Goldman researchers expect Spotify and YouTube Music to raise prices and for other DSPs to adopt recurring price hikes, which could result in 3% annual pricing growth in global paid subscription revenues.Goldman researchers attribute some of the mismatch to family streaming plans and other bundles, as global paid streaming average revenue per user fell 40% since 2016 when Apple Music and Spotify first launched family plans.Meanwhile, the number of streaming hours on Spotify has increased nearly five-fold between 2015-2021.Implied revenue per audio stream (both from subscriptioni and ad supported content) has declined by 20% since 2017, and revenue per streaming hour has declined by 14% between 20.

Highlights from Goldman Sachs’ Music In The Air report, first on streaming:

YouTube Music was the “major gainer,” gaining about 3 percentage points of market share over the past three years to hold market share in 2022. Spotify maintains its clear lead among the DSPs with 34.8% of total global market share in 2022, although it edged 60 basis points lower. “We continue to expect modest dilution of market share over time, mostly driven by the revenue mix shift towards EM, although we believe that the major record labels will continue to expand their presence in EMs through partnerships, investments and bolt-on M&A,” researchers wrote. The report also notes that, despite fears of market dillution from the rush of new content, Universal Music Group and Sony Music Entertainment both maintained their recorded music market share in 2022, with only Warner Music Group losing market share - about half a percentage point - to independents. “We believe the quality of the input to large language models is critical and the largest owners of proprietary (intellectual property) are best positioned to leverage the technology,” researchers wrote, noting the industry will need to be aligned in controlling the deployment of that tech.Ĭumulus Media a Rare Winner in Off Week for Music Stocks Researchers also sounded a positive note on the potential for generative AI to lower barriers for artists, boost music creation capabilities and improve industry productivity overall, with the major music companies best positioned to benefit. Goldman analysts also wrote that the current method of treating all streams lasting less than 30 seconds the same and paying content owners a pro-rata share of streams “needs to evolve…to cope with dilution of market share.” This weakening, they say, is coming from the fast-growing number of songs uploaded to digital service provider (DSP) platforms, fraudulent and artificial streams and “the propensity of algorithms to push lower royalty content.” Niche-Focused Funds Are the Next ‘Natural Step’ in Music Investment They estimate that up to $4.2 billion in potential revenue could be gained over time by charging different audience segments, such as super fans, more for subscriptions. They estimate that the revenue earned per audio stream has fallen 20% over the past five years, and that the revenue companies earn per hour of music streamed on Spotify is four times lower than for Netflix. “In the wake of these developments, we believe a more coordinated and collaborative response from the main stakeholders will be key to ensure that the industry not only continues on its path of sustainable growth but also captures new business opportunities.”Įchoing a frequent refrain of music industry executives, Goldman’s researchers say monetization of music content is way behind the rate of consumption. “We believe the music industry is on the cusp of another major structural change given the persistent under-monetisation of music content, outdated streaming royalty payout structures and the deployment of Generative AI,” Goldman researchers wrote in the new report. That indicates steady and even more broad-based growth, researchers say, but the industry is about to face a fresh wave of massive changes. Meet MUSQ, the Latest Music Fund to Tap Into ETF Craze

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