Many things have changed in the music industry in recent years. Album sales and radio airplay used to be the be-all and end-all of the music industry. But, digital streaming services have given it new life.
Apps and services like Spotify, Apple Music, and Amazon Music have revolutionized music listening. Additionally, these platforms have revitalized a sector of the economy that was struggling to adapt to the rise of digital commerce.
In this article, we will examine the music industry as it stands right now in 2024. We'll go over the new trends shaping the industry's future, the impact of streaming services, and the part played by major record labels and publishers.
Industry Growth Statistics
The music industry has been on an impressive upward trajectory recently, thanks in large part to the rise of streaming services. Here are some key statistics that highlight this growth.
Global Market Value
In 2021, the global value of music copyrights reached a staggering $39.6 billion, representing a substantial 20% increase from the previous year.
To put this into perspective, that's a 40% increase from the industry's peak during the CD era in 2001. Furthermore, recorded music industry revenue has skyrocketed from $13.1 billion in 2014 to $26.2 billion in 2022.
But the growth didn't stop there!
According to the latest IFPI Global Music Report, global recorded music revenues continued to climb in 2023, rising by an impressive 10.2% to reach $28.6 billion. This marks the ninth consecutive year of growth for the industry.
Streaming Revenue
Without a doubt, streaming services are the main reason for this incredible growth. From humble beginnings of less than $1.8 billion in 2014, streaming revenue has exploded to $17.5 billion in 2022. In fact, streaming now accounts for the lion's share of the global music market.
In 2023, subscription streaming revenues alone grew by 11.2%, making up nearly half (48.9%) of the entire global market. To break that down further, subscription streaming revenues reached a whopping $14 billion last year.
Interestingly, the number of paid subscriptions to music streaming services surpassed 500 million for the first time in 2023. Plus, there are now more than 667 million users of paid subscription accounts worldwide.
It's clear that streaming is becoming the preferred way for people to listen to music.
They give a clear picture of an industry that has not only recovered from the problems caused by digital disruption but has also done very well in the new streaming-based world.
It will be interesting to see how the music business changes and adapts to new technology and changing consumer tastes in the years to come.
Impact of Streaming Services
In the past, music fans had to buy albums or downloads to enjoy their favorite artists. However, streaming services like Spotify and Apple Music have revolutionized music consumption.
Transformation of Music Consumption
No longer do you have to look through CD racks or wait for songs to download. We can now instantly listen to almost any song, album, or artist we want with just a few taps on our phones. It's easier than ever for music fans to try out new styles and find new artists.
The numbers speak for themselves.
Spotify, the world's leading music streaming platform, boasts an impressive user base of over 500 million monthly active users - more than the entire population of the United States and Canada combined!
The massive adoption of streaming services highlights the dominance of this new model of music consumption. But what is it about streaming that has captivated so many listeners?
One important thing is that these platforms let you customize your experience.
With the help of complex algorithms and AI, streaming services like Spotify can make playlists that are perfect for you and help you discover new artists and songs that you might not have heard otherwise.
Revenue Generation
Streaming has changed more than just how we listen to music, of course. Besides that, it has also had a huge effect on the bottom line of the industry.
The money that labels and artists make from streaming has become a big part of their growth. More and more people choose paid subscriptions despite streaming services' attempts to raise the prices of their subscription plans.
Some users might not want to pay more, but these price increases could bring in even more money in the years to come.
This growth is also interesting because it's not just well-known markets like the US and Europe that are driving it. New economies like China and India are also starting to make a big difference in streaming revenue. And these countries have a lot of untapped music industry potential.
Technological Advancements
As streaming continues to evolve, so too does the technology that powers it.
Have you ever been amazed at how well Spotify knows what song you want to hear next? You can see the magic of AI at work there. It can figure out what you like to listen to and how you usually do it. This makes experiences that are very specific to you and keep you interested and coming back for more.
But streaming has an effect on a lot more than just music apps. With the rise of short-form video sites like TikTok, there are now a lot of new ways to find and promote music.
Millions of people use these sites to make and share videos set to popular songs, which makes them powerful tools for artists who want to reach new audiences and go viral.
As technology continues to advance, it's exciting to imagine what the future of music streaming might hold. Will we see even more immersive and interactive experiences? Will virtual and augmented reality change the way we engage with our favorite artists?
We don't know for sure, but one thing is for sure: streaming has already changed the music world in ways we couldn't have imagined ten years ago.
Major Industry Players
A small group of major players has long controlled the music business, affecting the careers of many artists and the listening experiences of millions of fans worldwide. But who are these big companies, and how do they keep their market power?
The Big Three
When it comes to the music recording market, three names reign supreme:
- Universal Music Group
- Sony Music Entertainment
- Warner Music Group
Together, these powerhouses control a staggering 68% of the global market share. It's hard to imagine any artist making it big without catching the attention of at least one of these industry titans.
But their influence doesn't stop at recorded music. Even in music publishing, where the rights to the underlying compositions are managed, Sony, Universal Music Publishing, and Warner Chappell Music hold sway, commanding a combined 58% market share.
From the moment a song is written to the time it hits the airwaves, these companies are pulling the strings behind the scenes.
So, what does this mean for the average music lover?
Well, chances are, most of the songs you hear on the radio, stream on Spotify, or dance to at a concert are in some way connected to the Big Three.
They have the resources, the networks, and the clout to make or break an artist's career.
Emerging Investors
While the Big Three may seem like an unshakable force, the music industry is not immune to change.
In recent years, a new breed of investors has emerged, looking to get a piece of the action by acquiring existing music rights.
Enter music royalty funds, like Round Hill Music and Kobalt Capital. These savvy investors are scooping up catalogs of songs, betting on the long-term earning potential of these musical assets. It's a bit like buying a piece of real estate, except instead of a physical property, you're investing in the intellectual property of a song.
But what about the average music enthusiast who wants to get in on the action?
Traditionally, investing in music royalties was a complex and exclusive affair, reserved for industry insiders and those with deep pockets.
However, platforms like Royalty Exchange are changing the game, making it possible for individual investors like you to buy and sell royalties, just like trading stocks.
Music royalties provide investors with access to royalty streams that were previously available only to industry insiders and institutional funds. These royalties are uncorrelated with public markets, making them a pure form of alternative investment. They have a proven track record of generating consistent income, often with double-digit yields that outperform ETF's and dividend-paying stocks.
On Royalty Exchange, investors can purchase royalties to some of the biggest songs by the biggest artists in the world. Including massive streaming successes with over 1 billion streams like Drake's "In My Feelings" and OMI's "Cheerleader". Classic hits by artists like Jimi Hendrix and Dire Straits have been sold at auction. Most of the top nominees for this year's VMA's have some of their biggest hits available for fans to invest in on the platform. Once you sign up in just a few minutes, you can start making offers and earn money each month or quarter when royalty payments are sent from distributors.
Each listing that you check out on the platform shows all of the past 5 years financial information about earnings so you can see which catalogs are continuing to grow and which are consistent earners. Imagine Post Malone or Ariana Grande performing their biggest hits during the VMA's this year and you making money during the show! Now you can.
We’ve prepared this guide on Royalty Investing Made Easy to help you out if you are new to music royalty investing and want to see why they are some of the best alternative investment available to add to your portfolio.
At Royalty Exchange, you can choose from thousands of the most popular songs to invest in. We offer hundreds of catalogs that are up for auction today, so sign up as an investor to get started.
Imagine owning a slice of your favorite artist's work and earning money every time their song is played. It's a fascinating concept that has been democratizing the music investment landscape for the past few years and continuing to grow every day.
Future Growth Prospects
As the music business continues to change and adapt to the digital age, what does the future hold for this fast-paced and always-shifting field?
It's impossible to know for sure what will happen in the future, but music industry analysts have been studying the patterns and trends that are shaping the business very closely, and their predictions are full of exciting growth and opportunity.
Analysts' Predictions
Leading the charge in these predictions is Goldman Sachs, whose analysts forecast an impressive 8%+ annual growth rate for recorded music and a solid 6%+ for music publishing through 2030.
These projections are based on a number of factors, including the continued expansion of streaming services, the untapped potential of emerging markets, and the rise of new licensing opportunities in areas like short-form videos and connected fitness.
What exactly do these numbers mean for the industry as a whole? To give you an idea, if these growth rates hold true, the global recorded music market could reach a staggering $45 billion by 2030, while the music publishing market could hit $11.6 billion.
These are not small numbers by any means, and they reflect a level of optimism and confidence in the industry's future that we haven't seen in quite some time.
Challenges and Opportunities
Of course, with growth comes challenges, and the music industry is no exception. One of the biggest hurdles facing the industry today is the issue of streaming fraud and digital piracy.
Despite the best efforts of streaming platforms and record labels to combat these problems, they remain a persistent thorn in the side of the industry, siphoning off revenue and undermining the hard work of artists and creators.
But even in the face of these challenges, there are reasons to be hopeful. Potential positive catalysts on the horizon include regulatory changes and higher statutory royalty rates in the US, which could provide a much-needed boost to the industry's bottom line.
Additionally, the continued growth of emerging markets like China and India presents a massive opportunity for the industry to tap into new audiences and generate new revenue streams.
As the old saying goes, "With great challenges come great opportunities," and the music industry is poised to seize those opportunities in the years ahead. By staying nimble, adaptable, and forward-thinking, the industry can navigate the challenges and emerge stronger than ever before.
So what does all of this mean for the average music fan? It means that the future of music is bright and that we can look forward to a world where our favorite artists have more resources and support to create the music we love.
It means that the industry is evolving and growing in exciting new ways and that there will always be new and innovative ways to discover and enjoy music.
Conclusion
It's clear that the music business is going through big changes right now when we look at how things are. The rise of streaming services has changed not only how we listen to music but also given new life to an industry that was having a hard time adjusting to the digital world.
The music business has changed a lot over the years, just like technology and consumer habits have changed in general.
Along with the world becoming more digital and linked, the way we make, share, and listen to music is also changing.
Everyone in the music business, from artists and labels to investors and fans, needs to stay up-to-date and flexible in order to do well in this ever-changing field. The industry can keep growing and changing in fun ways by embracing new technologies, looking into new markets, and building strong relationships with audiences.
With looming uncertainty in global financial markets now is the best time to start investing in music royalty catalogs as their performance is independent of the global economy. At Royalty Exchange, you can choose from thousands of the most popular songs to invest in so you can start earning.
We offer hundreds of catalogs that are up for auction today, so sign up as an investor to get started.
Discover why so many investors today are actively searching for the next best music catalog investment deals.
