In January 2012, Techdirt founder Mike Masnick published a report called The Sky Is Rising, a survey of the global entertainment industry that took a notably positive approach to growth in the last decade. Now Masnick and co-author Michael Ho have published a new report drilling more deeply into six European countries: the UK, France, Germany, Italy, Russia and Spain.
It’s been released by the Computer & Communication Industry Association – you can download it as a PDF here in six languages – and covers music but also books, games and video.
For each sector, the report seeks to present an alternative picture to the stories of piracy and falling physical-media sales that have so concerned these industries over the last decade.
Masnick held a telephone press conference this afternoon to publicise the report, so we dialled in. He was keen to stress that the report doesn’t take a position on policy issues, and that its data is as sound as possible.
“We spent a lot of time sorting through a large amount of data to find the most credible and supportable data we could find, and rejecting data that we couldn’t support,” he says.
“We took government data, financial reports, vetted industry numbers and figures from trusted analysts, then comparing back across it. The key point was really to get all this data, bring it together and present it so that everyone could take a look.”
Masnick added that the report doesn’t attempt to take a position on policy issues, but rather to inform the debate around those policies.
The topline finding across the six countries was similar to that found in the original Sky is Rising report on a global basis:
“There continues to be massive growth in terms of the amount of content being created, released, shared and distributed,” said Masnick. “And increased opportunities in terms of the revenue being created, as well as new services and tools.”
So, more books are being published than ever before, e-book revenues are growing sharply (from a small base, of course); the European gaming population doubled between 2008 and 2010 thanks to social and mobile games, while traditional consoles continued to sell strongly; and more films are being produced every year, with box-office and TV revenues continuing to increase.
And music. Among its musical points: the number of licensed music services in the six European countries increased five-fold between 2007 and 2011, while live revenues are forecast to have grown healthily in five of them over that period: up 15% in France and Italy, 11% in Spain, 10% in the UK and 105% in Russia in 2013.
The report also notes that more music is being produced than ever before, with new sub-genres emerging, and new opportunities for musicians to find an audience online, and make money through direct-to-fan commerce and crowdfunding – although Masnick noted that these are still small compared to the overall market size.
“There had been over the past decade a pretty big decrease in recorded music sales, but it appears that is at least stabilising, and we’re beginning to see some turnaround in some countries,” he said.
“We’re seeing significant growth on the digital side – the decrease remains from the physical side. And we’re seeing massive growth in terms of the number of legal and authorised music services in the countries, which correlates well to the amount of digital music sales.”
Russia is singled out in the report as a country where digital music revenues fell sharply from $73m in 2010 to $43m in 2011.
Masnick cited two potential factors in this: a relative lack of new digital services in Russia compared to other countries, and a big drop-off in ringtone sales.
Labels would offer another factor: the availability of unlicensed music on social network vKontakte, which has become something of a villain in the eyes of the industry.
It’s a point that can be argued about until the cows come home, although the launch of iTunes, Deezer and other services in Russia in recent months paint a more positive picture.
Overall, though: “These are definitely markets that are transitioning, and in most cases it appears transitioning fairly successfully thanks to new digital services and tools,” said Masnick.
“The amount of output has continued to grow… The revenue has continued to grow, there are different fluctuations here and there, but the trends all seem to point in the same direction.”
He did accept that for creators, all this upheaval can be a worry, partly because all that extra music, games, films and books being released provides greater competition, but also because it’s not as clear nowadays what they have to do – ”there’s now a lot more options” as he put it.
During the ensuing Q&A, I asked Masnick whether he thinks the books, games and film industries have learned from the music industry’s last decade of digital disruption, as their executives are fond of saying they have in conference appearances.
“It depends: different players have learned different lessons, and different parts of different industries have picked up some lessons and not picked up others,” he said.
“For the books, games and films markets, that transition has probably been less gut-wrenching than music: they’ve certainly learned some lessons. Certainly the recorded music industry resisted going digital at all for a very long time, but for the book market, once e-book readers were in the world, they very quickly jumped into that market.”
While it’s outside the scope of the report, I also asked about the debate around digital music services like Spotify, with some artists extremely concerned about the size of their streaming payouts.
Masnick sees these debates as “growing pains as new models and new services pop up”, and part of the transition process from physical to digital. “I’m fairly confident and optimistic that these things will work themselves out over time hopefully,” he said.
“As you see more and more success, people begin to figure it out. “When something is brand new and has a small base, there’s not necessarily enough money to go around to make everybody really happy. But as those markets develop, they hopefully work themselves out.”
Masnick does tend to ruffle feathers in some quarters of the music industry – one reason we think he’s always worth listening to – so the important thing here is to read the report and then form a judgement on it.