MIDiA has just released its latest music predictions, available in full to customers here. Here are some important points.
2021 has been a huge year for the recorded music industry with retail values up 23% to $51.9 billion (retail values include masters, publishing and retailers/DSPs). Label business revenue increased 20% to $22.9 billion. The large discrepancy between retail and label growth is partly explained by the rise of non-DSP streaming, which assigns a much higher share to publishing than to DSP streaming. Non-DSP streaming was worth $3.0 billion in 2021 across masters, publishing, and platforms. Production music (a segment omitted from most other market estimates) was also a strong performer, generating around $1 billion.
MIDiA predicts that global recorded music revenues will reach $89.1 billion by 2030 in retail terms. That’s a 72% increase from 2021. The $37.2 billion that will be added by 2030 will be more than was added between 2014 and 2021, which means the music industry isn’t even halfway to a long-term rebound phase yet. While there is a well-founded argument that music revenues have still not returned to pre-Napster levels, the coming years should correct this anomaly (runaway inflation permitting).
Streaming will represent 82% of music revenues in 2030 and it is therefore the dynamics of the streaming market that will support the overall market growth:
Subscriptions: Increased ARPU in Western markets and increased subscribers in emerging markets. Europe and North America will only account for 23% of subscriber growth between 2021 and 2030
No DSP: Emerging social, gaming and metaverse platforms will provide new licensing opportunities. Non-DSP provides a licensing and business model framework for future emerging consumer technologies, such as Web 3.0, providing rightsholders with crucial revenue diversification as subscriptions mature
Emerging Markets: Asian markets in particular will become the engine room of subscriber growth. The Asia-Pacific region alone will have 0.5 billion subscribers by 2030. China accounted for 39% of global subscriber growth in 2021
United States: Even though the United States will lose a share of subscriber growth by 2030 (due to growth in China), it will drive the largest share of subscription revenue growth and will remain largest market in the world by 2030 in terms of revenue.
Label subscriber ARPU will increase by more than 7% globally by 2030, supported by price increases equivalent to 17%, but offset by a reduction due to the growth of multi-user plans and a drop in the share of labels.
Bullish or bearish?
With the influx of capital into the music sector in recent years (IPOs, catalog acquisitions, etc.), space is more than ever in the center of attention. 2021 was the year the music industry responded to these inflated expectations with stellar performance, backed by the first fruits of a new and diverse business strategy, poised to sound the future of the web.
It is the conjunction of these factors, forecasting non-DSP for the first time, and accounting for the exceptional performance of China in 2021, which led MIDiA to significantly increase its forecast by around 25%. We believe this significant increase (the largest ever) reflects the new potential of the global music industry as it enters a new chapter that will be shaped by non-DSP, Web 3.0 and emerging markets.
But – and it wouldn’t be MIDiA without a “but” – this bullish outlook coincides with the global economy about to go into freefall. So, to be on the safe side, MIDiA’s forecast also includes a detailed downside scenario dataset with label trading revenue slowing to just 3% for 2022, and from there adding just another 14.3% more growth. 2030.
We believe that this bearish scenario is unlikely to materialize, although it is within the realm of possibility. If the global economy slows down, it’s likely that while music won’t be recession-proof, it won’t be recession-vulnerable either.
If you would like to know more about MIDiA’s music predictions, email [email protected]