Report: streaming to push music industry value to $41b by 2030

A new Goldman Sachs report estimates that the streaming phenomenon will lift the value of the global music industry to US$41 billion by the year 2030.

That is a considerable – and optimistic – leap, given that IFPI (International Federation of the Phonographic Industry) put global streaming revenues in 2016 at $4.56 billion, up 60.4% from 2015.

The entire music industry’s revenue was put at $15.7 billion

From 2016, which marked a 5.9% rise.

Goldman Sachs is now predicting that these revenues will jump by more than 500% over the next 13 years.

It also forecasts that total paid streaming subscribers will hit 847m by 2030 – a rise of more than 700m compared to the end of 2016.

The report suggests that streaming will account for $34 billion of that, with paid subscriptions accounting for most ($28 billion) while consumers’ move from ad-supported services accounting for $6 billion that year.

Streaming has grown so quickly that this 2030 forecasts marks a 16% reanalysis from previous projections.

The Goldman Sachs prediction consolidates confidence in some quarters of the industry that it’s entering a golden period.

The US music industry is on track for a second consecutive year of double digit growth – something which has not happened since 1999 when Napster first emerged and sent the industry into freefall.

Last year Universal Music Group went into profitability due to $1.1 billion in streaming revenues, while Warner Music’s streaming revenue grew 50%.

Goldman Sachs’ 2030 prediction also has performance rights contributing $4 billon, synchronization to be $500 million, physical and downloads at $700 million and “other” at $1.2 billion.

Its more positive reassessment also increases the value of the two biggest record companies in the world.

On the basis that UMG and Sony Music Entertainment “will receive 55%-60% of royalties for every piece of work that is being monetised” in the future, it has increased their worth.

It has Universal Music Group pegged at €19.5 billion (A$29.24 billion), which is 16% more than the previous €16.8 billion ($25.19 billion). Its price target for Universal parent Vivendi is up 8% to €25.20 per share.

Tokyo-based Sony Corp’s price target is upticked by 2% to ¥5,600 (A$64.80).

The growth of music streaming will continue at its rapid phase for a number of reasons.

One, of course, is that millenials are not interested in owning music any more, just tapping at the library door for a take-out.

The mindset of consumers has changed to be willing to pay for streaming, especially if premium services are doing deals that include must-have products.

As TMN reported, record companies have come up with a route-map to erase free tiers within three years.

It has made itself indispensable with the growth of smartphones, in-auto listening and in-home listening.

Most of all, the rise of voice activated devices is tapping into a much neglected market – the one which has not bothered with moving into streaming because it technically doesn’t comprehend how to work the devices.