How much will the global music industry be worth in 2030?
It’s a question Goldman Sachs attempts to answer every year through an update to its highly influential music in the air report, authored by respected GS analyst Lisa Yang alongside her colleagues.
This year’s 62-page update has now arrived – perhaps with some sense of jitters for investors who have spent billions of dollars on music catalog acquisitions over the past 18 months.
Could Goldman cut its music industry revenue forecast over the next few years?
Could the current macroeconomic headwinds lower Goldman’s future projections for the value of blue-chip music catalogs?
You might be able to hear the poppers partying on Wall Street (and the major record labels).
Because Goldman’s latest projections are (almost) complete, suggesting the music rights industry will reach epic proportions over the next decade.
For starters: Goldman now expects annual global trade revenues that flow through the recorded music industry (labels, distributors and artists) to grow to US$53.2 billion by 2030.
It’s finish $7.5 billion on Goldman’s most recent projection ($45.7 billion). It is also more than double the size record worldwide turnover last year ($25.9 billion) as counted by the IFPI.
Goldman says this increase in its projection is largely due to “higher paid streaming ARPU and ad-supported streaming assumptions as well as lower declines in physical sales.”
Goldman also raised its forecast for the global market. music publishing industry.
Previously, Goldman had suggested annual business revenue from music publishing would reach $10.6 billion in 2030; now it’s increasing that projection by a billion dollars, to $11.6 billion.
This increase in forecast revenues from publishing, say Yang and co in music in the air, is at “higher [projected] streaming, physical and performance revenue.”
Elsewhere, Goldman now suggests that global music streaming revenue (on a retail/gross basis) will reach $89.3 billion in 2030… with the contribution of paid streaming $55.6 billion of this figure and ad-supported streaming contributing $33.7 billion.
All of these figures have increased compared to the previous music in the air estimates.
Live music projections – covering global ticket and sponsorship sales – for 2030 remain where they were, with a forecast that the global live industry will generate $38.3 billion during this year.
Earlier in this article, we noted that crucial numbers from Goldman’s flagship music rights report were “almost” all up in the 2022 edition.
And so on: Goldman has slightly overturned his expectations for the total volume paid music streaming subscribers worldwide.
GS had previously predicted that by 2030 there would be 1.277 billion pay music streaming subscribers worldwide; it is now reduced to 1.260 billion.
Riddle us this: How Goldman can move significantly at the top its subscription streaming revenue projections for 2030, but move down its projections of total subscribers?
Bingo: Goldman increased its ARPU (average revenue per user), partly thanks to a stabilization of falling ARPU at companies like Spotify in 2021, and partly due to potential future price increases on music streaming platforms.
Goldman previously believed that in 2030, the annual ARPU of music subscribers worldwide would be USD $42.8 per year; it has now moved that figure up to $45.8.
(A three dollar annual increase may not seem like a lot, but remember it’s across those projected 1.260 billion paying music streaming subs worldwide.)
music in the air (edition 22) was of course released amid widespread concerns about rising consumer prices, rising interest rates and falling stock markets.
Goldman Sachs is obviously not oblivious to these trends.
Lisa Yang and her team write in the new report, “We expect catalog acquisition spending to slow in a rising rate environment, and as returns [on big-money catalog acquisition deals] will continue to be challenged, we believe majors have a significant competitive advantage in sourcing and monetizing their catalogs [than their rivals].”
However, the report adds: “We expect consumer spending on music to remain resilient in a higher inflation/lower macro environment.
“Our analysis shows that music remains one of the most under-monetized forms of entertainment, with spending still 40% below its historical peak, while consumption continues to grow year after year.
Perhaps the most interesting coverage in Goldman’s new report concerns ad-generating “emerging platforms” (meaning “emerging” in terms of revenue importance to music rights holders).
These platforms – which include Facebook, TikTok, Snapchat, Instagram Reelsvarious video games, podcasts and more – apparently depicted 30% advertising-supported revenue from the global recording industry in 2021.
Goldman says he now expects these “emerging platforms” to represent 40% of the global recorded music industry ad-supported income by 2030, and 12% of total global recorded music revenues (compared to 5% in 2021).
According to the report: “While the traditional on-demand subscription model continues to dominate much of the growth of the music industry, we believe that advances in technology and the continued digitization of industries will further increase the growth of the music industry. ubiquity of music and will create new opportunities for monetization”.
“We believe that advances in technology and the continued digitization of industries will further increase the ubiquity of music and create new opportunities for monetization.”
Lisa Yang and Co., Goldman Sachs
He adds, “We estimate that around 60% of emerging platform revenue in the music industry last year came from short video and/or social media, which includes TikTok, YouTube Shorts, Instagram Reels and Snapchat Spotlight.
“In addition, these new platforms are also becoming important means to amplify artists and set cultural trends, helping to increase the effectiveness of record labels’ A&R and marketing spend.”
Combined, Goldman says he expects streaming price hikes and ad revenue from these “emerging platforms” to more than offset the short-term negative economic impact on the music business of “Rising Inflation, Macro Weakness and War in Ukraine”.The music industry around the world