Goldman Sachs has issued the latest edition of its influential Music In The Air report on the global music industry.
Authored by international analyst Lisa Yang and Goldman Sachs colleagues, the report raises global revenue forecasts following the 2021 market figures from IFPI.
Goldman Sachs is also confident that music streaming will be resilient in any economic downturn.
The 2022/2023 global music forecasts have been raised by seven percentage points and five points respectively, and 2030 forecast by 10 points, mainly driven by higher streaming ARPU, revenues from emerging platforms and physical sales.
The projection for 2022 is 24% revenue growth across all sectors, followed by 8% growth in 2023.
For streaming, the Compound Annual Growth Rate (CAGR) is forecast at 12% for 2021-30 (up a percentage point), driven by volume, price and emerging platforms. The music streaming market’s global value is forecast to reach $89.3 billion in 2030 compared to $33bn last year.
Catalogue acquisition spend is set to slow down in a rising rate environment. GS believes that the majors have a “significant competitive advantage in monetising their catalogues”, as highlighted by the recent example of Queen.
The report also backs the majors as they increased market share in 2021, with Sony Music particularly strong and Warner Music Group making gains. There’s a note of caution with modest dilution over time given the revenue mix shift towards emerging markets.
Universal Music Group remains the market leader after a consistent growth performance.
“We see UMG as a major beneficiary of the growth of music streaming and new monetisation opportunities as the world’s largest record label and second-largest music publisher,” said Lisa Yang. “We believe UMG possesses several competitive advantages, including its scale, clear and consistent track record in breaking artists, the depth and breadth of its catalogue, and its ability to spot new trends early, under the stewardship of an experienced management team.”
The revised projections for global growth confirm that new horizons continue to open up for the digital music sector
The music industry has been digesting the report since it was published.
“The fact that Goldman Sachs has again revised upwards its projections for global growth confirms that new horizons continue to open up for the digital music sector,” Geoff Taylor, chief executive of the BPI, BRITs and Mercury Prize, told Music Week. “It should be central to government’s creative industries strategy to increase its investment in helping UK record labels grow their businesses overseas, as the global music market expands and becomes ever more competitive. That will help to ensure greater streaming income for British artists and songwriters, and turbocharge growth from the UK music sector.”
Markku Makelainen, CEO of Utopia Music, said: “We love to see music’s growth potential revised up and believe Goldman's predictions to be completely achievable based on the industry’s current model and infrastructure. But just imagine the growth we’ll see if all parts of the music industry have access to clear accounting of music ownership and consumption and, as such, can fully monetize their business and make every play count.
“Utopia’s mission is to provide the music industry with a data platform that provides a central source of truth, and payments infrastructure to support faster royalty payments with less cost and less errors. An industry that knows more, will grow more: we believe music’s sustainable growth potential to be much greater. Our internal estimates even exceed those of Goldman Sachs.”