PriceWaterhouse Predicts Near-Zero Music Industry Growth Over the Next 5 Years…

And you wonder why so many music companies are diversifying into other, non-music industries.  Because when the research companies are saying things are bad, then things are bad.

Which brings us to Pricewaterhouse Coopers, which just issued a report calling for a modest one-percent annual percent growth rate for the US-based music industry through 2017.  Which, spun the right way, means at least things aren’t still sinking.

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These guys are trying their best to be optimistic, simply because upbeat forecasts generally translate into more report sales.  And worldwide, things are slightly better.  “Globally, the music industry is getting back on track: total consumer spending on music in 2012 was $49.9 billion, a slight fall from 2011,” Pricewaterhouse indicated. “However, annual revenue will start to grow again in 2013, reaching $53.8 million in 2017, a compound annual growth rate of 2 percent over the forecast period.”

But wait: who still reads (and can afford) these reports, anyway?  Indeed, the whole exercise raises questions of whether aggregated music industry reports make sense anymore.  Most of the decline is being driven by physical, which of course carries a monstrous percentage that isn’t getting replaced by digital.  Then again, we already knew that.

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That’s your father’s industry; we’re building the new one, right?  Well, the difficult, look-in-the-mirror question is this: will digital continue to grow?  Or, will downloads taper off, while streaming fails to actualize its hype?  Enter France, which is suddenly showing grim declines across nearly every format, with broader economic malaise and even streaming cannibalization contributing factors.

And what about live?  Here, PwC is more bullish, calling for a 3 percent growth path towards $30.9 million in revenues by 2017.  That will “more than offset the continued decline in recorded music revenues,” according to these data-crunching soothsayers.

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Then again, serious structural questions are also looming in the concert industry as well.  The recent Rolling Stones debacle could represent the moment high-priced, high-fee shows went away, with smart strategists like Kid Rock playing to cheaper crowds.  Meanwhile, tankers like Live Nation continue to employ strategies that involve mega-acquisitions (Insomniac, BigChampagne), mega-salaries, mega-debts and all sorts of oldline thinking that might not cut it by 2017.

7 Responses

  1. Tweetsnnews

    This directly reflects the same struggles that American Idol, The X Factor, and the other vocal talent shows that are having a hard time keeping their TV ratings favorable. Could it be that people are cutting back on entertainment spending for the sake of making ends meet with the neccessities? I think so.

  2. Guest

    What about publishing? I bet that is a nice consistent, but modest, annual upward trend.

  3. Steven Corn (BFM)

    These stats are not very clear, in my opinion. The IFPI 2012 report showed a global recorded music industry of about $16.6 billion with digital coming in at $5.8 billion. Yet PnC shows it as ~$23 billion and digital at ~$9 billion.

    It’s hard to know what’s being counted by PnC versus the IFPI so one can compare apples to apples (pun fully intended).

    What bothers me is that these reports are not very transparent. It takes almost as much effort to analyze them for accuracy as it does to create them in the first place.

    I love having stats to quote (either good or bad). But they never can be applied to a micro level of success or failure. Nor can they be a compass on which to make solid business decisions either for companies like mine or for labels of any size. What I really would like to see is a chart of all of the predictions and their deviations from actuals. Using my poor memory, I can’t recall anyone hitting the mark or even coming close. Anyone have a chart showing the success ratios?

  4. Visitor

    PR, it may be useful to include the 9 years preceding 1999 for context, so it’s more obvious that these numbers are a vast improvement over how things have been going…

  5. Yves Villeneuve

    Good News as opposed to this article:

    A brave chap from the UK has decided to become my first twitter follower. At least he was there a minute ago.

    Please welcome with open arms TGM Audio Mastering (@thegrandmasters).