South Africa's Underperforming Music Industry
The South African music industry is a story of underperformance. Although several emerging markets are posting growth, latest IFPI figures suggest we are punching well below our weight. Historically SA has seen a robust market share in physical sales; until 2010 we had been climbing the IFPI world rankings, but this has since seen a rapid change. According to the latest figures by the International Federation of the Phonographic Industry, sales of recorded music on physical media are shrinking faster that the average rate of global decline. Although we've seen strong growth in the digital realm, this has not been enough to offset the decline in physical sales. Digital sales have climbed more than 100%, but this is not surprising as music streaming services only started officially launching in SA from August 2012.
Despite the dramatic increase in the South African digital market share, there is still a digital divide in South Africa with higher LSM consumers enjoying connectivity equal to any first world country while the majority cannot afford SA's prohibitively expensive data charges. Although tackling these structural changes is beyond the grasp of the music industry, there is reason for optimism. According to Cisco Visual Networking Index 2015, there will be 27 million internet users in South Africa by 2019, up from just 15 million in 2014. That's a massive jump in internet traffic, and with it comes significant growth in music subscription services.
A more accurate way to gauge South Africa's music market performance to other countries is to look at a per capita gross national income (PGNI) to music spending comparison. In other words, judging a country's spending in the context of an individual's income. Music spending in USA in 2014 was .013% of PGNI, which is 2.9 times more than South Africa. Thus the average consumer in America spends a much greater portion of their income on music than the average South African. Although there are a number of factors that affect digital sales, the affordability of mobile broadband/data and the pricing of digital services remain key elements in opening up the South African market and making it more efficient, increasing greater potential for consumer spending.