After almost two decades of digital disruption, is the music biz really set for an epic revival?
The global recorded music biz will reach US$131 billion by 2030 – but the attitude of record companies could well hinder growth and even force consumers back to pirate sites.
This is the prediction of US investment bank Goldman Sachs in its upgraded 2019 Music In The Air report.
It says that nearly 1.2 billion consumers will be paying for music streaming within eleven years.
“After nearly two decades of disruption, the music industry is undergoing a massive revival,” it reads.
The growth has been rapid enough for the bank to up its 2017 prediction that music streaming will generate $28 billion in 2030.
What’s driving the surge? Millennials and Generation Zs spend more money on music.
Goldman Sachs draws on calculations are that the average spend of all demographics on music is $152.
The 13-17 demographic spend is $80 each, and the 18-34 group spend $163.
Streaming take-up has challenged the once-popular notion that the live sector will overtake recorded music as the prominent money maker.
2019 Music In The Air says recording will draw away to remain the major revenue source, leaping from the current $30 billion to $80 billion in 2030.
Live in comparison is expected to only expand from $26 billion to $38 billion.
Publishing revenue is forecast to double from $6 billion to $12.5 billion.
2019 Music In The Air also forecasts another change in the landscape, this time concerning streaming platforms.
The scenario is that Spotify and Apple Music will remain global leaders but with smaller market shares.
Spotify is expected to drop from 38% to 32% and Apple Music from 20% to 16%.
Internet players like Amazon, YouTube and Facebook are predicted to grow from its current share of 10% to 14% by 2030.
China’s Tencent Music, now at #3 globally, is tipped to go from 11% to 23% within eleven years.
But Goldman Sachs repeats its warning that record companies could sabotage this accelerated growth by pulling music from streaming services to power up negotiations over royalty payments.
This could cause an intense consumer backlash.
A high percentage (76%) of streaming users demand continued access to millions of tracks – 41% consider it “very important” and 35% “fairly” important.
Lessening of tracks, warns the investment bank, could see streaming lose its appeal, and consumers return to pirate sites.
A similar negative reaction is tipped if prices are increased.
Frustrated consumers already sent the message over windowing of major releases – that is, having them exclusively on one streaming platform for a time – that labels including Universal Music Group have banned it.
Goldman Sachs also cautioned labels’ push for streaming services to drop their free tiers to earn more money.
This could also see a backlash and a shift back to piracy.
The report stresses the importance of looking closely at Spotify’s renegotiation of licensing contracts with major labels this year.
It does not believe that the royalty figures will change.
“Over time, we believe major labels’ artist discovery, curation, and marketing capabilities and high market share concentrations should allow them to defend the status quo in future negotiations.
“Spotify should also be in a better position to leverage its marketing platform and data services — particularly as it becomes a bigger contributor to labels’ earnings.”