income.
That’s not impossible. If we were able to maintain last year’s 9.8% growth rate, we could probably do so within a decade assuming inflation were to be under control. With the UK streaming market maturing rapidly and most forecasters assuming lower growth, the chances of that happening, however, seem remote.
What we need instead is a recognition that music itself is unlikely to generate the growth the music industry needs. Signing even more new artists is unlikely to move the dial.
Instead we need another transformational technology, which can provide a route to the increase in revenue we need to really match the glory days of 2001. Technology alone is not enough – we need to embrace the entrepreneurs who dare to think the unthinkable. At the risk of being “controversial”, we also need to recognise that digital services and retailers also need to make a profit if the entire music ecosystem is to succeed.
Some believe that new generation AI could yet deliver just such a transformation, but that remains to be seen.
The key point is that incremental improvements are unlikely to deliver the leap we really need. So let’s resolve to be bold, to grasp opportunity and dare to think really big.
Next stop: £3.9bn!Music Business Worldwide
