PricewaterhouseCoopers (stylized PwC) has released its 17th annual, dense-as-a-poundcake report on the global media landscape, which covers at least one topic of interest to anyone in near- or far-orbit around the creation or consumption of what we now, despite creators’ chagrin at the term, call “content.” (The report’s methodology has been included at the bottom of this article.)
The report is beyond ambitious in scope and comprehensive in its coverage, which necessarily means it covers some familiar ground for anyone following any particular area of interest closely. But it is the projections that are of interest here.
Notably for the music industry, PwC predicts total music revenue — including concert receipts, recorded music sales and streams, and satellite radio — in the U.S. to grow at a steady (compound annual) rate of 3.5 percent, bringing it to $18.04 billion by 2020. That’s a precipitous increase from the growth seen over the preceding four years, in which it rose from $14.87 billion to its current (as of 2015) $15.18 billion. That growth is being driven, according to the company, with streaming revenue predicted to grow at a rate of 21.6 percent through 2020, accounting for $4.27 billion that year. Live music is estimated by PwC to be worth $9.30 billion stateside and is predicted to ascend at a 4.7 percent rate through 2020.
Some of that growth could be attributed to the bleed from radio to digital — 44 percent of those 12 and older said they use the Internet, and 32 percent terrestrial radio, to hear new music. As is well-known, radio in the U.S. doesn’t pay royalties. Digital does (even if from the relatively low ad rates paid out by free streaming sources like YouTube and Spotify).
In the International Federation of the Phonographic Industry’s (IFPI) “Global Music Report” released earlier this year and which focuses solely on the recording industry (again, PwC records all music revenue), the U.S. was said to have generated a 1.4 percent total revenue increase in 2015. That was largely driven by a dramatic increase in the streaming market overall, which added 27 million subscribers year-over-year for a total of 68 million, with a 46.6 percent growth in revenue. That said, PwC’s numbers are nearly in line with the global recorded music business’ growth rate of 3.2 percent in 2015.
Company to company, PwC’s report includes some interesting notes; iHeartRadio’s 17 percent market share makes it the second-largest streaming service behind Pandora and that company’s 45 percent market share (at least as of the beginning of 2015, prior to the launch of Apple’s anecdotally popular Beats 1). The report spends a not-small chunk of space on SiriusXM, with the company adding 500,000 customers per quarter and a total of 29 million total subscribers, generating revenue of $3.92 billion, predicted to grow at 3.2 percent per year.
Where PwC’s analysis shines, however, is its look at the digital advertising market, which is experiencing a traditional-to-digital confluence and struggling with a strategic perpendicularity between the two. “Effective measurement of Internet advertising remains a significant barrier to further growth, with little consensus on how best to track and quantify consumers’ engagement with digital ads. This is compounded by advertisers’ fears about the viewability of digital ads, amid concern that they are paying for ads that no one sees,” PwC writes, continuing on to say that “the migration of traditional ad spend to digital (including mobile) arguably still lags behind consumer adoption of the new platforms and devices.” PwC points out that traditional advertising — television, radio and print — presents a similar problem, but benefits from an entrenched synergy with those media.
Bolstering that analysis are some striking numbers, including the topline ad revenue number on the web last year: $59.55 billion — the largest in the world and double that of the runner-up, China. The total ad spend in the U.S. across mediums, according to Statista, was $180 billion last year. (It’s worth noting that Statista also put digital ad spending at $67.09 in 2014. Grains of salt will be given out at the exit.) Of that $59.55 billion in digital revenue, wired ads (to broadband users) $38.8 billion.
Total mobile web ad revenue stood at $27.6 billion last year. But the growth rate between wired and mobile tells a clear story: 17.4 percent year-on-year for mobile, and 3.9 percent for wired. Mobile is clearly the future, as these numbers (and any media analysis) will show. “Much of the growth in mobile ad revenue is attributable to the tech giants — notably Google and Facebook — having managed to pivot their businesses towards mobile in the last three years, with the result that mobile now accounts for the majority of their total ad revenue.”
Two studies, released over the last day, point to problems with any quantitative analysis of the advertising industry, however. The Association of National Advertisers today released a transparency study of the U.S. industry, and found that “non-transparent business practices were found across digital, print, out-of-home, and television media.” On the mobile front, research firm Midia revealed, as PwC points out in its report, that people are not pleased with the advertising shown them on mobile; one in ten said they would switch to a carrier that provides native ad blocking.
And wow, people watch a lot of video. PwC estimates that video was responsible for 82.1 percent of data traffic in the U.S. last year. The confluence between mobile and video seems to be the sweetest spot for advertisers — and as a result, the place where media companies are putting a lot of their eggs — with a predicted growth rate of 30.3 percent, from $3.54 billion last year to $13.30 billion in 2020.
While Billboard was dubious six years ago, PwC’s analysis at the time proved to be accurate. After a decade of swirling upheaval and uncertainty, perhaps media, largely reliant on digital for eyeballs but not dollars, can finally put some salt down on the road.