Germany becomes Europe's largest music market.

According to billboard.biz and the IFPI Digital Music Report, Germany overtook the U.K in the revenue generated by physical sales, online sales and performance rights collection. Let's compare these 3 different income areas between the U.K and Germany in order to understand the development on both music markets in recent years.

Physical sales:

The U.K. market made $1.38 billion in 2010. This was a decline of 11% compared to 2009. Germany in turn made $1.41 billion in physical sales, what accounts for 81% of all sold music. The U.K. is more established in the digital market, which grows from year to year. 25% of all recorded music purchased in the U.K. comes from digital sources. One major reason, why Germany makes more money in traditional music sales is the consumer interest in "Deluxe Versions" of albums and the strategy to release simplified packaged CDs month after the initial release to place them in the lower price segment.

Digital market:

The major reason, why the U.K. falls in the ranking of international music markets, is the changeover from physical to digital sales. The U.K. increased digital album sales from 12.5% to 17.5% in 2010. The appetite for digital sales continues and so it is very likely that the U.K. market will return to its old position in the ranking in 2012. In Germany digital sales totaled only $178 million. iTunes is the most popular online retailer on both markets. The U.K. has also made the transition to subscription services like Sportify, while in Germany ongoing battles between the collection society GEMA and subscription services as well as advertisement based video platforms such as YouTube VEVO avoid any progress in this field.

Performance Rights:

The U.K. is the market leader in performing rights. It collected $111 million in rights revenue in 2010, what is equivalent to 8% of total recorded music sales. Germany is also strong in this sector and copyright owners earned $91 million in rights revenue the same year, what is equivalent to 6% of total sales.

The U.K. market is very strong in collection performance royalties overseas, while Germany is more successful in marketing domestic artists. In this context, it becomes clear why the U.K. is the second most important source for A&R behind the U.S.

Richard Smirke (2011). How Germany Overtook The U.K. To Become Europe's Largest Music Market. Retrieved January 22th, 2011, from: http://www.billboard.biz/bbbiz/industry/global/ifpi-2011-report-global-recorded-music-sales-1005100902.story

IFPI (2011). Digital Music Report. Retrieved January 22th, 2011, from: www.ifpi.org/content/library/DMR2011.pdfwww.ifpi.org/content/library/DMR2011.pdf

Yonah (2011). UK Music Market Beaten by Germany. Retrieved January 22th, 2011, from: http://www.p2pon.com/2011/04/07/uk-music-market-beaten-by-germany