At MBW Review, we focus our microscope on some of the biggest events in the music business of recent times. This time around, we’re leafing through Goldman Sachs’ latest must-read report on the music industry. The MBW check is supported by Instrumental.
If there is one report from the music industry that sets industry expectations more than anyone today, it is Goldman Sachs’ Music In The Air.
The financial firm released its latest update on the paper received from MBW this week.
It contains some sunny predictions for the record business in the years to come … and the most current of them might require Universal Music Group head Sir Lucian Grainge to put on his sunglasses.
Goldman Sachs has increased the valuation of UMG from € 30 billion to € 44 billion through the new Music In The Air.
The latter number is roughly equivalent to $ 53 billion at current exchange rates.
Setting the Universal story aside, there are some interesting industry-wide predictions in the latest Music In The Air, authored as always by respected music business analyst Lisa Yang (Goldman’s London-based executive director, Media & Internet).
“We expect a faster transition to music streaming and greater monetization of music content from new formats (e.g. short-form video, networked fitness, games, etc.), a trend that has been accelerated by the pandemic,” it said in the newspaper.
“The value of music catalogs will continue to increase and more and more capital will be drawn into the room.”
Goldman Sachs latest Music In The Air report, written by Lisa Yang and Co.
Goldman also predicts that “the digital distribution landscape is likely to remain competitive and fragmented for the years to come,” with “Amazon, YouTube and Tencent Music being the main profit makers,” while it predicts that the top three music companies “will retain their dominant positions “With the rise of entry-level and middle-class artists, market shares must be watered down. “
The company’s other key forecast shouldn’t shock anyone who’s been reading MBW lately: “The value of music catalogs will continue to rise, drawing more and more capital into the room.”
The latest update from Music In The Air benefits from the fact that its forecasts can be based on concrete / official sales figures for the music industry for 2020 thanks to the IFPI’s latest Global Music Report.
With this in mind, Music In The Air now predicts that the global music industry will see trade revenues grow nearly $ 2 billion in 2021, from $ 21.6 billion last year to $ 23.5 billion this year.
The newspaper predicts that this growth will be driven by streaming music.
Goldman predicts that paid music streaming (in terms of gross revenue) will generate $ 21.1 billion in 2021.
That’s a cool $ 3 billion more than $ 18.1 billion generated by paid streaming platforms in 2020.
The ad-supported streaming market will grow from $ 7.6 billion in 2020 to $ 9.2 billion in 2021, according to Music In The Air.
The music publishing market, hampered by a drop in royalty payouts due to the pandemic lockdown, will grow in 2021, but not by much, suggests Goldman – with trading sales increasing from $ 6.0 billion in 2020 to 6.2 Billion USD this year.
And the live music market, apparently the hardest hit sector from Covid-19, will generate $ 12.7 billion this year, Music In The Air predicts, up from just $ 4.8 billion in 2020.
The forecast of $ 12.7 billion for 2021 is lower than Goldman’s previous forecast of $ 18.3 billion, due in part to “the resumption of live events later than previously expected.”
The prediction in the Goldman report that is most likely to attract the eyes of music business prospectors concerns global music streaming subscribers.
As confirmed by the IFPI, that number was 443 million in 2020.
Goldman Sachs predicts that number will exceed 500 at 527 million this year.
By 2023 it will be 697 million, according to Music In The Air, and by 2030 it will easily surpass a billion paying users at 1.279 billion.
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