How COVID-19 Has Affected the Global Dance Music Industry & 15 Other Key Points From the 2020 IMS Business Report: Exclusive

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Since the start of the COVID-19 pandemic, it's been clear that all sectors of the global dance music industry would be deeply affected. Now, we have the data explaining these effects.

Released today (July 16), the annual IMS Business Report offers myriad statistics on how the dance scene was faring before the pandemic and the effects that COVID-19 has had thus far. Prepared by London-based analyst Kevin Watson, the annual report is a crucial tool for the dance/electronic industry, serving as a baseline on the health of the worldwide scene, with its numbers being widely cited throughout the year.

While the report is typically presented at the spring IMS Ibiza summit, this year's presentation is happening online, with Watson and a panel of industry experts explaining and discussing this year's findings. The panel discussion begins at  9 a.m. PT / 12 p.m. ET and will be live streamed on both the International Music Summit and Billboard Dance Facebook pages.

This year's report finds that before the pandemic, the valuation of the industry was up, with this increase driven by DJ earnings and festivals. Amidst the pandemic, the value of the electronic music industry could fall by over 56%. Following are those statistics and other primary takeaways from the 2020 IMS Business Report.

2019 In Review:

Pre COVID-19, the electronic music industry rebounded in 2019, reversing recent falls to grow by 2% to $7.3 billion.

After falls in 2017 and 2018, the rebound in the estimated industry value was led by recorded music, DJ earnings and festivals. The time period does not include the impact of COVID-19 on the industry, a development which is estimated later in the report.

In the United States, Dance/Electronic share rebounded in 2019 to 3.6% of volume, in line with the 5-year genre average.

U.S. music industry retail revenues grew 13% year-over-year in 2019 to $11.1 billion, with 79% now coming from streaming. Dance genre over-indexes on streaming, with 90% of consumption in 2019 from audio and video streams, compared with just 68% for the rock genre. This helped dance's share of total volume increase from 3% in 2018 to 3.6% in 2019.

Over the past five years, dance has lost out to hip-hop/rap in the UK.

Dance's share almost halved, while hip-hop’s doubled. While dance still has a high share in the UK versus other countries, it has dropped from being third most popular in 2015 to fifth overall in 2019. In contrast, hip-hop/rap has doubled share in the UK over this time, rising from the 4th to 2nd most popular genre.

Techno has been Beatport's most popular genre for the past four years. 

In order of popularity, the genre is followed by house, tech house, melodic house & techno, deep house, drum & bass, progressive house, electronica/downtempo, trance and indie dance/nu disco.

According to Forbes, DJ earnings rebounded in 2019, with the total earnings of the top ten artists returning to pre-2017 peak levels. 

The estimated earnings of the 10 highest-paid DJs increased by 4% year-over-year in 2019 to $273 million. This is similar to total earnings in 2014-16, but below the 2017 peak, when DJ fees yielded $298 million. The Chainsmokers earned the most in 2019 with $46 million, followed by Marshmello who earned $40 million and who reportedly signed a 2-year Kaos LasVegas deal worth $60 million.

In Ibiza, clubbers spent roughly €260 million in 2019, contributing €0.5 billion to the Ibiza economy, with two million club tickets sold.

During the island's summer 2019 season, an estimated two million club ticket sales generated €80 million in revenue. Drinks and VIP sales added €67 million and €9 million, respectively. A "musical tourist" spends twice that of an average family while on the island.

2020 Thus Far:

Dance/Electronic clubs and festivals could lose roughly 75% of their income in 2020, equivalent to roughly $3.3 billion.

The pandemic has particularly impacted the summer festival and Ibiza seasons, and it remains to be seen whether some events will be able to take place later in 2020. Live streams, drive-in gigs and virtual events will generate some revenue in the meantime.

DJ and artist income could fall from $1.1 billion in 2019 to $0.4 billion in 2020 as a result of COVID-19, a drop of 61%.

Electronic DJs & artists’ earnings were significantly impacted by cancellation of events since March 2020.

By April 20, 2020, roughly 350 electronic festivals had been canceled or postponed.

Germany saw the most event cancellations, followed by France, The Netherlands, the UK and the United States. Globally, 8.9 million fans were unable to attend festivals. Since March of 2020, club events and festivals have been cancelled across most of the world. This has particularly impacted the summer festival and Ibiza seasons, and it remains to be seen whether some events will be able to take place later in 2020.

The current club and festival alternatives being trialled are unlikely to be commercially viable for venues ongoing.

Livestreams happening from venues are used primarily to raise funds for good causes, not to generate revenue for the venue itself. For drive-in gigs, capacities are likely to be limited due to the space required and are not feasible for most clubs. Distanced dancefloors see an 85-95% reduction in capacity, which severely impacts revenue, an effect not offset by ticket price.

Electronic Music brands have switched to live streaming in 2020 and raised millions of dollars for good causes.

Livestream events have included Beatport's pair of Re:Connect events, which raised roughly $260,000 and drew 23 million views, David Guetta's United At Home Event In Miami, which raised $1.25 million and drew 50 million viewers, the Defected Virtual Festival, which raised $1.2 million dollars and drew 18.5 million viewers, and Digital Mirage, which raised $370,000 and drew four million viewers.

In May of 2020, seven of the ten most-watched music streamers on Twitch were electronic focussed, totaling six million viewer hours.

Insomniac Events led the pack, generating 2.6 million viewer hours by running online versions of their events, including the EDC Virtual Rave-a-Thon. Insomniac was followed by the Twitch pages of Mad Decent, Beatport, BandsinTown, Desert Hearts Records, 20 second Viral, Live Kiss, Lightning In a Bottle, Anjuna and Monstercat.

DJs who performed in Fortnite increased their Instagram follower growth by 10x during and after the event.

Fortnite has built on success of Marshmello's event by hosting several electronic music artists. Party Royale mode launched with Dillon Francis, Steve Aoki  and deadmau5, who collectively added 55,000 Instagram followers in four days. Minecraft announced it would host an Electronic Music festival in July called Rave Family Block Fest, although it was subsequently postponed.

Continued growth in streaming is expected to generate $0.1 billion in additional revenue for Dance/Electronic in 2020.

Streaming fell immediately after lockdowns were introduced in Europe and the United States, with Electronic/Dance genre more impacted than others. The subsequent rebound, and increase in streaming subscriptions is likely to drive overall growth in 2020. Platforms such as Bandcamp are also adding value, having experienced significant revenue growth.

The value of the Electronic Music industry could fall by over $4 billion (56%) in 2020 as a result of COVID-19.

Club and festival revenue will be most severely affected, along with DJ & artist earnings, as the majority of events are in the summer period. Streaming revenue is expected to continue to grow in 2020, and online-focussed companies are likely to benefit, such as those in education.

The worst case scenario would be a prolonged period without live events, which would have an even greater impact on the industry. For example, a 95% reduction of club & festival revenue would reduce overall industry value to just $2.2 billion, a fall of 70% vs. 2019.

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