By CultureBanx Team
- Goldman Sachs forecast music revenue is going to reach $151.4B by 2030
- Hip-hop and R&B make up 29.9% of the music consumed in the U.S.
Streaming and A.I. take center stage in Goldman Sachs (GS -0.75%) latest series of ‘Music in the Air‘ report, with estimates for industry revenues to reach $92 billion last year and increase to $151.4 billion in 2030. Currently music streaming sales are dominated by top R&B and hip-hop artists such as Drake, SZA, Kendrick Lamar, The Weeknd, Lil Baby and Cardi B. Music publishers and labels also stand to profit greatly from the rise of streaming, led by Black listeners who are the largest user group.
Why This Matters: Streaming culture is set to propel global music revenue to record highs. Hip-hop and R&B make up 29.9% of the music consumed in the U.S., with rock and pop coming in at 17% and 13.3% respectively, according to Statista. Goldman’s $104.4 billion of predicted net revenues in 2030 includes $50.1 billion from recorded music, $14.7 billion from publishing and $39.5 billion from the live industry. Recorded songs which fall into the streaming category will grow the most
Millennials and Generation Z are spending more of their annual budgets on music than other age groups. Specifically, people aged 18-34 years old are spending $163 annually. However, when it comes to the Black community they are far outpacing millennials and spend about $173 annually on purchased music. This is in part because the portion of people who stream music on their smartphones is growing in developed markets and is expected to rise 37% by 2030.
With streaming becoming the dominant form of music consumption, expect to see more monumental shifts in the music industry. “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industry is on the cusp of another major structural change given the persistent under-monetisation of music content, outdated streaming royalty payout structures and the deployment of Generative AI,” Goldman wrote in its report. For example the report notes Spotify (SPOT +0.54%) could face “millions of songs” being uploaded every day compared to the current 120,000.
Music labels have and will continue to benefit greatly from streaming. Case and point, take Universal Music Group and its family of labels which include Capitol Music Group, Island Records, and Def Jam just to name a few. They have a deep roster of heavy hitters like Rihanna, Kendrick Lamar, Drake and Migos. Revenues for UMG during 2022 increase by 21.6% hitting nearly $10.95 billion, led by a 19% spike to over $5.6 billion in streaming revenues.
Situational Awareness: There are a handful of streaming companies controlling most of the music streams and three music companies owning the vast majority of catalogs. Streaming services will want to “limit the potential flood of new music being uploaded to their platforms.” In effort to reassure investors that generative AI isn’t a big threat to the music industry, Goldman argues that the market’s consolidation is what will help it fend off the dangers.
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