The MBW Review is where we aim our microscope towards some of the music biz’s biggest recent goings-on. This time, we leaf through Goldman Sachs‘ latest must-read report about the music industry. The MBW Review is supported by Instrumental.
If there’s one music industry report that sets the industry’s expectations more than any others these days, it’s Goldman Sachs’ Music In The Air.
The financial company has this week released its latest update to the paper, which has been obtained by MBW.
It contains some sunny predictions for the record business in the years ahead… and the most newsworthy of them may require Universal Music Group boss Sir Lucian Grainge to slip on his shades.
Goldman Sachs, via the new Music In The Air, has raised its valuation of UMG from €30 billion to €44 billion.
The latter figure is roughly equivalent to $53 billion at current exchange rates.
Putting the Universal story to one side, there are some interesting industry-wide predictions made in the latest Music In The Air, which is co-penned as ever by respected music biz analyst, Lisa Yang (Goldman’s London-based Managing Director, Media & Internet).
“We anticipate a faster shift to music streaming and greater monetisation of music content from new formats (e.g. short-form video, connected fitness, gaming, etc.), a trend that has been further accelerated by the pandemic,” reads the paper.
“The value of music catalogues will continue to increase, attracting ever more capital into the space.”
Goldman Sach’s latest Music In The Air report, authored by Lisa Yang and co.
Goldman also predicts that “the digital distribution landscape will likely remain competitive and fragmented” in the years ahead with “Amazon, YouTube and Tencent Music the major share gainers”, while it forecasts that the three major music companies “will hold their dominant positions but face some market share dilution amid the rise of entry-level and mid-tier artists”.
The company’s other key prediction shouldn’t come as a shock to anyone who’s been reading MBW of late: “The value of music catalogues will continue to increase, attracting ever more capital into the space.”
The latest update to Music In The Air benefits from being able to base its forecasts off concrete/official music industry revenue numbers for 2020, thanks to the IFPI’s latest Global Music Report.
As such, Music In The Air now predicts that the global recorded music industry will see a near-$2bn rise in trade revenues in 2021, up from $21.6 billion last year to $23.5 billion this year.
Driving this growth, forecasts the paper, will be music streaming.
Goldman predicts that paid music streaming (in gross revenue terms) will generate $21.1 billion in 2021.
That’s a cool $3 billion up on the $18.1 billion generated by paid streaming platforms in 2020.
The ad-funded streaming market, suggests Music In The Air, will grow this year from $7.6 billion in 2020 to $9.2 billion in 2021.
The music publishing market, hampered by a downturn in performance royalty payouts due to the pandemic lockdown, will grow in 2021, but not by much, suggests Goldman – with trade revenues rising to $6.2 billion this year from $6.0 billion in 2020.
And the live music market, obviously the hardest hit sector from Covid-19, will generate $12.7 billion this year, predicts Music In The Air, up from just $4.8 billion in 2020.
The $12.7 billion forecast for 2021 is down on Goldman’s prior forecast of $18.3 billion, partly due to “later than previously expected resumption of live events”.
The prediction in the Goldman report that’s most likely to get the eyes of music biz prospectors pinging out on stalks concerns global music streaming subscribers.
As confirmed by IFPI, this number stood at 443 million in 2020.
Goldman Sachs predicts this figure will surpass 500 this year, at 527 million.
By 2023, it will hit 697 million, says Music In The Air, and by 2030, it will have easily surpassed a billion paying users at 1.279 billion.
