In recent years, the music industry has undergone significant changes, and music streaming services have emerged as the dominant global format. Currently, global recorded music revenue is projected to grow at a rate of 7.5% in 2023, with a compound annual growth rate of 8.6% spanning from 2023 to 2030. This trend holds true for the United States as well, where streaming plays a crucial role in the overall music industry revenue, encompassing both physical and digital music sales. In fact, music streaming contributes a staggering 84% of the revenue in the U.S. music industry.
Goldman Sachs Research suggests potential solutions to headwinds in the industry, such as pricing power, superfans monetization, and reevaluating the payment structure between streaming services and music labels. Lisa Yang, head of the European Media and Internet Research team, points out the current streaming practices and says,
The team’s projections indicate that monetizing superfans could generate an additional $2 billion in revenue for streaming platforms by 2027 and a significant $4 billion by 2030, thereby contributing a notable 16% boost to paid streaming revenues.
The music industry has also experienced a significant increase in investment companies acquiring music rights, with millions of dollars paid for music catalogs. This surge is driven by the belief that music rights can serve as a valuable asset class, capable of generating long-term income through royalties and licensing deals. Universal Music Group, Sony Music Entertainment, and Warner Music Group Corp. (NASDAQ:WMG)’s dominance in the industry positions them as the primary buyers of music rights.
