Music retail is dying in South Africa

Sales of recorded music on physical media in South Africa is shrinking faster than the average global decline, the latest statistics from the International Federation of the Phonographic Industry (IFPI) show.

While there is strong growth in digital music sales in South Africa, the IFPI’s Recording Industry in Numbers 2014 report shows it is not enough to offset the large decline in physical music sales over the last 5 years.

CD sales, which make up the bulk of physical recorded music sold in South Africa, shrank from 15.9 million units in 2012 to 12.2 million in 2013. In 2009, CD sales in South Africa stood at 17.1 million.

Globally, overall music sales decreased by 4% from 2012 to 2013, while in South Africa overall music sales are down by almost 12%.

The graph below illustrates the dramatic decrease in music sales trade revenues in South Africa.

Music sales in South Africa by format source IFPI
Music sales in South Africa by format (source IFPI)

IFPI defines trade value as record companies’ revenue, net of discounts, returns and taxes. Promotional goods, non-music related or non-recording artist related products are excluded.

The IFPI also provides a breakdown of digital sales by format which shows that along with South Africa’s 106.8% growth in digital sales, there was also a dramatic shift in the local market.

Digital sales from sources classified as “other” went from 4% of the pie in 2012 to 19% in 2013. Ad-supported revenues also increased its share from 7% to 12%, while mobile increased from 18% to 21%.

Subscription services also burst onto the scene and now make up 6% of total digital sales in South Africa. This is not too surprising though, as music streaming services only started officially launching in South Africa from August 2012.

Single track and full album sales now make up a much smaller fraction of the total digital sales in South Africa.

The graph below illustrates how South Africa’s digital music landscape has changed in the past year:

Digital music sales market share in South Africa source IFPI
Digital music sales market share in South Africa (source IFPI)

IFPI World Rankings

Further illustrating the decline of music sales in South Africa is the IFPI’s world rankings, which arranges countries by the percentage of global music trade revenues contributed.

Until 2007, South Africa showed a steady increase in music revenue coming from the country in contrast with much of the rest of the world where sales were struggling.

Until 2010, South Africa had been climbing the IFPI World Rankings physical sales chart and came 14th of the 51 countries ranked.

In the 2013 IFPI World Rankings, South Africa is placed 17th for physical sales and 26th overall.

Music retail under pressure

Underlining the IFPI’s findings, two of South Africa’s largest music retailers, Musica and Look & Listen have come under pressure in the sector, resulting in strategic closures of retail outlets and a greater focus on electronics and other entertainment products.

At February 2014, Musica had a national footprint of 118 stores, down from 120 stores at the end of August 2013, and 134 in 2012.

Musica’s turnover for the interim period also declined, albeit marginally (1.4%), to R495 million, from R502 million in the same period in 2013.

Meanwhile, Look & Listen has seen its brick and mortar channel footprint reduced to 19 stores, according to the store locator map on its website. This is down from 28 stores in 2012.

The retailer has also pulled out of a deal to facilitate the re-launch of its digital music service – a project originally set for a December launch.

The store was supposed to target mobile and would have been made available as a digital download service only. Look & Listen killed off its online store in February 2013.

This article was first published on Mybroadband. Additional reporting by BusinessTech.

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Music retail is dying in South Africa