Coronavirus, the music market collapses

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With the entire music supply chain stopped for more than a month, the first effects of coronavirus on the Italian record market are evident. Shops and entertainment chains closed, many publications postponed until after the summer and inaccessible recording rooms offer a potentially very negative picture.

From the first weeks, in fact, the drops in the physical segment (CDs and vinyls) of over 60%, the related rights of over 70% (due to the closure of shops and the absence of events) and the synchronizations in serious suffering are evident . Streaming also suffers due to the absence of new releases, which usually act as a driving force for listening, and poor consumer mobility (according to IFPI data, in Italy 76% of those who listen to music do so in the car, and 43 % on the journey home-work).

It happens after a 2019 that according to IFPI data had instead shown an overall growth of 8%, the highest in five years, for a value of 247 million euros. Dragged by streaming with a + 26.7%, digital has conquered a slice in our country which today represents more than 70% of all revenues. Significant is also the overtaking of free streaming audio supported by video advertising, with 21 million euros against 18 million, once again confirming the presence of an effective Value Gap in remuneration from platforms such as YouTube.

The physical segment, which has now fallen by 13.8%, declined sharply – which unfortunately can only be further aggravated by the current health crisis: if the CD marks –20.9%, vinyl manages instead to maintain a +7, 3%.

In 2019, the Culture Bonus, which generated revenues of almost 20 million euros, certainly contributed to limiting the decline in this market segment. The extension of the bonus, just re-launched for young people born in 2001, to a wider audience of consumers could be one of the tools – together with an expansion of the tax credit for record productions – to be made structural in the post-crisis period.

Furthermore, the large share of Italian production, which represented 87% of the best-selling albums in 2019 (one of the highest national repertoire percentages in the world), is the one that could suffer the most from the state of crisis. With recording rooms stopped, concerts and tours blocked, the impact on the entire supply chain of creatives, studio technicians and workers in the sector could be devastating.

“It is a really difficult situation because while in the past it has been an industrial model crisis that has affected a part of the supply chain, leaving the live as a compensation area, this crisis affects the entire supply chain with potential very hard effects that will last a long time,” he says Enzo Mazza, CEO of FIMI (Federation of the Italian music industry).

The measures required by the companies, in addition to the more general ones already included in the Cura Italia decree, should then concern the phase of resumption of activities, with a focus on tax elements, such as the extension of the tax credit to all the works, the reduction 4% VAT as well as for publishing and an expansion of the audience receiving the culture bonus.

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