Statistics released by the Recording Industry of South Africa (RiSA) last week reveal a dynamic South African music industry in 2007, but one that is facing a number of serious challenges if it is to avoid the major declines that have affected record companies in developed economies around the world.

According to stats released this week by RISA, the South African music industry saw a slight year-on-year growth in the value of physical sales in 2007, contrasting contrasts with almost all other markets around the world which continued to experience sharp falls in physical sales.

RiSA's figures show that the physical industry as a whole grew by 2.4 percent., although this figure does not include  sales of track downloads, ringtones and other digital products.

 

Total industry physical sales rose from R996-million in 2006 to R1020-million in 2007. Unlike the previous year, sales of South African repertoire took a blow, falling from R456-million in 2006 to R442-million in 2007, a drop of 2,9 percent (although still a significant jump from R384-million in 2005).

DVDs grew from one million units to 1,2 million in the international market and 1,1 million to 1,2 million in the South African DVD market over the past year.

The lion's share of the South African repertoire market is taken by EMI with 22,4% followed by Select with 13,5 %, Gallo with 12,2 % and Sony BMG with 10.0%. Gospel, Urban/Afro Pop and Afrikaans remain the dominant genres in this sector.

If Gallo is counted as an independent, the total sale of South African repertoire produced by independents (60,3%) exceeded total sale of SA repertoire produced by majors (39,7%). If it is treated as a major, the four majors (Sony BMG, EMI, Universal and Warner Music Gallo Africa) produced 51,9% of South African repertoire sales while independents produced 48,1% in 2007.

With respect to sales of international content in the local market, Sony BMG again led the pack in 2007 with a market share of 29,1 % followed by Universal with 28,3 %, Warner Gallo with 17,9% and EMI with 17,1%.

Sony BMG also held on to the number one market share spot overall, with 20,8% compared to Universal's 19,4%, EMI's 19,2% and Warner Gallo's 15,5%.

For all the buoyancy the industry data reflects, 2007 saw many challenges facing South African record companies. Operating costs (including studio recordings and video production; media, marketing and advertising costs; manufacturing costs and overheads) rose by 7 - 10 %. The wholesale price also fell during 2007 across several formats. The costs of deploying RiSA's national anti-piracy enforcement unit also continued to increase.

This meant the industry was becoming increasingly dependent on opening up new revenue streams. This includes leveraging digital incomes across the South African, African and international markets, especially in the mobile sector - and ensuring that broadcasters and implementation and collection of Needletime.

Among the content supplied to the South African TV and radio broadcasting industries are 3,000 hours of terrestrial TV programming plus a further 25,000 hours to South African-based subscription TV broadcasters as well as 200,000 hours of radio programming, which equates to 50 billion hours of entertainment for South African consumers on radio in 2007.

[ Reference: Channel O website ]