MERLIN RESEARCH: MEMBER LABELS AND DISTRIBUTORS AT FOREFRONT OF BURGEONING STREAMING MARKET

• 92% of respondents saw streaming and subscription revenues increase year-on-year, a third by over 100%
• Two thirds report increases in a-la-carte download sales over same period
• Merlin labels’ share of streaming services is 12-20% higher than their overall digital shares in US and UK
• Royalties in excess of $65m expected in streaming revenues for Merlin members during 2013

16^th May 2013, The Great Escape, Brighton:- Marking its fifth anniversary of operation, Merlin, the global rights agency for the independent record sector, has published results of a member survey that declare streaming a serious business. 92% of respondents saw streaming and subscription revenues grow between 2011 and 2012, with a third enjoying increases of more than 100%.The growth is shown to be incremental, rather than a substitute for other revenues. Two thirds of members reported increases in a-la-carte download revenues for the same period, with 22% reporting increases of over 50%. Overall, three quarters of respondents said that their total business revenues had increased between 2011 and 2012. Of these, one in five reported overall revenue increases in excess of 50%.An additional aggregated analysis of over 6.5bn streams across a number of leading streaming subscription services in 2012 revealed also that Merlin member’s growth in the streaming sector is outpacing the market.  Merlin members’ 2012 share on these services eclipsed their share of the wider digital market by margins of between 12 and 20%, depending on label and territory.These results match Merlin’s own burgeoning streaming and subscription revenue predictions; the agency expects to collect in excess of $65m for its members in 2013.Additionally, this not only proves that streaming has become serious business, but points also to a new dynamic underpinning its growth, with independent music key to its success.  Freedom of choice created by limitless ‘shelf’ space and a proliferation of tastemaker filters is leading fans, no longer herded by the tightly controlled store fronts of physical retail, to discover and enjoy more independent music than ever before.Commenting on the findings during his opening keynote at The Great Escape convention in Brighton, Merlin chief executive Charles Caldas said: “Five years on from the establishment of Merlin, it is clear that the streaming business is coming of age.“We are in an exciting phase of the business. The new generation of digital services has created a new dynamic of consumer freedom, limitless choice and myriad paths to discovery. Our numbers illustrate that this dynamic is bringing incremental value to the market, and the demand from music fans for the music being released by our independent members is higher than ever before."But the ecosystem is fragile: power is more concentrated than ever, and we are seeing an attempted land grab by the largest companies for digital market share as they try to recreate the old-market advantages they are clearly losing in the digital space.“Any digital service that comes to market pre-shaped to satisfy the demands of the largest companies, and without understanding this new consumer-led dynamic is bound to fail. And in this delicate phase of the business, that is bad news for us all.”The global survey, which was conducted on an anonymous basis, considered the digital revenues of Merlin’s members, who collectively represent the most commercially significant basket of rights outside of those held by the major labels. Merlin’s members include the world’s most successful independent labels and distributors from 35 countries.----------------------------------------------------FULL SURVEY FINDINGS MERLIN MEMBER MARKET SHARE INCREASES SIGNIFICANTLY ON DIGITAL PLATFORMS, EVEN MORE ON STREAMING SERVICES When music is purchased or accessed on digital services, figures gleaned from Nielsen’s 2012 Music Industry Report and proprietary Official Chart Company data show that the market share for independent companies increases considerably as compared to the physical market.Additionally, using its own proprietary data, Merlin saw that members’ aggregated market shares on digital services were on average 56% higher than in the physical market in the US and 52% higher than in the physical market in the UK.On streaming platforms, these differentials are even more pronounced, with an analysis by Merlin of over 6.5bn streams across its licensees showing an additional uplift of between 12-20% depending on the label and where it is based. STREAMING AND SUBSCRIPTION TAKE OFF, DOWNLOADS INCREASE TOO 92.11% of Merlin members saw an increase in 2012 streaming and subscription revenues as compared to 2011.  And one in three reported increases of over 100%.Streaming now accounts for the majority of digital revenues for nearly a quarter (24%) of respondents across the world. This growth is more pronounced in Europe, with nearly a third (30%) of European members reporting streaming comprising over 50% of digital revenues, versus 16% in USA.This growth is incremental, with two thirds (63.86%) of members reporting increased a-la-carte download sales, 21.84% reporting download revenue increases of over 50%. TOTAL BUSINESS REVENUES INCREASE:Between 2011 and 2012, 73.04% of respondents said that their overall business revenues had increased for 2012 as against 2011. Of these, one in five (20.87%) reported overall revenues had increased by more than 50%. SERVICE RANKINGS FOR MERLIN MEMBERSApple’s iTunes Store remains the world’s dominant music service for Merlin members. Spotify comes in second and Amazon MP3 third - but there are some notable regional variations for the likes of eMusic, Deezer and Beatport.

	GLOBAL	USA	UK	EUR
1	iTunes	iTunes	iTunes	iTunes
2	Spotify	Spotify	Spotify	Spotify
3	Amazon MP3	Amazon MP3	Amazon MP3	Amazon MP3
4	eMusic	eMusic	Deezer	Deezer
5	YouTube	YouTube	eMusic	Beatport
6	Deezer	Beatport	YouTube	eMusic
7	beatport	Deezer	Google	YouTube
8	Google Play	Rhapsody	Rhapsody	Juno
9	rDio	Google Play	rDio	Musicload
10	Musicload	Juno Download	Beatport	Rdio

 About Merlin:Merlin is the global rights agency representing the world’s most important independent music companies. The organisation acts to ensure its members have effective access to new and emerging revenue streams and that their rights are appropriately valued and protected.Merlin’s membership embodies over 20,000 independent record labels and distributors, representing some of the world’s most important independent artists, including:·       The xx, The National, Vampire Weekend (Beggars Group)·       Tom Waits, Bad Religion, Wilco (Epitaph Records)·       Nick Cave and the Bad Seeds (Kobalt)·       Arcade Fire, She & Him (Merge)·       DJ Khaled, Jim Jones (E1)·       Enter Shikari, Editors, Ghostpoet, Soulwax ([PIAS])·       Animal Collective, Arctic Monkeys (Domino)·       Prodigy, Marilyn Manson (Cooking Vinyl)·       DJ Antoine (Kontor)·       Armin van Buuren, Hardwell (Armada)·       Chuck Prophet, Josh Rouse (Yep Roc Records)·       Kid Koala, Amon Tobin (Ninja Tune)·       Bob Sinclar (Tommy Boy)·       Grizzly Bear, Boards of Canada, (Warp Records)·       Ani Difranco (Righteous Babe)·       Sharon van Etten, Bon Iver (Secretly Canadian)·       Hercules and Love Affair, Space Cadets (!K7)·       Dan Zanes, Sonny Landreth (Virtual Label)Merlin’s members command around a 10% share of the global and US recorded music markets.Since commencing operations in May 2008, Merlin has struck deals with a wide variety of digital services including Spotify, YouTube, Google Play, Rdio and Deezer and reached a number of high value copyright infringement settlements on behalf of its members with, amongst others, Limewire, XM Satellite Radio and Grooveshark.In February 2013, Merlin was named among the world’s ten most innovative companies in music by Fast Company magazine.  In March 2013 its chief executive, Charles Caldas, was named winner of the IMPALA Outstanding contribution award, which recognised his dedicated work launching and growing Merlin into the virtual fourth major in the digital space.A list of Merlin’s board members and further information on Merlin is available at: http://www.merlinnetwork.org/board/