Paid Music Subscriber Totals Will Reach 1 Billion By 2030, Says Updated Goldman Sachs Report

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The U.S. recorded music market is still growing -- faster than top researchers originally thought.

Goldman Sachs analysts are raising previously-reported industry forecasts by an average of 4 percent over the next decade, now predicting the industry to grow into a $45 billion beast with a paid streaming population of 1.15 billion by 2030.

In its 2017 dossier, the research team led by Lisa Yang originally projected the industry to pull in $44 billion annually by then, putting the population of paid users at 900 million. But fueled by faster-than-expected adoption of paid subscriptions, she's upping paid streaming forecasts by 6 percent on average over the period, predicting that the population of paid users will balloon to 690 million by 2023 alone.

Yang also predicts that paid streaming will generate $27.5 billion in the forecast period -- up from $27.1 billion, and that overall annual global streaming revenues, including ad-supported, will reach $37.2 billion. (Due to inflation and wavering exchange rates, restated prior estimates here may not exactly match those previously reported.)

The new numbers coincide with IFPI's recent 2018 Global Music Report, which rung in the fourth consecutive year of growth for global music sales -- up to $19.1 billion, a nearly 10 percent rise on 2017's numbers. Actual market figures were 1 percent ahead of Yang's forecasts: Total paid streaming users came in at 255 million in 2018, slightly more than the 237 million predicted. 

The report partly attributes the boom to promising recent updates from major labels and streaming services, signifying sustained momentum in the streaming market. Still, it expects this growth to be somewhat offset by a continued decline in global annual ARPU, partly due to the rise of emerging markets and the popularity of bundles and family plans. The report projects ARPU to decline to $25 in 2030 (from $32.7 last year).

It also predicts that Spotify and Apple Music will remain global industry leaders, but expects their market share domination to erode over time -- to 32 percent and 16 percent, respectively, down from 38 percent and 20 percent in 2018. Internet players like Amazon, YouTube and Facebook are projected to command a larger swath of the market (14 percent by 2030, up from 10 percent last year).

Meanwhile, China-based Tencent Music is on the rise, marking the third-largest platform globally in 2018 and accounting for 11 percent of global paid users. Its share is predicted to rise to 23 percent by 2030.

As the report notes, several upcoming catalysts could shift these predictions once again. For one, Spotify is due to renegotiatate licensing contracts with major labels this year, though the report does not expect royalty rates to change. "Over time, we believe major labels’ artist discovery, curation, and marketing capabilities and high market share concentrations should allow them to defend the status quo in future negotiations," the report reads. "Spotify should also be in a better position to leverage its marketing platform and data services -- particularly as it becomes a bigger contributor to labels’ earnings."

Also forthcoming are the national implementation of Article 13 (now Article 17) of the EU Copyright Directive, and the potential partial sale of Universal Music Group, which "could significantly alter the structure of the music industry," the report continues, "particularly if it involves one of the global online streaming players."


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