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Business News Digital Labels & Publishers
More “major structural changes” likely as music industry pursues next round of digital growth, says Goldman Sachs
By Chris Cooke | Published on Thursday 29 June 2023
Analysts at Goldman Sachs remain positive about future growth in the music business, despite reducing their previous prediction for market growth this year from 8% to 7.1%. The bank’s latest ‘Music In The Air’ report also predicts another round of “major structural change” within the industry, in particular in relation to streaming business models and music-making AI.
According to Billboard, the report notes that average income from the streaming services – on a per stream or per hour basis – has been steadily declining over the years. Partly because subscription prices haven’t kept up with inflation. And partly because of the increased number of family plan style subscriptions being sold, and growth in some key emerging markets, where the income per user is lower.
However, the report predicts that Spotify will follow the lead of its competitors and start increasing its headline prices very soon, and that all the streaming services will then start instigating more regular price increases as time goes on. It also reckons that there’s a multi-billion dollar opportunity to be realised by better serving superfans within the streaming service subscriber bases.
As for how streaming monies are shared out across the industry, the bankers agree with many in the music community that the current model needs to evolve.
As far as the major label bosses are concerned, that evolution needs to include separating out functional audio – like mood music and background noise – from more conventional music releases. Though quite how any such evolution will be decided upon and instigated still remains unclear.
Better alignment of all the key stakeholders is likely required for the effective evolution of the streaming business model. And – reckons Goldman Sachs – such closer alignment is also needed to capitalise on the opportunities around generative AI.
Such technologies create opportunities as well as challenges for the music industries, the new report says, not least because “we believe the quality of the input to large language models is critical and the largest owners of [music rights] are best positioned to leverage the technology”.
But realising that potential means key industry players “need to be aligned in controlling the deployment of that tech”.
