Factors that Affect Movie and Music Industry Markets

Introduction

Art is considered as a part of creativity and the major constituents of the art include films and music. The technology and economics have created unique challenges across segments of the entertainment industry over the past quarter century. The significant change in how business is done in music, film, and art come to one key factor — the Internet. How artists, labels, studios, and corporations alike have adapted to ever-changing distribution and revenue models has often been a deciding factor in long-term survival in this new media landscape. Almost everyone around the globe listens to music and watches movies, and by this way becomes a part of this industry.

Industrial information

The global Media & Entertainment (M&E) market reached $1.9 trillion in revenues in 2016, according to the 2016-2020 Entertainment & Media Outlook by Price water house Coppers (PwC), and is expected to expand by nearly 5% to reach just under $2 trillion in 2017. In 2016, China ($190 billion) became the second largest market after the United States ($712 billion), followed by Japan ($157 billion), Germany ($97 billion) and the United Kingdom ($96 billion). France came in the sixth, at $69.3 billion (2016). In contrast, the six largest Latin American M&E markets grew to $96 billion combined in 2016. Demonstrating major contributions of uniquely American culture, the United States boasts the largest global share of M&E earnings for filmed entertainment, music, book publishing, and video games.

The U.S. M&E market alone represents a third of the global market and will reach approximately $771 billion by 2019, up 8.6 percent from 2016. The largest U.S. M&E firms (calculated by 2016 revenues) across four broad industry segments include Penguin Random (Books), SONY (Music), Disney (Film), and Microsoft (Video Games). Many corporations have experienced significant convergence and moved from film, broadcast or news, for example, to offer a multitude of services across M&E sectors.

As already indicated, film industry is one of the largest sources of entertainment in the world. The industry produces thousands of films annually and gains billions of dollars in revenue. Hollywood is the greatest, oldest, and most profitable film industry in the world. In 2016, the film industry in the United States and Canada generated approximately $11.4 billion, making it the most profitable industry in the world. This industry experienced a 2% growth from $11.1 billion in 2015.

The film industry of China is the second largest film industry in the world after the United States and Canada, generating $6.6 billion in 2016. For the past 10 years, the film industry in China has been experiencing an annual average growth of a whopping 35% but experienced a meager 3.7% in 2016 compared to 48% it experienced in 2015. After these countries, comes United Kingdom and others.

Besides, Indian Film industry is worth to be reminded in terms of quantity, they produce over 1200 movie per year. In one year, this industry approximately generates $2.39 billion.

The largest film industries in the world

Facts about movie market:

The most pirated film of all time ”Avatar” was illegally downloaded on over 21 million occasions.

Domestic box office now accounts for less than 25% of revenue for film studios, while foreign distribution nets 36.1%.

Seven major studios control more than 80% of total film industry revenue, led by Disney (18.2%), NBC Universal (16.4%), Time Warner (16.2%); 21st Century Fox (12.9%) and Sony (12.1%).

The DVD market has crashed. Sales and rentals of films in physical formats in America has sunk from $25 billion in 2005 to $12 billion in 2016

Piracy

Movie piracy as anyone viewing a full-length movie via ‘unauthorized’ means, including digital (downloading, streaming, digital transfer of pirated copies), physical (buying counterfeit/copied DVDs), and secondary (borrowing or viewing pirated copies).

The negative effects of piracy:

Piracy cost the worldwide motion picture industry estimated $18.2 billion in 2005. This includes producers, distributor, theaters, video stores and pay-per-view providers in the U.S and all around the world.

The expectations of illegal copying may cause some products not to be marketed at all, because the manufacturers do not believe that legal sales would be sufficient to recover the costs of production and distribution. In this case, the loss to rights holders is the profits and royalties that would have been earned had the product been created and brought to market. Consumers also suffer a cost in this situation; equal to the difference between the values they would have placed on this product less the price they would have paid for it.

Besides all these factors, the industry, which is being copied and making money in the illegal way, will lose its interest to be productive and the people and companies, who should have been thinking on new ideas, will be too busy struggling this problem.

Music Industry

Just like the film industry, the music industry contributes significantly to the growth of the economy by generating billions of dollars in revenue. When it comes to “Largest Music Industries in the World”, of course the United States is being the global leader.

The United States music industry earns billions of dollars every year and it is home to many of the world's most renowned musicians. According to IFPI Global Music Report, the industry gained $4.898 billion in 2018 and was ranked the largest music industry in the world. The Recording Industry Association of America states that the industry grew by 11.4% in 2018 reaching $7.7 billion. Growth in the music industry is related to increased consumption of digital music, particularly online streaming. Live concerts, studio recordings, and wide range of music genres characterize the industry.

In the second place, here comes Japan. This industry gained $2.628 billion and was ranked second right behind the US. The third and next places are shared among Germany, United Kingdom, France and other European Countries.

Countries with the largest music markets

The music industry earned $43 billion in revenue in 2017. Musicians only received 12% of that figure, $43 billion was also the all time peak revenue of the music industry, all the way back in 2006 70.1% of the music industry market share is split between three major companies — Universal, Sony, and Warner The average price paid to the artist per stream on Spotify is $0.0043. On Apple Music, it is $0.0078. On YouTube, however, the average per stream rate is $0.00074.

Titled Connecting with Music, the report examines thirteen leading international markets. Countries like Mexico, Brazil, South Korea, Italy, Spain, Sweden, the US, Germany, Australia, the UK, France, Canada, and Japan were examined.

Today, 96% of all Internet users listen to licensed music, and 46% of all music streaming is implemented via YouTube. Beyond that, 23% of users listened to music through paid audio streaming subscriptions. 22% used a free, ad-supported service.

In the United States, 48% of all internet users have engaged with licensed audio streaming. While significant, this number pales in comparison to Mexico, Sweden, and Brazil. The IFPI found that 75% of internet users in Mexico engaged with licensed music. In Sweden and Brazil, 66% engaged with licensed streaming. Canada and Japan ranked as the countries with the lowest music engagement online, with a 39% and 18% share, respectively.

In the study of IFPI, it has been found that 13 to 15 years old have demonstrated high levels of music engagement. Approximately 85% of teenagers from this age group use streaming platforms to listen to music. Of those 85%, 79% use a video service and 67% an audio platform.

The IFPI also broke down the number of those who used audio platforms. Of those 67%, 37% use paid streaming services, 62% used free, ad-supported platforms, 33% of those who use audio streaming platforms paid for their own music streaming subscription, 36% are part of a family subscription plan, 53% of all 13 to 15 year olds have also purchased physical music or paid music downloads. They preferred digital downloads over CDs and vinyl records. However, of the 53%, 19% purchased vinyl records.

The piracy in music industry, of course would be irresistible as well as in movie industry. Today, despite the fact that more users prefer to listen to music through paid or free streaming platforms, the IFPI found that piracy has risen this year. 35% of all internet users have stream ripped. This number rose 5% over the last year.

Specifically Google, play a key role in enabling copyright infringement. The IFPI found that 54% of those actively downloading copyrighted music used Google to find and stream-rip music.

Accordingly, trade group speaking about the report, IFPI CEO Francis Moore said in a statement that:

“This report shows some amazing trends defining this new era, how fans around the world are enjoying recorded music and connecting with the artists they love in so many ways.

“The increasingly digital global music environment did not just happen. It requires an enormous amount of work from record companies and their partners to license over 40 million tracks to hundreds of digital services around the world.“

The report also highlights the ongoing challenges for the industry. It provides further evidence of the Value Gap – the mismatch between the values that user upload services, such as YouTube, extract from music and the revenue returned to those who invest in and create it. The global music community is united in urging policy makers to act to address this.”

Conclusion

In conclusion, despite of all the facts mentioned above, music and film industries are one of the most profitable industries in the world and it’ll always remain as one. The need to them will never decrease and these industries will always be a part of art and culture. People from all around the world, no matter of which industry segment he/she belongs, will always be a part of these two industries – film and music. These are what gather people together and give them a lot of in common interests.