Music in the Air – Global Music Industry Trends & Emerging Markets

Goldman Sachs Equity Research Article on Emerging Markets and Global Music Industry Forecasts

2023 was a turning point for the music industry in many respects, marked by the first ever major price increase by global streaming platforms, the modernisation of outdated royalty payment structures and the deployment of Generative AI. We expect to see further progress in these areas in 2024 and beyond, including: (i) a second round of headline price increases and/or product-led price increases; (ii) the launch of new super premium plans catering to superfans; (iii) the adoption of artist-centric payment models by more streaming platforms; and (iv) the development of a framework and monetisation avenue for the use of music content by Generative AI models, either through the first commercial licensing agreements between tech companies and rights holders or through establishing legal precedents. As the monetisation of paid subscription improves, we believe there is also an opportunity to better monetise the vast pool of freemium users and evolve the ad-supported offering to improve paid conversion rates.

The global music market (recorded, publishing and live) grew faster than expected in 2023, up 15% yoy (GSe +7% yoy), driven by stronger than expected growth in live music (we estimate +25% yoy, leaving the market c.20% above 2019 levels), and better than expected growth in recorded music and music publishing (+10%/+11% yoy respectively).

We forecast global music industry revenues to grow at +7.9% yoy in 2024 (+7.8% prior), with a return to more normalised live music growth of +6.0% yoy (+5.0% prior), solid recorded music growth of +8.9% yoy (+9.3% prior) and publishing growth of +9.2% yoy (+8.5% prior). Our 2024-30E industry revenues increase by c.10% on average on the back of a higher 2023 base, as well as a slightly raised 2024-30E CAGR of +7.6% (+7.4% prior). The improved growth outlook is mainly driven by a higher music publishing CAGR of +7.8% (+7.6% prior) and live music CAGR of +6.6% (+5.0% prior), partly offset by a slightly lower recorded music CAGR of +8.1% (+8.6% prior). Within recorded music, we lower our streaming growth forecasts to a 10% CAGR (+11% prior), mainly reflecting lower ad-funded and emerging platform revenues assumptions, as well as a faster subscription revenue mix shift towards EM. Read full article for greater detail. (Published by GS Equity Research May 1, 2024)