Like most in the business of creative content, the music industry’s faced an embattled past few decades as it’s struggled to ride out the changing tides of the digital revolt. But after 15 years of troubling decline, the New Zealand music world finally seems to have rediscovered its stride with streaming unabashedly leading the way.
Wholesale figures released by Recorded Music New Zealand (RMNZ) earlier this month reported the good news of back-to-back years of double-digit growth. It showed that total revenue for the local music industry increased by 16 percent to $86.2 million in 2016—an improvement from last year’s growth figure of 12 percent.
Most notable from the figures is the meteoric ascendancy of revenue accumulated from streaming services. Since platforms like Spotify entered the Kiwi market back in 2012, streaming has consistently grown its share of the revenue pie, to the point that it now makes up half of all earnings (in 2013, streaming made up just 7 percent).
RMNZ CEO Damian Vaughan says streaming’s meteoric ascendancy has served to revitalise and reenergise an industry that's weathered turbulent change. And while streaming’s two biggest players—Spotify and Apple Music—comprise the most significant portion of that total figure, there are also smaller, more niche players such as Tidal, Pandora and iHeartRadio that also contribute to the platform’s revenue boom.
“We’re delighted to see continued industry growth in 2016 thanks largely to the unprecedented rise of streaming which generated more than $40 million in 2016, up a remarkable 169 percent from 2015. Streaming services have emerged and thrived in New Zealand, giving consumers more choice as to accessing and enjoying music in the digital age."
While all $86.2 million of revenue goes back to New Zealand-based businesses, which include both independent Kiwi labels (eg: Flying Nun) and large international ones (eg: Universal), the proportion of local artists that make up the total figure is much smaller, with numbers varying from channel to channel. Vaughan estimates that with streaming, it’s more likely New Zealand content is around the region of 7 percent. With radio, he estimates around 15-20 percent, and with physical products and downloads lingering between 11-15 percent.
“Those organisations that do sell international repertoire here do retain a certain amount of that before distributing back to their international colleagues so they can operate their New Zealand operations in sales, but also invest in local artists here,” explains Vaughan.
“So with more money being in the industry—20 million more in the last two years—there is undoubtedly an increase of money and potential for investment for local artists in New Zealand.”
When it comes to the issue of piracy—an issue that’s dogged the industry practically since the dawn of the internet—Vaughan insists that while the problem remains, it's been aided by the advent and proliferation of legal streaming platforms.
“There are deals like where Spotify and Spark have teamed up and offered [Spotify Premium] as part of a customer friendly experience where it’s all billed through your phone bill,” Vaughan states as an example. “That’s definitely aided in consumer awareness of how easy they are to use and cost-effective…relative to going through what piracy entails in terms of exposure to online risks and the rigmarole of downloading things illegally.”
Beyond streaming, public performance and broadcast have remained steady, taking up 16 percent of the music revenue pie and earning $14.2 million in 2016. Downloads and physical purchases, on the other hand, continue to shrink, with the former suffering a revenue dip from $15.6 million in 2015 to $11 million in 2016.
While physical revenue also continues its decline, it’s notable that the sector’s survival has partially been buoyed by vinyl records, sales of which comprise 15 percent of the physical sector. Vinyl’s resurgence ties in with people’s renewed passion for a tactile experience in the digital age, with its romanticism and nostalgia proving particularly appealing to modern day consumers.
“It's grown significantly over the last three or four years. It’s still a small piece of the pie but it’s not insignificant anymore,” says Vaughan.
“You would've said in the mid-to-late 2000s that vinyl was close to not existing at all so to see that resurgence is great. But I think it's fuelled by nostalgia. People like to buy a physical item. Digital consumption is still the norm but it’s kind of a love affair with having something physical.”