Even as reports from Wall Street grow dark amid worries of a recession, Goldman Sachs predicts a booming decade for the music industry, with total music revenue to double to about $131 billion by 2030. The company’s annual “Music in the Air” forecast predicts that a combination of global streaming growth, emerging platforms like TikTok, the revival of the live music market and the ongoing strength of vinyl sales will drive the recorded music industry revenues to $52.3 billion by 2030, a $7.5 billion boost over last year’s prediction and more than double last year’s IFPI revenues of just under $26 billion.
It is bullish on publishing as well, predicting that revenues will rise to $11.6 billion in 2030, up a cool billion from last year’s prediction for the year. This rise is based on “higher [projected] streaming, physical and performance revenues,” the latter tied to a faster-than-expected recovery in the live sector following its near-total shutdown due to the pandemic.
The upshot can be found in the report’s opening pages: “We expect consumer spend on music to remain resilient in a higher inflation/ weaker macro environment. Our analysis shows that music remains one of the most undermonetized forms of entertainment, with spending still 40% below its historical peak, while consumption continues to grow year after year.”
The report, written by analyst Lisa Yang, tempers some of its predictions for the coming year due to the “impact of a weaker macro” and the effect of Russia’s war on Ukraine, which largely removes both countries from the global music economy. However, it predicts a 12% growth in streaming, “driven by volume, price and emerging platforms” and that it will be “resilient in an economic downturn (and more so than SVOD)” — the report goes to lengths to differentiate audio streaming from video, saying that music is stickier and has deeper market penetration.
It also points to the competition between streaming companies as a positive, with Spotify as “the clear leader” with a 34.4% global market share, although its lead is diminishing, YouTube Music and China’s Tencent Music gaining while Apple Music and Amazon Music remain “broadly stable.”
And although it lowered its projection for the total number of paid streaming subscribers by 2030 — from 1.277 billion to 1.26 billion — it raised its streaming revenue projection based on ARPU (average revenue per user), from $42.8 to $45.8.
Not surprisingly, it predicts a continued dominance of the three majors — Sony, Universal and Warner — although independents, notably France’s Believe, continue to rise. Its projections for live music for 2030 remained stable, with a forecast that it will generate $38.3 billion this year.
“The global music market (recorded, publishing and live) rebounded strongly in 2021, up 34% year over year on our estimates, driven by a strong return of live events (+200% yoy or back to 50% of 2019 levels), the accelerated adoption of streaming (+24% yoy) and the resurgence of physical sales (+16% yoy),” the report states. “As a result, recorded music and music publishing both grew at the fastest rate since our records began, up 18.5%/17% yoy, respectively, beating our prior expectations by 11%/12% respectively.”
The report also reinforces recent industry chatter about a slowdown in the red-hot catalog-acquisition business, as interest rates rise. It adds, “catalog investments will likely remain a major debate until we get greater disclosure and clarity on actual returns, or until actual spend comes down,” although it points to the enormous growth in the catalogs of Queen and Elton John in the wake of the biopics “Bohemian Rhapsody” and “Rocket Man.”
But a large part of its growth predictions are based on emerging platforms in the music space, including TikTok, podcasts, video gams and others, which it says accounted for 30% of the industry’s ad-supported revenues last year. Goldman predicts that number to rise to 40% in 2030, and will rise to 12% of total recorded music revenue from 5% last year.
Music streaming a “more compelling value proposition” than SVOD due to more time spent on them, higher market penetration for music streaming, and the fact that consumers spend a comparatively small amount of money on music, which leaves room for a price increase with relatively small risk of churn.
It also laid out market implications for several companies, with Universal Music, Live Nation and NetEase listed as Buy; Spotify, Believe and Sonos as Neutral; and Tencent and SiriusXM as Sell.