June 10, 2020
Germany is a powerhouse when it comes to music revenues. Both CISAC and IFPI rank Germany the 4th biggest music market in the world. Music collections organisation GEMA reported recorded music revenues of €1.07 billion in 2019 (MusicAlly, 2020). This was a 4.9% growth from the previous year. Similarly, BVMI, another German music collections society, reported revenues well over 1 billion euro. And streaming has a significant part to play. Despite being a market dominated by physical formats, in 2019 55% of music revenues came from streaming (MusicAlly, 2020).
In Germany, the physical market for music is significant accounting for 35.6% in 2019 (BVMI & MusicAlly 2020). Streaming has grown in popularity and subsequently gained market share over the past 3 years. In 2019, BVMI reported 107 billion audio streams. This is a staggering increase, as there were 79.5 billion in 2018 and 56.4 billion in 2017 (Billboard, 2020). BVMI CEO Dr Florian Drücke stated that music streaming “has now gone mainstream in Germany”. These rapid growth figures would definitely support this statement.
This growth in streams has been accompanied by a growth in German premium subscribers to music platforms. BVMI stated that there are now over 11m people with a premium subscription (MusicAlly, 2020). This is 2 million more than the previous year. However, with a population of over 80 million people, this is still an extremely lucrative market for streaming platforms. Drücke shared that this has created “growing competition between streaming services”.
In 2017 TechBook, a website focused on German digital trends, shared research about streaming platform choice. In the survey conducted by Munich TNS Institute, 17% of respondents shared that Spotify is their platform of choice. In the 18-29 age group, this figure reached 39%. However above 40 years old Germans shared they streamed music rarely and above 60 respondents reported barely any usage. This was the most recent data provided by TechBook, so rising subscriber numbers may have altered this in 2020. As for other platform options, Amazon Music closely followed Spotify at 14%. Google Music is used by 8%, Apple Music and Deezer respectively accounted for 7% (TechBook.de, 2017).
Pop music is the top category listened to by Germans, but Drücke shared that Hip Hop is benefiting from music streaming. This genre is now the second most popular, with German Hip Hop artists experiencing local growth (Music Ally, 2020). In their most recent report, IFPI shared a special feature on Germany’s “Urban Music Boom”, highlighting how streaming has been a big contributor to this genre’s growth. Through streaming, clever online marketing and social media popularity German artists are finding significant success not just locally but in German language countries (Music Ally, IFPI, 2020).
Internationally, Germany and specifically Berlin is well known as a global music capital. Each year music tourists arrive in masses to see top German and international DJs at clubs such as Berghain. German electronic music also has experienced massive global appeal with artists such as Zedd, Robin Schultz and Paul Kalkbrenner popular in the charts and performing at top international festivals. For other genres there may be a challenge as BVMI CEO Drücke shared that due to the language barrier, German language music may struggle to reach as many people outside the region (MusicAlly, 2020).
An important thing to remember about the German music industry is the importance of copyright law and the music industry’s connection to law. In Germany there has been a levy applied to products, such as blank CDs, that could be used to copy art, including music. This Copyright law has applied since 1965. However, as technology changes, there have been many challenges from companies, some resulting in backpay.
Music right organisations lobby the government to support the industry. Since the Covid-19 pandemic, music organizations including GEMA and BVMI have been lobbying the government to provide emergency support of €582 million to support the German music industry as artists and employees experience losses and uncertainty. They argue the importance of music in people’s lives (Music Business Weekly, 2020).
Artists’ pay is also a hot topic, with artists and managers coming together to challenge large global labels earlier this year. The argument is that while streaming has increased scalability and reduced music distribution overhead costs, these artists say it has not been reflected in their revenue share. Their ask is for a fast overhaul of the status quo to create a more “user-centric” style of payment from streaming services. These artists have received positive responses from BMG spokespeople who shared “We strongly welcome this attempt to highlight some of the inequities of the traditional record deal. This letter is signed by some of Germany’s most respected music managers and should be taken seriously” (Music Business Weekly, 2020).
Looking forward, streaming has a lot of scope to grow in Germany. While physical music distribution remains popular, streaming has now overtaken it and will continue to gain market share. The year on year growth of premium subscribers and the large population will mean for a lot of competition between streaming providers. It is also interesting to understand how artist and manager pressure on record companies will affect the payments of streaming royalties. Changes and increasing streaming adoption is sure to be impactful. Across global music rights organisations, such as CISAC and IFPI, Germany is one of the largest collections contributors in the world. This is a thriving music market and Germany will surely have a major impact on the global landscape of streaming.
Learn about the Matching Engine
The Matching Engine is a globally used application which can support CMOs across geographies to tackle the challenges posed by modern music streaming. Talk to our team today about how our cloud-native application can be integrated into your matching process.