Music royalties are how musicians and songwriters get paid when people listen to their songs. Right now, most of that money comes from streaming services like Spotify and Apple Music.
But the way this money is shared can be confusing and sometimes unfair.
Musicians often need tips to help them earn more. Investors are curious if putting money into music is a good idea.
That’s why it’s important to think about what might happen in the future. This article shares predictions and trends about music royalties based on what experts have to say. It looks at how things could change and what new opportunities might come up.
If you know about these trends, you can plan ahead and find new ways to succeed in the music business.
Future Predictions
The future of music royalties is set to undergo significant changes in the coming years. Here's what you can expect based on current market analysis and expert opinions:
Value of Music Copyrights Rising Around the World
The market for music rights is growing quickly and is expected to go through the roof in the next few years.
The market is expected to reach USD 39,897.5 million by 2028, growing at a Compound Annual Growth Rate (CAGR) of 2.62%.
This upward trend is driven by two main factors:
- Increased streaming engagement: More people are using music streaming services than ever before.
- Higher subscription prices: Streaming platforms are gradually raising their rates.
You'll likely notice your favorite streaming services bumping up their basic monthly fees. For instance, Spotify, one of the industry leaders, has recently increased its prices in the United States.
As of June 2024, Spotify's flagship individual Premium tier costs $11.99 per month. This shows the industry's push for higher valuations and sustainable growth.
Other major streaming services, such as Apple Music, Amazon Music, and YouTube Music, have also increased their subscription prices in recent years.
These price hikes aren't just about increasing profits for the streaming companies. They also mean there's potentially more money in the pot for musicians, songwriters, and copyright holders.
Rise of Blockchain Technology
Blockchain will change how musicians get paid. This is important to you because:
- You'll be able to see for yourself how much your favorite acts are making.
- It will be easier and faster to make payments.
- There will be less disagreement about who owns what and who should pay what.
More blockchain platforms will make the music business more fair, making sure that all singers, songwriters, and others get paid what they're owed..
AI's Impact on Music Creation and Royalties
Artificial Intelligence is set to make big changes in the music industry.
For example:
- Music Creation: AI tools can help musicians compose music or suggest new melodies.
- AI-Generated Music: Expect a rise in music created by AI, which could affect copyright rules and how we value music.
- Royalties: AI might predict music trends and improve how royalties are managed.
As AI gets better, new laws and industry standards are likely to come out. This will help create a world where AI and humans work together to make music and pay royalties.
Expansion of Direct-to-Fan Platforms
The music industry is undergoing a major change with the rise of direct-to-fan platforms.
One of the biggest benefits is that musicians usually keep a larger share of the profits. On Bandcamp, for instance, musicians can earn an average of 82% of each sale, much higher than what they’d get from traditional streaming platforms.
It's not just about money, though. These sites help musicians connect with their fans on a deeper level. This link can give musicians a more stable way to make money, especially if they have a large fan base.
It's important to note that direct-to-fan platforms are not replacing standard royalty systems. Instead, they give musicians another way to make money. These sites are likely to become more important to how people share music and how musicians make a living as they grow.
Shift in Streaming Payout Models
Streaming services are changing how they pay musicians. Here's what's happening:
- Minimum play requirements: Some platforms now need a song to be played a certain number of times before it makes money. This helps stop fraud but may hurt smaller musicians.
- Active listening rewards: Some platforms pay more for songs that users actively choose to play. This helps popular musicians but makes it tougher for new ones to earn money from casual listeners.
- User-focused payments: A few services are trying out systems where your subscription fee goes directly to the musicians you listen to. This could support musicians with loyal fans, even if they aren't super popular.
- Exclusive content rewards: Some services give higher pay for special or early-release songs, encouraging musicians to create unique material.
These changes aim to make payouts fairer, but they'll create both winners and losers. Established musicians with engaged fans might benefit, while newer or niche musicians could struggle.
Global Expansion of Music Markets
The music industry is becoming more global and diverse, with new markets gaining importance. South Korea is a standout, with its digital music market expected to reach $1.48 billion in 2024. This highlights the country’s strong role in the global music scene.
K-pop’s growing popularity has fueled digital music consumption both within South Korea and worldwide.
This growth in South Korea is part of a bigger trend in Asia and other developing areas that is changing the way music is made around the world. Fans of music can now find a wider range of material, and musicians and investors can reach new audiences and make more money.
Those who connect with these expanding markets could see a significant boost in their royalty earnings.
Key Trends to Watch
The music industry is changing fast. New technologies and market shifts are transforming how music is made, shared, and paid for.
Here are the main trends to watch in 2024 and beyond:
The Advancements of AI
AI tools can now create original melodies, suggest chords, and even make full songs. This technology also helps make royalty payments faster and more accurate.
However, AI brings up some important questions. For example, who owns the rights to a song made by AI? Right now, most countries say that AI-created work cannot be copyrighted. This is a big topic of discussion in the music world.
People are also worried about how AI might affect human musicians. Some fear that too much AI music could make it harder for musicians to be noticed.
The music industry is still figuring out how to handle these changes. Major music labels are even suing some AI companies over copyright issues. As AI continues to improve, we will see more changes in how music is made and how musicians are paid.
It’s important to remember that human creativity and emotion in music cannot be replaced. The future will involve finding a balance between AI help and human artistry.
Shift Towards More Transparent Royalty Payment Systems
The music industry is moving towards more transparent royalty payment systems.
Blockchain technology is at the forefront of this change, offering a secure and transparent way to track music usage and ensure fair payments.
This shift could help musicians get paid more quickly and accurately for their work, addressing long-standing issues in the industry.
Growing Importance of Emerging Markets
Emerging markets, particularly in Asia and Africa, are becoming increasingly important in the global music scene.
In 2023, music revenues in Africa grew by a whopping 24.7%. That's the highest growth rate of any region in the world. This means more African people are buying and streaming music than ever before.
Countries like China and India are seeing rapid growth in music consumption, driven by rising internet penetration and smartphone usage.
If you're an musicians or considering investing in music, these emerging markets offer new chances to make money. There are millions of new listeners to reach and new platforms on which to share music.
While there's lots of growth, there are also challenges. Things like different copyright laws or internet access can be tricky. But for those who can navigate these issues, there's a lot of potential for success.
Evolution of Music Licensing for New Technologies
New technologies are creating novel ways to experience music, necessitating the evolution of music licensing models. These innovations are opening up new revenue streams for musicians and rights holders.
Virtual Reality (VR) Concerts
Virtual Reality is opening up new possibilities for music experiences. It comes with many benefits:
- Immersive Experience: VR headsets transport you to virtual concert venues, making you feel like you're really there.
- Global Access: Fans worldwide can attend shows, breaking geographical barriers.
- New Revenue Streams: musicians can sell virtual tickets, experiences, and merchandise.
VR concerts are reshaping the live music experience. As this technology becomes more mainstream, you can expect to see new licensing models emerge to accommodate these virtual music experiences.
Augmented Reality (AR) Music Integration
Augmented Reality is adding digital elements to our real-world music experiences. It's like adding a layer of digital magic to what we see and hear.
Here's how AR is changing music:
- Enhanced Album Experiences: With AR, you can point your phone at an album cover and see it come to life with videos, lyrics, or behind-the-scenes content.
- Interactive Concerts: At live shows, AR can add visual effects that you see through your phone or special glasses. This could make concerts more exciting and interactive.
- Music Discovery: AR apps can help you discover new music by showing information about songs playing around you, like in a store or café.
- New Advertising Opportunities: musicians and labels can use AR to create unique ads or promotions that blend with the real world.
In the future, AR might allow for even more creative ways to blend music with our everyday environments.
As it creates new ways to experience music, the industry needs to figure out how to license these new uses of songs. This could lead to new types of music rights and royalties.
Expert Opinions
Industry experts are providing valuable insights into the future of music royalties. They highlight upcoming trends, challenges, and opportunities that could shape the industry.
Mark Mulligan, managing director at MIDiA Research, points to a shift in how algorithms are affecting music discovery. Originally, these algorithms helped listeners find new music based on personal tastes. Now, they’re driven by monetization, which could lead to dissatisfaction and cause consumers to seek other ways to discover music.
Jay Gilbert, co-founder of Label Logic, predicts the value of global music copyrights will grow to $50 billion by 2024, up from $41.5 billion. He also expects an increase in streaming subscription prices, with the basic monthly rate potentially rising to $12.99.
Janelle Borg, lead content writer at Amplify, highlights the growing importance of dedicated fanbases. She notes that musicians like Beyoncé and Taylor Swift have successfully leveraged their superfans for major projects, showing how crucial strong fan connections are.
Jesse Kirshbaum, CEO of Nue Agency, also points out that AI is becoming a big deal in music. He says it's both exciting and a bit scary for the industry. While we're still figuring out how AI can be used in music, Kirshbaum expects it to change things in a big way. He thinks big tech companies will probably lead the way in using AI in music.
These expert opinions paint a picture of both opportunities and challenges for the music royalty landscape. The potential for growth and new revenue streams is clear. However, the industry must adapt to changes in consumer behavior, technological advances, and evolving business models.
Conclusion
The future of music royalties is full of opportunities and challenges. As technology continues to change how music is made, shared, and monetized, musicians and investors have new paths to explore.
For musicians, the future offers more tools to create and distribute music directly to fans. It opens up more ways to earn money from their work. However, they will need to navigate a more complex digital world and adapt to new trends and technologies.
Investors also have a promising market ahead. As the global music industry grows and new markets emerge, more opportunities for investment will arise. But to succeed, investors need to stay up to date on industry trends and quickly identify valuable opportunities.
Platforms like Royalty Exchange are making it easier for musicians and investors to connect. By creating a marketplace for music royalties, they allow musicians to access funding for their careers while giving investors a chance to diversify their portfolios.
In the fast-evolving world of music royalties, adaptability and innovation are key. The future of music royalties is being shaped now, and it’s an exciting journey for everyone involved.
