ISBN 1-85765-702-0

Executive Summary

Table of Contents

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EXECUTIVE SUMMARY

In 1998, the market for recorded music in the UK was worth £1.12bn at trade delivery value. Value sales at retail selling price (rsp) are still growing gradually, but the value of sales to trade at constant prices fell by 4.6 percent between 1996 and 1997, and did not recover fully in 1998.
Sales fell further in volume in 1998, as a result of various factors, including a weakening consumer economy, a shift in promotion towards compilation albums rather than individual artists, and a lack of major hits or new artist launches in the period. However, a string of strong artist releases during Christmas 1998 revived full-price album sales, delivering a 15 percent growth on the same quarter in 1997.
Most sales are now in compact disc (CD) format, and price band development has seen a resurgence of full-price products (although prices have generally been stable or fallen in real terms in 1997/1998).
Retail distribution is dominated by specialist chains such as Our Price, but the major supermarket chains are beginning to be significant, while mail order sales have been drifting downwards. Although no sales figures are yet available, several retailers have launched direct access sites on the Internet.
Future sales depend both on the development of new technology, and on the continued development of new bands and artists.
New technology may enable record companies to avoid the expensive physical production and distribution of products by selling music in electronic form through the Internet -- as long as they can protect their royalties. A breakdown in royalty collection could undermine the financial basis of the whole music industry.
Independent labels still largely undertake the development and financing of new artists -- although many have open or concealed agreements and relationships with the majors. The creation of new mass-market artists is vital to sales of new products, but again this could be compromised if performing rights and royalties are not protected.
In the past, the main threats to the market have been parallel imports and bootleg copies, which were generally of much poorer quality than legal products. The development of new, high-quality recording systems and products has increased the dangers and the scope for problems.
Assuming that the threat to legitimate trade music sales can be contained, Key Note forecasts that the market will be worth £1.1bn in 2003. Nearly all physical product will be sold in CD format, whether full-size, mini-disc or single. However, the proportion of legal sales through the Internet or digitally broadcast channels could reach 13 percent of this value.

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TABLE OF CONTENTS

Executive Summary

Market Definition

INTRODUCTION

MARKET SECTORS

Market Size

THE TOTAL MARKET

BY MARKET SECTOR

A GLOBAL PERSPECTIVE

FOREIGN TRADE

Table 1: Sales of Recorded Music by Value (£m at rsp and percent), 1993-1998

Table 2: Sales to Trade by Volume by Product Format (million units), 1993-1998

Table 3: Sales to Trade by Value by Product Format (£m at current prices), 1993-1998

Table 4: Sales to Trade by Volume by Sector (million units and percent), 1993-1998

Table 5: Sales to Trade by Value by Sector (£m and percent), 1993-1998

Table 6: Consumption of Albums in Selected Major World Markets ($ and units per capita), 1997

Table 7: UK Imports and Exports of Recorded Music by Volume (million units), 1993-1996

Table 8: UK Imports and Exports of Recorded Music by Value (£m), 1993-1996

Industry Background

RECENT HISTORY

INDUSTRY CONCENTRATION

DISTRIBUTION

PRODUCT LINES

BUSINESS UNITS

EMPLOYMENT

TRADE ASSOCIATIONS

Table 9: Proportion of Album Sales Accounted for by the Top 10, Top 40 and Top 100 ( percent), 1995-1997

Table 10: Retailers of Recorded Music in the UK (number of stores), 1996 and 1997

Table 11: Sales of Albums by Price Bands by Volume and Value ( percent), 1993-1998

Table 12: Sales of Albums by Volume by Price Category and Format (000 units), 1993-1998

Table 13: Sales of Singles by Product Format and Type ( percent), 1995-1998

Table 14: Sales of Albums by Product Format and TypeÅ ( percent), 1995-1998

Table 15: Sales of Albums by Category ( percent), 1995-1997

Table 16: Number of Enterprises by Turnover Size Band (£000), 1998

Table 17: Number of Enterprises by Number of Employees, 1998

Table 18: Number of Employees at Selected Major UK Recorded Music Companies, 1995-1998

Competitor Analysis

THE MARKETPLACE

MARKET LEADERS AND THEIR LABELS

ADVERTISING AND PROMOTION

Table 19: Share of Album Sales by Volume by Distributor ( percent), 1993-1997

Table 20: Share of Album Sales by Volume by Record Company ( percent), 1993-1997

Table 21: Share of Album Sales by Volume by Record Label ( percent), 1993-1997

Table 22: Advertising Expenditure on Recorded Music and Related Sectors (£000), 1995-1998

Table 23: Advertising Expenditure by Company (£000), 1998

Table 24: Advertising Expenditure by Recording Artist - Top Ten (£000), 1998

Table 25: Advertising Expenditure by Range and Compilation (£000), 1998

Strengths, Weaknesses, Opportunities and Threats (SWOT)

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

Buying Behaviour

OWNERSHIP OF RECORDED MUSIC BY FORMAT AND TYPE

EXPENDITURE ON RECORDED MUSIC BY FORMAT

EXPENDITURE ON RECORDED MUSIC BY MAIL ORDER

OWNERSHIP OF ENTERTAINMENT HARDWARE

Table 26: Profile of Album Purchasers by Sex, Age and Social Grade ( percent), 1998

Table 27: Ownership and Purchase of Recorded Music ( percent of all adults), 1998

Table 28: Index of Ownership of Recorded Music by Format and Type by Sex, Age and Social Grade (all adults=100), 1998

Table 29: Expenditure on Recorded Music in the Last 12 Months ( percent of adults), 1998

Table 30: Recorded Music Products Bought through Record Clubs or by Mail Order in the last 12 months by Sex, Age and Social Grade ( percent of product purchased

this way), 1997

Table 31: Ownership of Entertainment Hardware ( percent of adults), 1995-1997

Table 32: Ownership of CD Players by Type by Sex, Age and Social Grade ( percent of adults), 1997

Table 33: Ownership of Cassette Players by Type by Sex, Age and Social Grade ( percent of adults), 1997

Table 34: Ownership of Recorded Music Players by Number and Type ( percent of adults), 1997

Outside Suppliers to the Industry

CD PRESSERS

CD PACKERS

Table 35: UK Pressers of Compact Discs by Possible Output (million discs per year), 1998

Current Issues

ILLEGAL AND PARALLEL IMPORTS

THE INTERNET

DVD AND DIGITAL TV

CD AND CD-ROM REPLICATION

COMPILATION ALBUMS

Table 36: Illegal and Pirate Sales of Recorded Music in the UK by Volume and Value (million units and £m at rsp), 1995-1997

Forecasts

FORECASTS 1999-2003

MARKET DEMAND

TECHNICAL DEVELOPMENTS

OTHER TOPICS

Table 37: The Forecast UK Recorded Music Market by Product Type by Value and Volume (£m, million units and percent), 1999-2003

Company Profiles

INTRODUCTION

DEFINITIONS

FURTHER INFORMATION

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

HBI UK INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

Text © 1999 Key Note

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Last updated by Jacob van Eldik 22th January 2000