While the ongoing vinyl resurgence is breathing new life into the traditional music format, the online environment and emerging technologies are responsible for seismic shifts in the music industry landscape. With fans today embracing classic, modern and futuristic methods of consuming music, coupled with the recovery of live events from the pandemic, the outlook for the global music business is upbeat
Financial giants Goldman Sachs forecast that global music market revenue – incorporating recorded music, music publishing and live events – will top $87.6bn by the end of this year and jump to $153bn by 2030.
The financial institution’s bullish predictions come after the International Federation of the Phonographic Industry (IFPI) reported “the highest revenue levels this millennium” for 2021.
Global recorded music industry revenues – generated from physical sales, streaming, downloads, performance rights and synchronisation – climbed from $21.9bn in 2020 to $25.9bn in 2021, according to the IFPI’s Global Music Report 2022. It pegged physical format sales at $5bn in 2021, up from $4.3bn in 2020, while streaming revenues continued to dominate, jumping to $16.9bn from $13.6bn.
“In 2021, the global recorded music market grew by 18.5 per cent – a marked increase on the prior year’s growth rate (over 7.2 per cent),” states the IFPI report. “Once again, streaming – particularly paid subscription streaming – was a key driver of the overall growth. The dominant revenue format globally, streaming accounted for 65 per cent of recorded music revenues, up from a 61.9 per cent share in 2020.”
With 31 per cent of the market share, Swedish firm Spotify is the largest audio streaming platform in the world and counts Apple Music, Amazon Music, YouTube Music, SoundCloud and Deezer amongst its competitors. Since its launch in 2006, Spotify has paid out over $30bn in royalties to the music industry, including a record-breaking $7bn last year.
According to Spotify data, over 50,000 artists generated $10,000 through the streaming platform last year and, for the first time ever, over 1,000 artists generated over $1m.“Not only is streaming driving record revenues for the music industry, but there are also more artists sharing in that success than ever before,” said Spotify founder and CEO Daniel Ek, claiming that the company was making “further meaningful progress toward a more vibrant and diverse music industry”.
Pointing out that 25 per cent of all sales went to the top 50 artists in the CD era, Ek added: “On Spotify, that number has now been halved, with only 12 per cent coming from the top 50. The figures we’re sharing show that Spotify is improving on the music industry of the past, and more and more artists are able to stand out in the streaming era.”
Meanwhile, YouTube is gunning for Spotify’s crown. It paid out over $6bn to the music industry between July 2021 and June 2022 – a $2bn year-on-year (YoY)increase. YouTube’s global head of music Lyor Cohen said: “We want our twin engine of ads and subscriptions to be the number one contributor of revenue to the industry by 2025.”
With “exceptional revenue growth” of 35 per cent, the Middle East and North Africa emerged as the world’s fastest growing region for recorded music revenue in 2021, according to the IFPI’s report. Reflecting on the region’s rapid growth, Moe Hamzeh, managing director, Warner Music Middle East, says: “Growth has come from increased DSP [digital service provider] subscription numbers, but also from a rise in social media consumption and the increased importance of music on platforms like TikTok, Snapchat, Instagram Reels and YouTube Shorts – these are now pillars in people’s music discovery.”
Indeed, in March, short-form video hosting service TikTok launched SoundOn, an “all-in-one platform for music marketing and distribution, designed to empower new and undiscovered artists, helping them develop and build their careers”. Operational in the US, UK, Brazil and Indonesia, SoundOn allows artists to upload their music directly to TikTok and begin earning royalties. Closer to home, developments in the MENA region’s music industry have unfolded at an accelerated pace in recent years, with several UAE companies spearheading change.
Headquartered in Abu Dhabi, streaming platform Anghami – the first Arab tech company to float on the US stock exchange – posted a total revenue of $35.5m last year, an increase of 16 per cent on 2020. With 19.5 million active users, Anghami’s positive trajectory continues with the company reporting H1 2022 revenue of $21.1m – up 29 per cent YoY.
Furthermore, Anghami partnered with Sony Music Middle East to launch the Vibe Music Arabia record label last year. With the objective of evolving from a music streaming platform to an entertainment platform, Anghami also acquired events and concert company Spotlight Events in July, claiming the acquisition would unlock synergies and opportunities between the physical and digital worlds.
“While Spotlight Events will provide a stage for artists to perform and reach their audiences offline, Anghami’s technology will bridge the gap between the offline and online worlds by providing access to exclusive concerts through its live video streaming capabilities and creating immersive experiences through AR and VR,” said Anghami in
However, with musicians calling for reforms and fairer pay in the streaming economy – Spotify pays artists an average of $0.0033 per stream – two UAE firms are amongst those determined to disrupt the status quo by harnessing emerging technologies.
Talal Alafghani, co-founder and COO of NIFTY Souq, the MENA region’s first and largest NFT marketplace, believes that NFTs – non-fungible tokens – have the potential to revolutionise the music industry, a sentiment shared by EDM giant Steve Aoki. Labelling himself “a futurist”, Aoki said earlier this year that he’d made more money from NFTs than from 10 years of music advances.
Using Ethereum and Polygon blockchain and smart contracts, NIFTY Souq’s objectives are to build a bridge between artists, musicians and blockchain, support the growth of native crypto NFT artists and offer low minting costs for all creators launching NFTs on the platform, thus helping the artists set affordable prices.
“In today’s music industry, many artists are tied to intermediaries like music labels and streaming platforms,” explains Alafghani. “NFTs give the creators complete control and ownership of their creations. They can independently release their music to the public and sidestep the middleman. With this new technology, artists are reclaiming full ownership of their work. They can sell music NFTs directly to their fans and earn money from secondary market resales.
“The incentives are high for artists to use NFTs to publish and sell their work and the industry is already starting to move in that direction,” adds Alafghani. “At this pace, I believe streaming services will no longer dominate the music industry by 2030.”
Launched last year as a marketplace and auction platform for creating, selling and buying NFTs, NIFTY Souq recently secured $1.5m first round seed investment, which will be invested in tech and expanding the business.
Described as “a solution to common problems in the music industry as a whole”, UAE-based firm AudioSwim is an NFT music ecosystem and digital music distribution platform that allows artists and fans to buy and sell NFTs and music royalties globally. Providing “digital services for the forward-thinking musician”, the company’s mission is to “leverage the latest technology and help artists have more creative freedom”, states founder Albert Carter.
AudioSwim allows fans to invest in artists at a grass roots level by buying a percentage of future royalties from a given release, with minimum buy-ins determined by an artist’s sales history. If the song becomes a commercial success, fans receive a slice of the royalties proportionate to their initial investment.
Looking ahead to 2030, Carter has bold ambitions. “We aim to be the number one digital music distribution company and music royalty platform on the planet,” says Carter. “We want to make NFTs more mainstream-friendly via our streaming platform and plan to blend online and offline seamlessly by integrating the metaverse, virtual reality and augmented reality into how artist interact with their fans. Ultimately, by the year 2030 we will be recognised as the leading digital music community that springboards artist careers to the next level.”
Indeed, with blockchain, AI, the metaverse, gaming platforms and other emerging Web3 disruptors increasingly driving opportunities for fans to engage with music in new and increasingly diverse ways, the next big upheaval in the music business is firmly on the horizon.