Labels maintain new music spend despite sales slump
By Mike Collett-White
LONDON (Reuters) - Record labels say they have maintained high levels of investment in new music despite sweeping changes to their business in the digital age and a decade of falling revenues caused by sliding album sales and online piracy.
According to a new study from industry body IFPI published on Monday, record companies invested $4.5 billion in A&R (artists and repertoire) and marketing in 2011.
That was down from $5 billion in 2008, partly due to a significant drop in the amount record labels were willing to spend on marketing up-and-coming talent at a time of shrinking income.
But the A&R side fell less sharply to $2.7 billion last year versus $2.8 billion in 2008 despite a decline of 16 percent in the trade value of the industry globally over the same period.
Presenting the report in London, Max Hole, COO of Universal Music Group International, said he was cautiously optimistic that the music business would return to growth soon, helped by the proliferation of digital platforms.
"The stats are getting better, the rate of decline is slowing," he told reporters.
"There's every reason to hope that in the next couple of years we'll reach the low point and start to go back to growth."
According to the IFPI, in the first nine months of 2012, global recorded music sales had fallen by around one percent year-on-year after a fall of three percent in 2011. Continued...