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Francais a Little Prayer

The general decline in the major markets at the turn of the millennium took until 2002 to hit France. It is now making its impact felt, with France's market retail value sliding 14.4%. Finally confronting the issues that other territories have had to deal with, how is France's music industry moving forward and embracing new delivery routes and consumption patterns?

Introduction: a delayed decline
In 2002, France was one of the few major markets to actually record growth in music sales while other territories slid, blaming physical and online piracy for their woes. To put France’s position here in context, the slide in Germany was so great that a 13.5% growth in 2001 and a 4.1% growth the next year was enough to see France overtake Germany to become the fourth biggest music market globally. Last year it retained that placing, taking a 7% global share with a retail value of €1.8B (£1.2B). It, however, fell in line with the other dominant markets and recorded a 9.3% fall in units.

With a population of just under 60M, it is equal in size to the UK, although online penetration (37%) and broadband penetration (6.8%) are somewhat lower. The majority of music consumers (68%) are over the age of 30. As Michele Legge argued in Issue Nineteen of Five Eight, the consumer bias towards the older consumer is one of the reasons why France’s domestic artists do not compete internationally on an even footing with other major territories’ acts.

One factor behind France’s delayed decline was its investment in and support of local and Francophone artists. French artists boast the highest local market share (59% in 2002) of any territory in Western Europe and this has been commonly attributed to the government-led programme of cultural protectionism, especially in regard to radio quotas. This market share has grown from 43% in 1998.

Growing mobile market in France
Mobile has a 74% penetration in France according to recent Jupiter figures. With the exception of Scandinavian nations, this is generally in keeping with Western European mobile trends. Multimedia handset penetration currently sits at 32% - placing France in the mid-range in overall European trends. This figure is, however, expected to leap by almost 50% next year, reaching 76% penetration by 2007. 6.5M French mobile users currently pay for ringtones and estimates suggest that this could almost double to 12.1M by 2007, seeing a revenue leap from €174M (£115M) to €395M (£262M). The development of – and predictions for – the music-to-mobile market in France is very much in keeping with the other European territories with the industry ready to exploit this emerging market.

French anti-piracy initiatives and attitude towards digital music
Seeing its market being hit by a sales slump last year the French government and music industry have taken very direct and aggressive action against the online pirates that it blames for the sales decline. French industry body SNEP has made it explicit that it is prioritising anti-piracy initiatives this year. The impact currently on the market is an expected programme of downsizing that could see staff reductions of around 10%. Employee unions are currently in discussions with all the majors over this issue although the general feeling is that the cuts will be pushed through.

While much has been made last month of Italy adopting a hard line policy in Europe against online piracy – making unauthorised uploading and downloading a criminal offence with possible three-year prison sentences – France has already fired its first broadside. Back in February, Bruno Dugas was sentenced to six months in prison and a €1,000 (£665) fine for selling CD-R compilation albums of tracks that he had illegally downloaded from the Internet. While other territories – notably the UK and Japan – have threatened litigation, this movement places France alongside the US in terms of aggressive and direct anti-piracy initiatives.

The other area of interest in France is how the industry is embracing – or not embracing, as some cynics are arguing - digital music. In March, Sacem (the Society of Music Creators, Composers and Publishers) said it was taking legal action against Apple. The legal argument hinges on the implementation of the royalties levy in July 2002. Since that date, a tax has been imposed on all electronic devices with a hard drive sold in France. Last year, a total of €150M (£100M) was collected in levies on hard drives and blank media and paid out to artists and rights holders as a form of compensation for perceived lost earning arsing from digital copying of music. 20,000 iPods were sold last year in France and Sacem wants to impose a €20 (£13) levy on the players because of their inbuilt hard drives.

Like its sister territories in Europe, France has a growing number of legal download sites from established retailers such as Fnac and Alapage and, more interestingly, ISPs such as Wanadoo and Tiscali. This move by ISPs in France to offer music is part of a growing trend where telecoms and ISP companies such as Belgacom and Eircom are offering music downloads as part of their online packages. With France being seen as a key territory – alongside the UK and Germany – by the major US download services, localisation of content will be key in light of the French market’s natural tilt towards the domestic.

About the author: Eamonn Forde is Editor of Five Eight.
Five Eight is a business strategy review that provides music industry executives with a compact overview of the month's news, in-depth articles on key industry news and fresh articles examining new trends. Five Eight monthly cuts through 30 days of information, misinformation and disinformation to give its readers a critical, distilled insight into factors affecting their business. Five Eight is published by Frukt.
For more information, see www.fiveeight.net