Goldman Sachs projects $92bn music industry revenue in 2023
Revenue from each audio stream, including both subscription-based and ad-supported content, has seen a 20% reduction since 2017
Last week, the multinational investment bank and financial services company, Goldman Sachs unveiled its latest 'Music in the Air' report. The projections have been slightly reduced than those the company's 2022 report had, with Goldman Sachs now foreseeing a global music market valuation of $92bn in 2023, increasing to $151.4bn by 2030. Last year, Goldman Sachs was predicting $94.9bn in 2023 rising to $153bn in 2030.
The new report also outlines estimates for net revenues, which, for recordings and publishing, only includes the share allocated to rights holders. These net figures are $65.1bn for 2023 and $104.4bn for 2030.
The 2023 forecast comprises $28.2bn in recorded music revenues, marking a decrease from last year's projection of $30bn. However, the report anticipates publishing revenues of $8.8bn this year, up from the $7.8bn expected a year prior.
As for live music, Goldman Sachs pegs its worth at $28.1bn in 2023, slightly less than its prior prediction of $29.1bn.
Looking ahead, the firm's prediction of $104.4bn in net revenues for 2030 includes $50.1bn from recorded music, $14.7bn from publishing, and $39.5bn from live music.
Several key points of discussion are highlighted in the report, including Goldman Sachs' comprehensive overview of the music business.
The report elucidates that the music industry is teetering on the brink of a significant structural shift, driven by the ongoing under-monetisation of music content, archaic streaming royalty payout structures, and the advent of Generative AI.
Goldman Sachs believes that tackling under-monetisation could involve regular price hikes for streaming subscriptions and increased efforts to monetise the 'superfans' of artists.
Regarding streaming payouts, the report criticises the prevailing 'pro rata' model and recommends an evolution to adapt to the dilution of market share caused by a surge in music releases, the prevalence of streaming manipulation fraud, and the propensity of algorithms to promote lower royalty content.
The firm also anticipates that generative AI will further lower the barriers to content creation, augmenting music creation capabilities and enhancing productivity. However, they caution music rights holders to control its deployment to protect intellectual property and maintain user experience.
This implies cooperation between rights holders and digital service providers (DSPs). The report suggests that streaming platforms will strive to control the influx of new music, citing the potential for Spotify to grapple with millions of daily uploads as compared to the current 120,000.
The inferred revenue from each audio stream, including both subscription-based and ad-supported content, has seen a 20% reduction since 2017. Additionally, there's been a 14% drop in revenue for every hour of streaming from 2015 to 2021. On the flip side, Spotify has experienced a significant surge in streaming hours, with an approximately five-fold increase recorded from 2015 to 2021.
However, the report also uncovers some notable insights about 'emerging platforms revenue', which includes income from short-video apps, gaming, fitness, and podcasts, among other sectors.
Goldman Sachs deduces that this emerging platforms category constituted 6% of global recorded music revenues in 2022, approximating to around $1.57bn. It estimates that Facebook generated 23% of that revenue (around $361m), followed by gaming (19% – $298m), Peloton (17% – $267m), TikTok (14% – $220m), YouTube Shorts (8% – $126m), Snapchat Spotlight (7% – $110m), and Instagram Reels (5% – $78.5m).
These estimates provide a first look at the value of these particular platforms in the music industry. As always, this is the perspective of one analysis firm, but it provides a necessary context.
