How much money did the music industry make last year? [Mark Mulligan]
The music industry is a big world, but you always wonder what its revenue is doing to the economy. Here’s how much money has been made on the unpredictable Covid roller coaster in 2021.
by Mark Mulligan of MIDiA du Music Industry Blog
Universal Music Q1 2022 earnings showed continued growth, but a noticeable slowdown in streaming growth, with streaming revenue up 12% year-over-year (YoY) in USD, against growth of 35% a year earlier. in the music industry over the next few months, we will get a fuller picture of how the broader business slowed down after a bumper 2021. To that end, MIDiA has just released its inaugural “Music Industry Earnings” report, which tracks the earnings of 12 major music companies across recordings, publishing, streaming and live**.
MIDiA customers can download the full report and dataset here.
Here are some of the findings.
The overall travel trajectory for the music industry in the late 2010s and early 2020s was positive, but the growth was not always evenly distributed. Self-released artists consistently overtook record labels, streaming revenue grew rapidly in some markets while others lagged, and Covid disrupted the live music business – 2021 was different . Likewise, strong growth was present across most sectors of the music industry, with most companies and geographies benefiting in broadly similar ways.
2021 has been a year like no other in recent memory, with the music industry bouncing back from the pandemic. In many ways, 2021 has been a catch-up year for the broader economy, with additional activities underway that had been suspended during the worst of the pandemic. Although the music industry is largely a consumer business, it has a B2B (advertising) component and the increase in broader economic activity has trickled down to consumers as employees. The result was a blended 37.7% increase in top company revenue across recording, publishing, streaming and live.
That figure, however, has been skewed upwards by the unusual dynamics of the live music industry as it recoups revenue from a pandemic-induced meltdown. With the exception of live, organic growth was broadly similar across all other sectors, with labels (26.7%) and digital streaming service providers (DSPs) (27.0%) being the best performers. Music publishers increased by 20.5%.
Live increased its share of the total to 13%, from 5% in 2020, but this was still well below its 29% share in 2019. It remains likely that live will not recover such a high share, even if it is completely recovering, mainly because music rights companies have grown their revenues almost two and a half times faster in 2021 than in 2020. The net effect will be a net increase in the organic market. share once the live recovery process is complete.
Within labels, HYBE saw the fastest growth (over all recorded music revenue), up 70.4%, in publishing, it was Warner Chappell (23.7%) , while NetEase Cloud music led the way in subscriber growth, up 81.1% (far ahead of Spotify’s 16.1% growth). However, Spotify grew its free user base much faster than NetEase, while Tencent Music Entertainment saw its free user base decline by 1.1%.
While Covid disrupted many industries, live music was the only component of the music industry that did not continue to grow throughout the pandemic. For investors, the appeal is clear for an asset class that can thrive even in tough times. The rest of 2022, and potentially beyond – depending on what happens in the global economy and the geopolitical environment – will be a tougher test. Soaring fuel bills and food costs will reduce consumer discretionary spending, but because music subscriptions are relatively inexpensive products that tend to be owned by consumers with significant disposable income, exposure to risk may be low. Although the fact that UMG only increased its subscription revenue by 10% in the first quarter year-on-year, we may even be seeing a slowdown.
While a few years ago a slowdown in subscriptions would have been as worrisome for labels and publishers as it was for DSPs, the emergence of non-DSP revenue (Meta, TikTok, Peloton, Snap, Twitch, etc.) that the beneficiaries now have an established plan B. A point illustrated by UMG’s ad-supported streaming growth of 17% in the first quarter of 2022 year-on-year. Economic headwinds through the rest of 2022 will certainly be tough, but performance in 2020 and 2021 indicates a robustness that will help it weather the storm in ways that other consumer-centric industries may not appreciate.
*All values in current currencies, using the exchange rates published by Vivendi for each corresponding quarter.
**List of companies tracked in MIDiA’s 2021 Music Industry Revenue Report: