Music Industry
See also: Spotify | Podcasting and Audiobooks Industry
Discussion: Music Industry
Developments
2022
Rising to US$26.2 billion, the global recorded music market grew by 9.0% in 2022. .[1]
- USA and Canada increased by 5.0% in 2022; a slower rate than the prior year (+21.8%). Overall the USA & Canada region represented 41.6% of the global market.
- Both USA (+4.8% in 2022) and Canada (+8.1%) remained global top 10 markets, with USA the single biggest national market in the world, exceeding US$10 billion for the first time.
- Europe recorded music revenues saw growth of 7.5% in 2022. UK, Germany and France remained the three largest markets in Europe, all posting growth (+5.4%, +2.2% and +7.7% respectively).
By Format
Streaming
- Global revenues from streaming continued to increase in 2022, seeing double-digit growth (+11.5%) and reaching US$17.5 billion. This was a slower rate of growth than the prior year (+23.9%),
- Revenues from subscription streaming grew by 10.3% globally, reaching US$12.7 billion in 2022.
- Overall streaming (including subscription and advertisingsupported), accounted for the highest proportion of the market, increasing to a 67.0% share of the overall market in 2022 up from a 65.5% share the prior year.
- 589M users of paid subscriptions accounts.
RIAA Report
US only
1H 2023
In the first half of 2023, revenues from streaming services made up 84% of total recorded music revenues in the U.S., growing 10.3% to $7.0 billion. This includes formats such as paid subscription services, ad-supported services, digital and customized radio, and licenses for music on social media and digital fitness apps. It was the 4th year in a row that streaming made up between 83% and 84% of total revenues.[2]
The average number of subscriptions through the first six months of 2023 was 95.8 million, compared with 90.0 million for 1H 2022. These figures exclude limited tier services and count multi-user plans as a single subscription
| DIGITAL SUBSCRIPTION & STREAMING[3]
United States Estimated Retail Dollar Value (In Millions, net after returns) |
1H 2022 | 1H 2023 | % CHANGE 1H ‘22 to 1H ‘23 |
|---|---|---|---|
| Paid Subscription1 | 90.0 | 95.8 | 6.4% |
| $4,424.60 | $4,973.50 | 12.4% | |
| Limited Tier Paid Subscription2 | $515.40 | $524.40 | 1.8% |
| On-Demand Streaming (Ad-Supported)3 | $865.00 | $870.10 | 0.6% |
| SoundExchange Distributions4 | $464.90 | $497.80 | 7.1% |
| Other Ad-Supported Streaming5 | $101.50 | $159.10 | 56.8% |
| Total Streaming Revenues | $6,371.30 | $7,024.90 | 10.3% |
| DIGITAL PERMANENT DOWNLOAD | |||
| Download Single | 91.6 | 75.3 | -17.8% |
| $113.30 | $97.40 | -14.0% | |
| Download Album | 12.4 | 10.5 | -14.7% |
| $121.50 | $107.30 | -11.7% | |
| Ringtones & Ringbacks | 2.5 | 2.3 | -9.0% |
| $6.20 | $6.00 | -2.9% | |
| Other Digital6 | 0.5 | 0.5 | -7.7% |
| $14.50 | $14.00 | -3.3% | |
| Total Digital Download Revenues | $255.50 | $224.80 | -12.0% |
| TOTAL DIGITAL VALUE | $6,626.80 | $7,249.70 | 9.4% |
| Synchronization Royalties7 | $178.00 | $222.70 | 25.1% |
| PHYSICAL | |||
|---|---|---|---|
| CD | 18.3 | 15.1 | -17.2% |
| $206.40 | $236.00 | 14.3% | |
| LP/EP | 23.8 | 23.4 | -1.8% |
| $624.20 | $632.40 | 1.3% | |
| Music Video | 0.3 | 0.3 | -11.7% |
| $5.20 | $5.50 | 6.3% | |
| Other Physical | 0.2 | 0.5 | 116.5% |
| $4.00 | $7.90 | 96.7% | |
| Total Physical Units | 42.6 | 39.3 | -7.8% |
| Total Physical Value | $839.80 | $881.80 | 5.0% |
| TOTAL DIGITAL AND PHYSICAL | |||
| Total Units9 | 149.5 | 127.8 | -14.5% |
| Total Value | $7,644.70 | $8,354.20 | 9.3% |
| % of Shipments | 1H 2022 | 1H 2023 | |
| Physical | 11% | 11% | |
| Digital | 89% | 89% | |
2022 Full Year
Luminate Report
Q4 2023
At the close of 2023’s final reporting week on December 28th there were 1.249T On-Demand Audio streams for the year in the US and 4.115T Globally. These are both new yearly highs and the new net volume of streams tallied 140.5B in the US and 749.9B Globally, which are greater than the net gains in 2022 (120B and 620.5B, respectively).[4]
In 2023, the global music industry achieved a new milestone, surpassing 7 trillion Total On-Demand audio and video streams for the first time, representing a 33.7% gain over 2022. Global audio streams jumped more than 22% to over 4T and in the US audio streaming grew 12.7% to a new high of 1.25T.
U.S. Average Music Streaming Spend Increased Year-Over-Year
But Gen Z listeners report spending 11% less on Music Streaming Services Per Month
Q3 2023
- Global On-Demand Audio (ODA) Streams are +559.4B over where they sat YTD through Q3 2022 as worldwide ODA streaming continues to accelerate.[5]
- US ODA continues overall acceleration as well as the market is currently +107.1B ahead of where it sat through the end of Q3 2022
- Global 1H 2023 YOY growth at 22.9% and the US growth at 1H 2023 +13.5%. This is now 22.7% and 13%, respectively. A slightly slower growth
- US Music Listeners report spending 13.4 hours per week with music in Q3 2023.
- Overall, Gen Z leads all generations with 16.8 hours weekly, which is 25% more time with music than the average US listener.
Forecasts
Goldman Sachs
2022
Raised global music industry revenue forecasts to reflect a more positive view on pricing and revenue from emerging platforms that more than offsets the near-term potential impact of the weaker macro environment.[6]
- Raise our 2022/2023 global music forecasts by 7%/5% respectively, and 2030 forecasts by 10%, mainly on the back of a stronger 2021 base where revenues came 11% ahead of our expectations.
- Forecast +24%/+8% growth in 2022/23, which is 3ppt lower than previously owing to the impact of a weaker macro and Russia, while our forecast 2022- 30 CAGR is unchanged at +9%.
- Expect consumer spend on music to remain resilient in a higher inflation/ weaker macro environment. Our analysis shows that music remains one of the most undermonetised forms of entertainment, with spending still 40% below its historical peak
Streaming
- Forecast 2021-2030E streaming revenue CAGR of +12% (from +11% prior), with volumes remaining the primary driver.
- In 2023, forecast+13% streaming revenue growth (from +15% previously) as we incorporate the impact of a weaker macro and lower revenues from Russia
- Forecast global paid streaming penetration to rise to 20% in 2030 from 11% in 2021.
- ARPU stabilised in 2021 for the first time in 5 years; expect 1% decline going forward as improved pricing is offset by dilution from EM.
- Expect emerging platform revenues will represent 40% of ad-funded streaming revenues by 2030.
- Expect further fragmentation amongst the top DSPs. Spotify expected to decline its market share.
2023
Analysts at Goldman Sachs remain positive about future growth in the music business, despite reducing their previous prediction for market growth this year from 8% to 7.1%. Goldman Sachs thinks that the under-monetisation of music can be solved in several ways, including regular recurring price rises for streaming subscriptions, and more efforts to make money from superfans of artists.[7][8][9][10]
“The music industry is on the cusp of another major structural change given the persistent under-monetisation of music content, outdated streaming royalty payout structures and the deployment of Generative AI,” it explains.
“In the wake of these developments, we believe a more coordinated and collaborative response from the main stakeholders will be key to ensure that the industry not only continues on its path of sustainable growth but also captures new business opportunities.”
“We would expect the industry to work towards implementing price increases on a recurring basis, especially in an environment of higher inflation, and similar to the price increases adopted in other industries such as SVOD,” it claims, referring to subscription video-on-demand services like Netflix.
- Goldman Sachs is now predicting that the global music market will be worth $92bn in 2023 rising to $151.4bn by 2030. A bit below 2022 forecasts. The net figures are $65.1bn in 2023 and $104.4bn in 2030.
- Its now forecasting an average CAGR of +8.6% for the recorded music industry between 2023 and 2030, a figure which it calls “broadly unchanged” from its previous predictions.
- The 2023 prediction includes $28.2bn of recorded music revenues, which is down from last year’s forecast of $30bn. However, the report predicts $8.8bn of publishing revenues this year, up from the $7.8bn it expected a year ago. As for the live market, Goldman Sachs thinks that will be worth $28.1bn in 2023, compared to its previous prediction of $29.1bn.
- Looking forward, the company’s $104.4bn of predicted net revenues in 2030 includes $50.1bn from recorded music, $14.7bn from publishing and $39.5bn from the live industry.
- Emerging platforms category accounted for 6% of global recorded music revenues in 2022, which based on its figure of $26.2bn for the latter means around $1.57bn. It estimates that Facebook accounted for 23% of that revenue (so around $361m) followed by gaming generally (19% – $298m); Peloton (17% – $267m); TikTok (14% – $220m); YouTube Shorts (8% – $126m); Snapchat Spotlight (7% – $110m); and Instagram Reels (5% – $78.5m).
- It predicts that ’emerging platforms’ will account for 14% of global recorded music revenue (up from 6% last year) by 2030.
Streaming
- Its CAGR forecast for recorded music streaming growth in that same period (2023-2030) also remains “unchanged”, says Goldman, at +11%. Previous was 12%.
- Prediction for recorded music streaming revenue in 2023 has been pared down: Goldman now expects 2023’s global music streaming revenue (gross) to grow by 11.9% YoY (vs a 13.0% previous forecast).
- It also expects net/wholesale recorded music streaming revenue (i.e. the money paid to labels and artists) this year to grow by 12.0% YoY (again, vs. 13.0% in its prior predictions).
- Goldman is forecasting within its numbers that headline prices at music streaming services in developed markets (US, Europe etc.) will increase by an average of 3% per year over the next seven years.
- If 20% of paid streaming subscribers today could be categorized as ‘superfans’, says Goldman, and if these ‘superfans’ were willing to spend double what a non-superfan spends on digital music each year, it implies a $4.2 billion (currently untapped) annual revenue opportunity for the record biz. That $4.2 billion figure, however, represents a ‘Total Addressable Market’ (TAM).
- Goldman’s forecasts remain very similar to where they were before – though it’s shaved 60 million off its previous 1.26 billion subscriber forecast for 2030, partly reflecting the exclusion of Russia from estimates.
- Goldman also forecasts that ’emerging platforms’ will account for a whopping 47% of the recorded music industry’s revenue from ad-funded streaming by 2030.
References
- ↑ https://ifpi-website-cms.s3.eu-west-2.amazonaws.com/GMR_2023_State_of_the_Industry_ee2ea600e2.pdf
- ↑ https://www.riaa.com/wp-content/uploads/2023/09/RIAA-Mid-Year-2023-Revenue-Report.pdf
- ↑ https://www.riaa.com/wp-content/uploads/2023/09/RIAA-Mid-Year-2023-Revenue-Report.pdf
- ↑ https://luminatedata.com/reports/yearend-music-industry-report/?aliId=eyJpIjoiZ2sxamdKR2xZK3pMSUxlRSIsInQiOiJtT0s1MzFkQmpZMnhtYlZGOVh2emFBPT0ifQ%253D%253D#
- ↑ https://luminatedata.com/blog/growing-global-unpacking-streamings-continued-acceleration-in-q3-2023/
- ↑ https://www.goldmansachs.com/insights/pages/gs-research/music-in-the-air/report.pdf
- ↑ https://www.musicbusinessworldwide.com/peloton-paid-the-record-industry-more-than-tiktok-last-year-says-goldman-sachs-in-latest-music-in-the-air/
- ↑ https://musically.com/2023/06/29/goldman-sachs-updates-its-music-industry-revenue-forecasts/
- ↑ https://completemusicupdate.com/article/more-major-structural-changes-likely-as-music-industry-pursues-next-round-of-digital-growth-says-goldman-sachs/
- ↑ https://www.goldmansachs.com/intelligence/page/music-streaming-services-are-on-the-cusp-of-major-structural-change.html