J’son&Partners Consulting presents the research of online music market, results of 2012

1. J’son & Partners Consulting presents the research of online music market, results of 2012
During the report preparation we used the interviews prepared by our consultants with experts in the
music industry, such as Yandex.Music representatives and others (for example: JSON.TV interview with
a teacher and business trainee of RMA business school who has a pull of implemented projects for music
business companies – Alexey Nikolaev http://www.youtube.com/watch?v=VuZXwWkInAk ).
World online music market current situation
In 2012 the worldwide music market was 16.5 bln.USD, that include digital and physical sales. As a
result of 2012 Digital format was 5.8 bln.USD (8% higher in comparison with 2011).
Fig. 1. Volume and dynamics of world online music market, 2011-2012, bln USD
Resource: J'son & Partners Consulting
Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving
credit to the source of information – J’son & Partners Consulting.
™ J’son & Partners [registered trade mark].
1

2. US music market is still keeping the leading position in the world rating in 2012, it presents 4.48 bln.USD
by all segments – the ratio decreased for 0.5% in comparison with the previous year. Japan is the
second market with 4.42 bln.USD, UK is the third one with 1.33 bln.USD and South Korea occupies the
11th place with 188 mln.USD.
Mobile apps for music download is gaining popularity all around the world due to the convenience and
portability of audio content digital purchases, and also the apps functions are increasing each year.
Number of pay music services subscribers increased by 44% in 2012 and present 20 million of people.
Fig. 2. Number of subscribers of the world digital music distribution
services, mln. people
Resource: J'son & Partners Consulting
Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving
credit to the source of information – J’son & Partners Consulting.
™ J’son & Partners [registered trade mark].
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3. Current state and forecasts of the Russian online music market
According to J’son & Partners Consulting the volume of Russian digital sales of music content market in
2012 was 3.1 mln.USD vs 2.55 mln.USD in 2011. This amount includes direct sales (over 65% of Russian
music digital content market) plus advertising revenues and subscription model.
Fig. 3. Volume of Russian online music market, 2010-2016F, mln USD
Source: J'son & Partners Consulting
Until the end of 2012 the situation on the Russian market was very complicated, due to the leave of the
local market players, such as Yota Music, Fidel, Stream, etc. They refused to develop this business
branch. It happened because of the very high level of “piracy”, secondly it is very difficult for the legal
platform to “clean” copyrights and the policy of the largest copyright holders played its role. At the end
of 2012 among the strong Russian market players who saved position was streaming-service
Yandex.Music, that is not monetized directly in web-version (advertising model is being used).
However in 2012 happened what everyone (users, experts, market players) have been waiting for so
long: Apple launched its shop iTunes in Russia.
The appearance of such strong market player changed the situation drastically. In particular, copyright
holders, become more enthusiastic in promoting music products via digital shop iTunes rather than via
small platforms with unclear future.
According to J’son & Partners Consulting, the year 2013 must be crucial for the Russian online digital
music content distribution market. The total market volume will reach 8 mln.USD with growth rate of
158%. Such rates will lead Russian market to the unconditional and absolute leader among fast growing
world markets of music industry.
According to Yandex data (use of Yandex.Music service) the following market trends could be
emphasized:
 Users prefer Russian music (more than 50% of listening): despite the fact that the local content
has only 1% in catalogue.
Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving
credit to the source of information – J’son & Partners Consulting.
™ J’son & Partners [registered trade mark].
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4.  The main platform for music listening remains - the web: proportion of listening in web and
mobile versions is 95% and 5 % accordingly.
 Monthly number of unique visitors of Yandex.Music is around 13 million of people.
 After 1.5 months of Android mobile apps launch, number of listening increased more than twice
 The main barriers for service development are legislation in the copyright and associated
property rights sphere and wide expansion of “piracy” content.
Factors about Yandex.Music service:
 In the beginning the service planned as part of “search” service. Around 4% of user’s
searches were about music. The decision was made: reply to every search request with
opportunity to listen the target content.
 Yandex.Music is a streaming service and tending to be more comfortable and to become
intuitive online player for users
Independent expert in music market, teacher in business school RMA (“Management in music business
and entertainment industry” department) Alexey Nikolaev, described the market development, its drivers
and barriers:
 “Copyright holders start to revaluate the digital market and to structure their catalogues first”
(about launch of iTunes)
 “Before iTunes artists and lables provide the rights without thinking”
 “For any music services such moments as “discovering”, “recommendations” and “artist
search” are crucial.
 Our market biggest problem is that we don’t have “community” that will collect fees for
mechanicals rights from internet platforms for downloads and streaming”.
 “Google Music will be esier as iTunes standard tought lables how to work”
Full version of the interview can be watched
http://www.youtube.com/watch?v=VuZXwWkInAk
on
J’son
TV
Channel
on
YouTube.
Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving
credit to the source of information – J’son & Partners Consulting.
™ J’son & Partners [registered trade mark].
4

5. Illustration.4. Russian online music market: classification by models for content
distribution, 2010-2016F, млн USD
Source: J’son & Partners Consulting
Subscription will be the most fast growing method of monetization. This very model J’son&Partners
Consulting considers as the most prospective for Russian and world digital music markets.
According to J’son & Partners Consulting tracks and albums sales share in 2016 will reach 80.3%, and
the total share of subscription and advertising model will increase up to 19.7%.
The main market growth drivers will lay on iTunes services (J’son & Partners Consulting evaluates iTunes
market share as 50%) and Google Music (launch is expecting soon on the Russian market).
J’son & Partners Consulting expects in 2014-2016 growth of Russian digital music content market.
iTunes revenues will present over half of the market in 2013-2015.
Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving
credit to the source of information – J’son & Partners Consulting.
™ J’son & Partners [registered trade mark].
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6. Full results of the research of online m usic m arket in Russia and in the
w orld, results of 2012 are presented in the report: “Online m usic
m arket, 2009 – 2016” (79 pages)
Content
Resume
1.
Introduction
2.
Sources and Methodology
3.
Definition and classification of online-music market
4.
Online music makret overview, 2009-2013
4.1.
Online music services market – general overview
4.2.
History of online music market development
4.3.
Online music market in particular countries
4.4.
Volume and dynamics of the Russian online-music market, 2009-2012
4.5.
Online music market development forecasts for 2013-2015
4.6.
Online music market drivers and barriers in Russia
4.7.
Market structure, players
4.8.
Main business models and ways to monetize
4.8.1.
Streaming-services
4.8.2.
Online radio
4.8.3.
Download services
4.8.4.
Music apps and services for mobile devices
4.9.
Level of piracy in the segment of online music in Russia, 2009-2012
4.9.1.
General assessment of the level of piracy in the segment of online music
4.9.2.
Torrent-trackers
4.9.3.
Web sites with direct download
4.9.4.
“Pirate” content in social networks
4.10.
Key market players profile
5.
Adjacent markets
5.1.
Broadband access wireless network in Russia and in the world
5.2.
Mobile Internet market
5.3.
Electronic payment systems
5.4.
Smartphones market in Russia and in the world
5.5.
Tablet PC market in Russia and in the world
Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving
credit to the source of information – J’son & Partners Consulting.
™ J’son & Partners [registered trade mark].
6

7. List of Illustrations
Fig. 1. Volume and dynamics of the global market of online music, 2011-2012, mln. USD
Fig. 2. The number of subscribers of worldwide digital music distribution services, mln. people
Fig. 3. Shares of digital music content distribution in the world, %
Fig. 4. Market of digital sales in USA, $, 2009-2013E
Fig. 5. Structure of music market revenues in USA, 2010, 2012
Fig. 6. Market of digital sales in UK, $, 2009-2013E
Fig. 7. Structure of music market revenues in UK, 2010, 2012
Fig. 8. Market of digital sales in Japan, $, 2009-2013E
Fig. 9. Structure of music market revenues in Japan, 2010, 2012
Fig. 10. Structure of music market revenues in South Korea, 2010, 2012
Fig. 11. The volume and dynamics of the Russian online music market, 2010-2012, mln. USD
Fig. 12. The volume and dynamics of the Russian online music market: the distribution of content distribution models
2010-2012, mln USD
Fig. 13. The volume and dynamics of growth of online music in Russia, 2010-2016, mln. USD
Fig. 14. Russian online music market: diversification by content spread models, 2010-2016, mln. USD
Fig. 15. Russian online music market: diversification by platforms, 2011-2016, mln. USD
Fig. 16. Model of the interaction of players in the Russian online music market
Fig. 17. Audiocontent structure on rutracker.org, 2012
Fig. 18. The total mobile data traffic in the world, Eb, 2010-2016
Fig. 19. The total active mobile subscriber base of cellular network in Russia, mln subscribers, 1Q2010 – 2Q2012
Fig. 20. The total mobile data traffic, bln. MB, 1Q2010 – 2Q2012
Fig. 21. The frequency of use of the mobile internet from a smartphone
Fig. 22. The use of different access technologies to the Internet, Russia, October 2012
Fig. 23. The total active subscriber base of mobile data transfer in Russia, mln subscribers, 1Q2010 – 2Q2012
Fig. 24. Total revenues from mobile data transfer services in Russia, bln.RUB, 1Q2010 – 2Q 2012
Fig. 25. The total mobile data traffic, bln. MB, 1Q2010 – 2Q2012
Fig. 26. Average cost of 1 MB of mobile data traffic by mobile operators, RUB for MB, 1Q2010 – 2Q2012
Fig. 27. Market turnover of remote financial services, bln.RUB, 2008А-2017F
Fig. 28. Total existent Park of smartphones in the world, bln.pcs, 2010-2016
Fig. 29. Total existent Park of smartphones in the world by operational systems, mln.pcs, 2010-2012
Fig. 30. Volume sales of smartphones in mln pcs., in Russia, 1Q2010 – 2Q2012
Fig. 31. Dynamics of average retail price of a smartphone in Russia, USD, 2008-2012
Fig. 32. Market structure: smartphones – telephones, %, natural value, Russia, 2009 – 2015
Fig. 33. Total existent Park of Tablet PC in the world, mln.pcs, 2010-2012
Fig. 34. Total existent Park of Tablet PC in the world by operational systems, %, 2010-2012
Fig. 35. Total existent Park of Tablet PC in Russia, mln. pcs, 2010-2012
List of tables
Table
Table
Table
Table
Table
Table
1.
2.
3.
4.
5.
6.
The main stages of digital content development in the world, 1970-2011
The system of penalties for the distribution of illegal content
Pirate portals traffic
Overview of the electronic payments market in Russia 2008A-2012E-2017F., bln.RUB
Number of internet users and broadband access subscribers
Population, mln.people
_____________________________________________________________________________
The newsletter was prepared by the J'son & Partners Consulting Company. We exert every effort to provide actual and forecasting data
representing the situation in full and available at the time of the publication of the material. J'son & Partners Consulting reserves the right of
revising the data after publication of some new official information by individual players.
CONTACT FOR MORE INFORMATION:
Pavel Ermolich
Commercial Director
Pavel@json.ru
www.json.ru
Copyright © 2013, J’son & Partners Consulting. Media can use any text, diagrams and data contained in this market review only with giving
credit to the source of information – J’son & Partners Consulting.
™ J’son & Partners [registered trade mark].
7