What’s next for music as streaming growth slows? [MARK MULLIGAN]


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MIDiA Senior Analyst Mark Mulligan looks at the next steps in the music and music industry.

Through Mark Mulligan of MIDiA and the Music Industry Blog

The year 2020 defined by the pandemic has been an aberrant year for digital entertainment, with the 12% more time consumers spend on entertainment to stimulate everything, including music. One of the effects was that streaming grew more than it would have otherwise been, delaying the inevitable slowdown in streaming revenue growth. This artificial boost for 2020 has meant that the impact of the slowdown was felt even more strongly when it arrived in the first quarter of 2021.

Major labels saw their streaming revenues increase by just 0.8% between Q4 2020 and Q1 2021, while Spotify saw their revenues decline by 1%. Seasonality plays a major role here (a similar trend was seen last year) and year-over-year income has increased by around a quarter. Nonetheless, it reflects a maturing market.

In 2019, Spotify’s revenue grew 15.7% between Q4 2018 and Q1 2019, while the majors’ streaming revenue grew 3% between Q4 2017 and Q1 2018. In in short, when the market was growing faster, the seasonality did not lead to stagnation / negative growth. Streaming is still in good shape and will remain at the core of recorded music revenue for the foreseeable future, and Spotify’s price hikes will bring in some extra revenue in 2021, but it’s clearly time to start thinking about what’s to come.

“New business models and user experiences may evolve alongside streaming, to diversify the revenue mix of the music industry.”

There’s an argument that in today’s post-format world, we shouldn’t even be thinking about the next thing. So it is best to think about new business models and user experiences that may develop alongside streaming, in order to diversify the revenue mix of the music industry.

Music companies, labels in particular, are exploring where future growth will come from. The most pessimistic argue that it’s largely as good as it gets, that there won’t be a “next release”. It might be fair in terms of a single source of income, but the first signs are that there is enough potential in a range of sources to collectively drive growth. Here are some of the potential growth drivers for the music industry:

As a reminder, streaming is, and will remain for many years, the beating heart of recorded music revenue. In fact, more than that, most of these new opportunities exist on such a scale. because streaming. Until now, streaming has allowed full-fledged revenue growth, now it will allow growth in new adjacent markets.

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