Is the Music Industry ‘Comeback’ Overrated? A Hard Look at the Latest Stats

Just a few short years ago, the music industry was contemplating its very existence. But is it time to get over the comeback celebration?

For an industry that nearly collapsed overnight, the past few years have been a godsend. But is all the talk of a ‘music industry comeback’ misleading — and potentially damaging for future growth?

Take a glance at recent figures from global recording group IFPI, and a quick buzzkill emerges. 2018 was easily one of the best in recent memory, with surging streaming revenues numbing the sting of declining CDs and downloads. But 2018 sales levels are still only a ‘comeback’ when compared to the 2006-7 timeframe, and still solidly down from 1999-era highs.

The quick takeaway: plunging CDs packed a lovely revenue punch, one whose bundled elegance and scarcity remain difficult to replace.


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(click to enlarge)

But who says the comeback is over, anyway?

The RIAA’s recent 2019 half-year report might as well have been printed on a bottle of champagne. Indeed, recording revenues are still surging in the double-digits, and even CDs are showing some signs of flattening out. Buoying the increase was music subscriptions, which offer far greater revenue than ad-based accounts. Overall, streaming revenues surged 26.4% to $4.31 billion — part of a $5 billion+ half-year finish.

Not too shabby, and not too indicative of a slowdown.

Still, the conventional anxiety these days is that robust streaming growth is giving way to a plateau, with mega-markets like the US, UK, Sweden, Germany, Australia/NZ, South Korea, and Japan quickly saturating.

That leaves developing nations like India and regions like Latin America as fresh battlegrounds. But the revenue game in these areas is far trickier. India offers the perfect case study: despite a billion-plus inhabitants, the average Indian can’t afford a $10-a-month account, much less $1-a-month. The result is severely deflated ARPU, with operational costs often outstripping subscription or ad-based revenue gains.

Just last month, Spotify introduced its family plan in India. The price tag: $2.52 a month for a ‘family’ of six, which is actually more expensive than Apple Music’s bottom-of-the-barrel offer. Somehow, that business model seems a bit stretched, though both companies are struggling against a list of well-situated, low-cost incumbents.

Hence, the endless anxiety over plateauing worldwide streaming revenues.

And, the reasonable retort that 1999 is simply a bygone era. A CD-fueled, coke-and-stripper relic of the past that can never be reproduced. Today’s industry is a different animal — why compare a giraffe to an orangutan?

Fair enough, though streaming is also — arguably — causing a continued surge in some age-old business categories. That includes vinyl records, which are still surging. You could say this gain is happening despite streaming, though the more recent hypothesis is that it’s happening because of streaming.

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Source: Nielsen (photo: Digital Music News, Public Domain)

The live concert industry has also been a big winner in the digital era — since the Napster days. The reason is that people typically view live experiences as a deeper dive — with streams and YouTube vids the appetizer for something meatier.

But can the industry ever truly surpass its late-90s highs?

Perhaps a lot depends on how streaming grows over the next few years. Earlier today, the Entertainment Retail Association projected that streaming revenues would double by 2023 in the UK (Brexit notwithstanding). That’s a growth of $1 billion in added revenues, to $2.1 billion in a few short years, with a compound annual growth rate (CAGR) of 18%.

That contrasts with the more dour outlook that high ARPU streaming consumers have already been spoken for. Though maybe the answer is in-between.

But ignored in all of this is a slew of other percolating sub-industries.

We’ve spent a lot of time covering synchronization, an often-sidelined revenue source that has been stymied by inefficient agents and matchmaking processes. And what opportunities lie in the next-generation of streaming? Currently, it’s all about the elephants — Spotify, Apple Music, Amazon Music, YouTube Music, Sirius/Pandora, ByteDance/TikTok — but smaller, creative niche plays could emerge around advertisers, direct-to-fan streaming plays, and other concepts that are complementary to massive streaming platforms.

Even areas like vinyl LPs are innovating around newer technologies like HD Vinyl, while live concerts could witness serious growth around digital add-ons, bundling, and AR/VR. Even high-def streaming has a shot at finally materializing into a serious sub-category, especially with Amazon pushing so hard on the audiophile format. The only thing that isn’t making a comeback is piracy, which is currently plunging in the double-digits.

So perhaps the industry ‘comeback’ can be viewed in a number of ways in 2019.

Pessimistically as a half-baked, plateauing recovery predicated largely on streaming. Or more optimistically, as the starting point of a lot of future growth and innovation. But even with plateauing streaming revenue, broader revenue gains are certainly possible — even if those gains are based on a stable base of streaming music fans.

Written while listening to HAIM, DaBaby, and Dirty Honey.

9 Responses

  1. Anonymous

    The Music Industry of the 90s is never coming back. That’s not because of streaming, but because of the Internet in general. The Internet was a cancer to the industry. Streaming (and iTunes before it) is its chemo. I don’t know if it truly saved it, or if it just extended its life. But I’m glad the industry survived this long, and hopefully that will be the case for a while longer.

  2. Adjusted For Inflation?

    If those numbers are not adjusted it’s hard to see a comeback. Adjust those for inflation and there’s little doubt there is any comeback.

  3. Versus

    1. Is this data adjusted for inflation?

    2. How much of this ‘comeback’ actually makes it down to indie labels and indie artists?

    The way streaming income is apportioned seems to favor the already established big players. Even the price I pay for a subscription with a streaming service does not necessarily go to the artists and labels to which I listen, right? (That’s why I prefer BandCamp to support the artists, but that still seems to be a “bit player” in the grand scheme; i.e. very few listeners use Bandcamp or even buy music downloads now compared to streaming)

    Lots of articles on this, e.g. one on QZ “Your Spotify and Apple Music subscriptions pay artists you never listen to; “This [current system] is called a “pro-rata” system. Not everybody likes it. Many people in the music industry would prefer a payment system that was “user-centric.” Under this system, each user’s payment would be distributed based on what they streamed.”

    A “user-centric” system would allow listeners to really “vote with their dollars” in which artist they support.

    Also, for artists to get paid fairly, I would argue that the subscription models are too low-priced for unlimited listening. This is part of the devaluation of music. [Then again, it looks like video streamers are somehow able to make unlimited subscription models work…? Or are video producers in a similar bind to musicians, being underpaid and undervalued, with ever-changing and unpredictable payouts?] There should be tiers based on #streams/month, with perhaps a premium unlimited (or nearly so) plan at a higher price. This would allow a minimum or fixed pay-out per stream to the artists. Finally there needs to be more transparent accounting from streaming services. Without such reforms, the price per stream “floats” mysteriously, and no one really knows where the money goes.

    Not sure what the solution is. Comeback or not, I and every “indie” artist I know, even some with quite big names, have not seen their incomes rebound in any dramatic way from the “good/bad old days”. Of course, an anecdote (or several) is not evidence, so maybe my sample is a biased one of unfortunates. Some stats on how indie artists overall are doing, in terms of recording revenue (vs live, merch, etc. revenue), would be very worthwhile and interesting. Has there been a rebound?

    Or maybe there has been a rebound but the results are spread so thin (i.e. so many indie artist and releases now competing for attention, with the home studio and ease of self-releasing). That is, the pie for indie artists might have grown to a fair size again, but now it’s sliced so thin that the “sliver” for most artists is now reduced to a crumb?

    My gut sense is that the “rebound” is skewed to major labels and the top very small tier of mega-star artists. I could be wrong. Would love to see/hear data on all that about indie artists. Would also love cause for some optimism for those of us who are not in that top-grossing tier of mega-stars.

    • Versus

      Quick follow-on:
      Any assessment on the income of indie artists over time music, of course, be clear about its definition of what constitutes a “professional indie artist”, and that definition needs to be applied consistently. Else the average income of indie artist would have no consistent basis of comparison.

      Problems can arise if “professional indie artist” is defined circularly in terms of their income, though! That is, it it’s defined as “someone who is able to make a living from their art”, or “whose primary source of income is their art”, or “whose income is greater than $x from their art”, then the average would fail to include those who got pushed down from making a living in music, to having to take on other work, or making less money, etc. Then the average would seem higher than it really is. Of course, in any given case, it’s hard to say whether an artist’s downward trend is due to industry changes, or just changes in taste, or losing their audience in some way, via change in direction, quality, marketing of their music, audience “aging out” of their music, etc.

      (That is: If the “average indie income” is found to be increasing because all struggling indie artists are excluded from the calculation, that’s not really a comeback at all, on an individual level!) And it’s that individual, on-the-ground artist level, that I am interested in ascertaining. In other words: How is it now to make income, or make a living, from recordings, compared to prior years?

      So any such numbers study has to be carefully qualified so we know what we are measuring, and comparing apples to apples.

    • Anonymous

      nothing is going to save an industry as corrupt as yours.
      And honestly? I’m glad for it.

  4. BAC

    You people commenting are HILARIOUS

    The internet is a cancer on the record industry? REALLY? The record industry was a cancer in the 90s. Bad contracts. Overproduced shit. Maybe one good song on an entire CD, which wasn’t released as a single. Do you really think those were the good old days? You’re out of your mind.

    One of you wanted to raise the price of streaming subscriptions. HOW ARE YOU GOING TO DO THAT? Is every company going to agree to raise their prices? Then you have a cartel and the government steps in. Or are you going to have the government set the prices for streaming services? Good luck with that. You are a fucking moron.

    David Lowery? Ha ha ha ha ha ha ha! Anybody who reads David Lowery and believes his bullshit is a fucking loser.

  5. Paul Resnikoff

    Just did the inflation-adjusted data pull. Lowery’s right — the ‘recovery’ in 2018 is actually less than 50% of inflation-adjusted 1999 figures.

    • Anonymous

      Whatever they make up to make themselves more rich at the expense of others will be how business is done. It’s really that simple