Music

The music consumer market has been hit hardest by the digitalisation of the industry.

It is unclear whether the future lies in an ad-free model (paid) or advertising model (free); both streaming services will probably co-exist for a while. Companies need to deal with the growing competition in this field and will need to work to differentiate themselves.

Playing field

Digital streamed music revenues exceeded those for physical recorded music for the first time in 2016 as the streaming market jumped 45% year-on-year. Growth is primarily driven by Spotify, which continues to be the most popular mobile music app, installed on an estimated 3.7m devices and with consumption averaging 103 minutes every week. Almost 60% of 12-19 year-olds have downloaded and installed the Spotify app. Spotify’s dominance is unlikely to have a detrimental effect on the market going forward. Although Spotify is credited with reviving the Dutch recorded music industry, growth should still be seen as fragile and so the traditional downsides of single company dominance, such as price control or limiting availability, don’t really apply.

Due to the strong rise of music streaming services, brick and mortar music stores are struggling. However, this year also brought growth in the sale of vinyl in the Dutch market, partly offsetting the decline noted in the market for physical music.

The electronic dance music (EDM) scene is a leading contributor to growth, with Dutch dance music festival visitors totalling 2.9m last year, up from 1.6m in 2011, according to music consultancy DDMCA. Awakenings and the Amsterdam Dance Event rank among Europe’s top festivals.

However, one headline event, Sensation, closed down after 18 years when US-based live entertainment company LifeStyle decided to shutter it following major corporate restructuring. The final Sensation took place at the Amsterdam Arena in July.

What’s new?

To challenge the dominance of international streaming services like Spotify, local players Talpa Radio and MediaMarkt decided to team up in strategic joint venture JUKE Nederland. JUKE lets users listen to radio and stream on-demand music anywhere. The service’s unique selling point is that it lets customers add music they hear on the radio to their own playlists directly, and also gives users the opportunity to follow their own favourite (radio) DJs and their suggested playlists. This service could prove to be a strong contender for the current streaming services (Spotify, Deezer etc.).

In February 2017, US event management firm Eventbrite saw value in Amsterdam-based start-up Ticketscript, which provides music event organisers with a platform for selling tickets. Ticketscript has helped sell tickets for over 100,000 events across Europe over a period of ten years, including to the Amsterdam Dance Event.

 

 

Music market (€ millions)
Netherlands Historical data Forecast data CAGR %
  2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 17-21
Physical 133 113 103 97 91 84 75 64 54 44 -13.6%
y-o-y growth   -15.1% -8.7% -6.0% -5.4% -8.1% -10.8% -13.9% -16.1% -18.5%     
Digital 57 80 86 107 144 186 230 272 309 339 18.6%
y-o-y growth   38.3% 8.7% 23.9% 34.8% 28.5% 24.0% 18.2% 13.7% 9.7%  
Performance rights 51 57 56 62 67 72 76 77 77 75 2.1%
y-o-y growth
  11.1% -0.8% 9.7% 8.8% 6.6% 5.2% 2.2% -0.3% -3.0%  
Synchronisation 1 1 1 2 2 2 2 2 2 2 3.8%
Total recorded 242 250 247 267 305 343 383 416 443 460 8.6%
y-o-y growth   3.1% -1.1% 8.2% 14.1% 12.6% 11.5% 8.7% 6.4% 4.0%     
Live music 529 535 541 551 560 569 578 587 596 606 1.6%
y-o-y growth   1.1% 1.2% 1.8% 1.6% 1.7% 1.5% 1.6% 1.6% 1.6%  
Total 772 785 788 818 865 912 960 1,003 1,039 1,066 4.3%
y-o-y growth   1.7% 0.4% 3.8% 5.7% 5.5% 5.3% 4.4% 3.6% 2.6%  

Source: PwC, Ovum, NVPI, Note: Because we rounded off amounts and percentages throughout this Outlook, tables may not sum to 100%.

Outlook

We expect Blockchain to offer the sector a terrific opportunity to create a fairer distribution system for content creators. Blockchain could bring transparency to rights metadata, instant remuneration to artists, and new ways of monetising music. The most disruptive aspect of blockchains is that they provide an alternative to the ‘trusted intermediaries’ that have emerged in most industries to run registries, keep records, handle transactions or negotiate terms. Blockchain could become the most powerful self-publishing channel for artists, allowing them to bypass labels, publishers, collection societies and other intermediaries and giving them more control over how their songs and associated data circulate among fans.

Blockchains can establish a direct relationship between artists and consumers and ensure that they get paid instantly every time their work is purchased, played or used in any other way. Blockchain is still facing many challenges in the music industry but record labels should embrace this technology and work with artists to create remarkable opportunities for them. 

There is much uncertainty about the best model for delivering music to consumers, not only in the Dutch music market but also globally. It is unclear whether the future lies in an add-free model (paid) or advertising model (free); both streaming services will probably co-exist for a while. Companies need to deal with the growing competition in this field, however, and really work to differentiate themselves.

Contact us

Ennèl van Eeden
Global Entertainment & Media Industry Leader
Tel: +31 (0)88 792 45 40
Email

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