&
LATIN AMERICA: THE ASCENT
OF DIGITAL MUSIC
JULIANA KORANTENG
Editor-in-Chief
MediaTainment Finance (UK)
TABLE OF CONTENT
1. Latin America: Affluent in music currency
2. Digital Media in Latin America
3. Digital Music in Latin America
4. What the Experts Say
INTRODUCTION
• Latin America – A Profile (2016)
Population: 626.7 million
Internet Users: 378.2 million
Share of Internet Users with Smartphones: 93%
Facebook Subscribers: 321.8 million
Despite its notoriety for an endless list of political, economic and social
crises, the region of Latin America remains a rich source of contemporary
culture, especially music.
Source: IFPI; Internet World Stats; The Economist; eMarketer
INTRODUCTION
On the global map, it has bedazzled us with movies (think of acclaimed
film directors Alejandro González Iñárritu, Alfonso Cuarón from Mexico;
Argentina’s Juan José Campanella); art (Mexico’s Frida Kahlo, Diego
Riviera, and Fernando Botero from Colombia); and literature (Peru’s
Mario Vargas Llosa, Colombia’s Gabriel Gardia Marques and Gabriela
Mistral from Chile).
In contemporary music, Latin America is loaded and varied. Gloria
Estefan, Shakira, Carlos Santana, Ludmilla, Ricky Martin, Ego Kill Talent,
Far From Alaska, Marc Antony, Nicky Jam, Biel, and the late great Juan
Gabriel are national icons and international superstars.
Latin America:
The Ascent of Digital Music
Images (clockwise from top left) :
Ego Kill Talent; Shakira; Juan Gabriel; Ludmilla; Biel;
Anitta; Far From Alaska
Courtesy of Warner Music Group;
Elemess Music n’ Services; Shakira.com;
Juan Gabriel on Facebook
INTRODUCTION
A new generation reared on digital creativity include Tomasa del Real
(Chile), Deltatron (Peru) and N.A.A.F.I (Mexico).
They are also major contributors to the North American business, the
world’s biggest music market, thanks to their influence on the thriving US
Hispanic music scene.
And the recent rise of the Puerto Rico-originated raggaeton genre in
Latin America is equally boosting overall sales.
INTRODUCTION
The regional repertoire is rich and varied. It boasts talented artists who
meld the dominant Spanish and Portuguese tunes with indigenous,
African and Asian influences, as well as English-language international
hits.
That wealth of musicality in recorded and live music is among the most
significant contributors to the region’s creative industries. And thanks to
the growth of digital media, the plethora of recorded and live music is
thriving in a territory once plagued by rampant piracy.
The increase in streaming music platforms and revenue is accelerating.
Consumer spend on streaming, in particular, is soaring.
INTRODUCTION
No wonder the IFPI, the global recorded-music industry’s trade
organisation, described Latin America as “the fastest growing digital
region in the world” in 2015.
This is proving to be a positive base for future progress in terms of
revenue upsurge.
From information supplied by the IFPI, Nielsen Music, last year’s Midem
events and exclusive interviews with experts, this White Paper will show
how digital media and technology have provided a foundation on which
the region is building an even sturdier music business.
LATIN AMERICA: THE ASCENT OF DIGITAL MUSIC
1. Latin America: affluent in
music currency
Latin America:
The Ascent of Digital Music
11.8%
Growth in recorded music
revenues in 2015
Latin America was the fastest growing region in the global recorded
music industry in 2015, based on the most recent annual figures available.
It recorded the highest growth rate for the fifth consecutive year.
IFPI data shows total recorded-music sales grew almost 12% in 2015 from the
previous year.
The region’s biggest music market has always been and remains Brazil,
followed by Argentina and Mexico (see page 12).
And although total recorded music sales in Brazil fell 1.8% in 2015, that was
due to tone-off payments of significant royalties earned in 2014. Already,
industry anecdotes about Brazil indicate revenues from the first half of 2016
alone jumped 10% from the same period in 2015.
Latin America:
The Ascent of Digital Music
Considering how piracy once made Latin America a no-go area for the
international music sector, it is now possible to calculate how much fans are
spending on music.
Compared to the US$15-plus per capita spent by US consumers, the amount
spent in Latin America’s still developing economies is small. But consumers in
Argentina, Brazil, Mexico, Chile and Uruguay are spending between US$4 and
US$1 per head. Those are fans prepared to pay for legitimate music.
• Recorded Music Revenue Per Capita (US$) in 2015
United States: 15.5; Argentina: 3.3;
Central America/Caribbean: 0.4;
Brazil: 1.2;
Chile: 1.8;
Colombia: 0.7; Ecuador: 0.2; Mexico: 1.0;
Peru: 0.4; Uruguay: 2.0; Venezuela: 0.1
SOURCE: IFPI
Latin America:
The Ascent of Digital Music
• Key Markets (in 2015)
• Argentina: 15th Biggest Music Market
Population: 44 million
Total Value of Recorded-Music Market: US$141.6m
Growth Rate in Recorded-Music Revenue: +34.8%
• Brazil: 10th Biggest Music Market
Population: 207.7 million
Total Value of Recorded-Music Market: US$247m
Growth Rate in Recorded-Music Revenue: -1.8%
• Mexico: 16th Biggest Music Market
Population:130.2 million
Total Value of Recorded-Music Market: US$126.4m
Growth Rate in Recorded-Music Revenue: +14.4%
SOURCE: IFPI, The Economist
NOTES: Percentage change from previous year
LATIN AMERICA: THE ASCENT OF DIGITAL MUSIC
2. Digital Media in Latin America
Latin America:
The Ascent of Digital Music
Latin Americans are among the biggest consumers of social media
worldwide.
Based on 2015 figures published by research group eMarketer, Latin
Americans devote 29% of their time online to social media, compared to
22% in Europe, Middle East and Africa, 14% in North America, and 8% in
Asia-Pacific.
The adoption of Facebook dominates. In fact, a large number of music
industry promoters and artists prefer to communicate with fans via Facebook
as opposed to their own websites.
Latin America:
The Ascent of Digital Music
The number of Facebook subscribers reached an estimated 241 million in
2016, from 194 million in 2014, according to eMarketer data. It forecasts that
the number will grow to more than 282 million by 2019. By then, more than
93% of all social media users in the region will be Facebook account holders.
The current biggest individual Facebook market is Brazil with 87 million
accounts, followed by Mexico (51.8 million) and Argentina (20.9 million).
By the end of last year, Twitter was also enhancing its impact in the region.
Twitter users grew to almost 76 million users last year, from 58 million in 2014.
eMarketer reports indicate the number will jump to almost 102 million by
2019.
Latin America:
The Ascent of Digital Music
Of the entertainment websites visited most frequently by Latin Americans in
the month of April 2016, YouTube was the overwhelming leader. The giant
video-sharing website recorded almost 133 million unique visitors that month
compared to 19.4 million at Microsoft’s MSN Entertainment and 18.5 million at
Brazil’s Globo.com.
And when it comes to the most used mobile apps, WhatsApp was the leader
last April with Facebook significantly behind in second place, followed by
Google.
The apps for Instagram, YouTube and Snapchat were also among the Top 10
(sources include eMarketer, Mobile Time and Opinion Box).
LATIN AMERICA: THE ASCENT OF DIGITAL MUSIC
3. Digital Music in Latin America
Latin America:
The Ascent of Digital Music
Digital music is helping save the once flailing Latin American music
industry.
Digital sales account for more than 50% of total revenues in Mexico, Peru, and
Colombia. The rate is more than 70% in the Central America area (when
combined with the neighbouring Caribbean region). Also, digital represents
nearly 40% of sales in Brazil and 20% in Argentina, two major music markets.
It is the rise of streaming media that has helped turn Latin America into an indemand place for doing business in the music sector.
Latin America:
The Ascent of Digital Music
Streaming, which represented 40% of total digital revenues in 2015, is
offering a more secure and consumer-friendly way to counter piracy
compared to digital downloads and physical distribution.
As a revenue source, it has overtaken digital downloads in the following
countries: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico,
Paraguay, Peru and Uruguay.
The top streaming platforms are the international brands, led by Spotify,
Napster, Apple Music, Google Play, Tidal and Deezer. Home-grown services
are led by Claro-Musica, a subsidiary of telecoms behemoth America Movil.
Latin America:
The Ascent of Digital Music
By the middle of last year, Spotify held a market share of more than 64% of
Mexico’s digital-music sector. Google Play came in second with just over
12%, followed by Apple Music (8.1%) and Claro Musica (7.4%).
In Venezuela and Ecuador, the market leaders include Leaf.fm, which was
founded by Costa Ricans in the UK but is specifically targeted at live-music
fans.
In addition to America Movil, the telecoms operators that bundle streaming
into subscriptions are Movistar, Tigo,Vivo, and TIM.
Latin America:
The Ascent of Digital Music
But there remains room for growth. That emerged late last year when the
subscription-funded YouTube Red entered Mexico. Additionally, Vivendi, the
French media-and-entertainment conglomerate, launched WatchMusic in
Brazil. It plans to roll the service to other Latin markets this year.
Protecting copyright and compensating rights owners fairly in Latin America
will be key to sustaining the streaming business in the long term.
To this end, the region’s leading music publishers has signed a Joint
Administration Agreement for Online Uses with Latinautor, an umbrella
organisation representing 15 national collecting societies.
Latin America:
The Ascent of Digital Music
Since it would be laborious and expensive for each digital music service,
from Spotify to YouTube, to seek the required music licences from each
publisher on a country-by-country basis, the agreement provided a
streamlined one-stop-shop solution.
The end result is a series of hubs designed to simplify music licensing. There
is one hub each for doing business in Mexico, Brazil and Argentina
respectively, and a fourth hub for the remaining Latin America countries.
As Jorge Mejia, President, Latin America & US Latin at Sony/ATV Music
Publishing, explained at Midem last year: “For Latin America, the digital
service providers (DSP) have a better situation compared to approaching
every single publisher in each territory.”
Latin America:
The Ascent of Digital Music
The Digital Value (2015)
•
• Latin America
Regional Digital Revenues: +44.5%
Regional Streaming Revenues: +80.4%
Number of Facebook Users: 241.1 million
Number of Twitter Users: 75.6 million
Brazil
Total Digital Revenues: US$94.9m/+45.3%
Streaming Revenues: +193.2%
Number of Facebook Users: 87 million
Number of Twitter Users: 27.7 million
• Argentina
•
Total Digital Revenues: US$29m/+138%
Number of Facebook Users: 20.9 million
Number of Twitter Users: 8 million
Mexico
Total Digital Revenues: US$75.6m/+29.9%
Streaming Revenues: +240.3%
Number of Facebook Users: 51.8 million
Number of Twitter Users: 23.5 million
SOURCE: IFPI, The Economist; eMarketer;
NOTES: Percentage change from previous year
Latin America:
The Ascent of Digital Music
Latin American Music Fans: A Digital Profile (2016)
 Music is a key emotional touch point in LATAM with 90% saying
music is important to them.
 Streaming websites/apps are one of the top formats for listening to
music.
 Mexicans are consistently the most receptive to brand engagements
with music, especially free downloads of new or established artists.
 In a typical week, 62% of Argentina (62% of Mexico, 46% of Brazil)
music listeners use website/apps to stream music videos compared
to 21% of US music listeners.
 In a typical week, 45% of Brazil (44% of Argentina, 42% of Mexico)
music listeners listen to their personal digital music library when
they listen to music compared to 32% of US music listeners.
 75% of Mexicans would view a brand more favorably if the brand
offers free downloads compared to 69% of Argentina, 67% of Brazil,
and 45% of US respondents.
SOURCE: Nielsen Music 360 LATAM Report
LATIN AMERICA: THE ASCENT OF DIGITAL MUSIC
4. What the Experts Say
Latin America:
The Ascent of Digital Music
Bruno Boulay
Music Industry Consultant
Sao Paolo, Brazil
• Recorded Music: Highlights in 2016
“It is definitely the growing streaming business. We don’t have the complete
figures for 2016 in Brazil yet, but we know that during the first semester, sales
of streaming via monthly subscriptions grew more than 120% compared to
the same period in 2015. This means digital sales account for 70% of the total
music market in Brazil (including physical).”
•
Recorded Music: Predictions for 2017
“In 2017, the main streaming companies in Brazil (including Spotify, Deezer
and Google Play) will grow. The launch of new streaming services will
provide more choices to the huge community of local consumers, bearing in
mind that Brazil has more than 300 million of cellphones devices for a total
population of about 200 million people. And the revival of the vinyl
recordings might be confirmed in 2017 too.”
Latin America:
The Ascent of Digital Music
• Live music: Highlights in 2016
“In the marketing business, we can say that Facebook is definitively the
optimum way to support and promote concerts in Latin America. We should
also mention the successful use of crowdfunding to promote shows in Brazil.”
• Live music: Predictions for 2017
“The live music industry in Latin America will use more technology,
especially at the big music festivals, which are expanding in the region. The
best examples are in Brazil with its famous and huge Rock in Rio festival, or
the international events Lollapalooza or Tomorrowland, which came to Brazil
a few years ago and have become part of the country’s cultural agenda
thanks to technology.”
Latin America:
The Ascent of Digital Music
Flávia Cesar,
Licensing Manager
Warner/Chappell Brasil
Rio de Janeiro, Brazil
• Recorded Music: Highlights in 2016
“The growth of streaming services was definitely among the highlights of
digital music this past year, as well as the changes that are associated to this
format. The main one was the IFPI numbers that showed digital revenue
surpassing the revenue from physical sales for the first time.”
• Recorded Music: Predictions for 2017
“We expect to see a consolidation of the streaming format (which has
certainly helped reduce piracy) with the increase of users and revenues. In
addition, we are waiting for the confirmation of new (rights) agreements,
such as the payment of YouTube rights, which will boost the market.”
Latin America:
The Ascent of Digital Music
Thiago Endrigo,
Artist manager, A&R director
Elemess Music n’ Services
Sao Paolo, Brazil
• Recorded Music: Predictions for 2017
“I expect to see more transparency from the music service providers for the
right holders (artists and composers) to know exactly how much a streaming
"play" is worth, and to be able to collect the royalties more efficiently. In other
words, I hope artists can make money from digital music.”
• Live music: Highlights in 2016
“The cashless-payments system with wristbands used in music festivals
became an interesting way of avoiding queues for food and drink. I think
festival promoters were also able to increase their income with this system.”
Latin America:
The Ascent of Digital Music
Carlos Mills,
Director of international affairs
ABMI (Brazilian Independent Music Association)
Rio de Janeiro, Brazil
• Recorded Music: Highlights in 2016
“Although we did have an increase in streaming revenues, our copyright law is
not clear enough regarding how to compensate the authors and the publishers
whose works are featured on the streaming platforms. As a result, some
Brazilian authors and publishers are not receiving their share of digital
revenues. This can bring much uncertainty to the future of the Brazilian
streaming market.”
• Recorded Music: Predictions for 2017
“We will probably see more people using the streaming services, fewer
downloads (either legal or illegal), a slight decrease in physical album sales,
but an overall increase in digital revenues.”
Latin America:
The Ascent of Digital Music
Lorena Valdés
CEO
Vago Music&Entertainment
Mexico City, Mexico
• Recorded Music: Highlights in 2016
“I believe the launch of YouTube Red was a game changer.”
• Recorded Music: Predictions for 2017
“I am hoping to see more avenues for up-and-coming artists to reach out to
current and potential fans. For example, many artists have amazing remixes
that they can’t upload and share with fans because some platforms ban them
for copyright reasons. Other artists struggle because they are not signed to a
label or don’t have any information on how to get their tracks on the
legitimate platforms. I think labels need to be flexible about this and realise
they are hurting the industry rather than allowing it to grow.”
• Live music: Highlights in 2016
“Cashless payments with the use of wristbands at many events have enabled
people to attend concerts without (physical) tickets thanks to the use of RIFD
(radio-frequency identification), mobile apps, Bluetooth beacon systems and
other new technologies.”
Latin America:
The Ascent of Digital Music
Iñigo Zabala
President
Warner Music Latin America Miami
Florida, US
• Recorded Music: Highlights in 2016
“Latin America is a huge growth market for digital music with revenues in the
region increasing at around four times the global average. This growth
continued in 2016 with streaming services reaching more music fans across
the region, often in partnership with telcos. We are starting to see huge
streaming figures for local superstars such as Anitta and Ludmilla, as well as
international artists, which is extremely encouraging.”
• Recorded Music: Predictions for 2017
“There is still huge untapped potential in Latin America and scope for
streaming services to grow further. I hope we will see more great local artists
use these services to break through across the region. We’re used to seeing
Brazil, Argentina and Mexico as the dominant players in the region, but we’ve
seen exciting growth in smaller markets such as Chile, Colombia and Peru, so
I hope this momentum continues in 2017 and beyond.”
ABOUT THE AUTHOR
• Juliana Koranteng is the founder/editor-in-chief of MediaTainment Finance (MTF), the
business journal that covers investments in the international media, entertainment and creative
sectors. As an international correspondent or editor, Koranteng’s works have appeared in
Billboard magazine, Rockol.com, TIME magazine, the Hollywood Reporter, Advertising Age, the
Washington Post, The Economist, UK and US national newspapers and and the daily magazines
published by Boutique Editions at the annual MIPTV, MIPCOM and Cannes Lions events in
Cannes. She’s also the author of several books and reports. She conceived, developed and sold
New Media Age, the UK’s leading digital-marketing publication, to Centaur Media, and has
given speeches at international events and been interviewed by Forbes, the BBC, CNN and
Bloomberg. MediaTainment Finance and sister title TechMutiny are published by JayKay Media
Inc, the London-based media group that also includes a media consultancy, content creation,
and photography-design among its activities. @OutsidetheBoxMT @MediatainmentMT
@TechMutiny
This report is brought to you by MIDEM
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