The year 2020 has been rocky for the music industry. With the loss of live concerts and streaming on the rise, everyone has had eyes on music industry data. As we’re stepping into March, music industry’s major actors released their numbers, giving us an insight into last year.
Losses in the live music industry
Let’s start with the obvious, the live music industry has taken a huge hit. The main actors were able to push some live concerts at the beginning of the year before lockdowns started, before relying on the virtual performances we are tuning in today. We are now in a phase of understanding that live performances will always have to take a digital side into account and experimenting for the time being.
From a recent report from Pollstar, the live music industry suffered a loss of $30 billion dollars globally. This is disparaging because in the first quarter of 2020, the live industry was on the rise, “a healthy bump of 10.9% compared to 2019’s Q1, while ticket sales rose 4.6% over the previous year.”
Music Streaming’s Rocky Outlook
Without the live music industry to generate revenue (which was the main stream, especially for emerging artists), digital streams of revenue have become the main ones, with all their issues. The debates, new features and declarations caused more problems to the major actors in the streaming industry than the level of monthly active users (the number of paying users actually increased during lockdowns).
As an example, let’s look at the recent hit on Spotify. Spotify, or SPOT listing on the stock market, saw a great rise in its stock valuation since the start of 2020. Their lowest dip was down in April to about $120 a share as the music industry took a hit. However, they skyrocketed into the $200 and $300 brackets as investors saw the potential of streaming during the pandemic. Even if the reasons for this lower interest are unclear, it would potentially have to do with the slow integration of podcasts among users.
Spotify, however, hasn’t been stagnant in 2020 and has been looking into improving its platform to bring more users in. They are considering greater social feature integration and conducting experiments. Recently Spotify has announced Spotify HiFi to stream lossless audio, much like Jay Z’s Tidal platform, which could bring niche customers to the platform. Despite these talks and announcements, the stock valuation has yet to rise.
Recorded Music is Seeing Promise
So let’s recap: losses in the live music industry, a music streaming on the rise. Now what is happening when it comes to the recorded music industry?
To start with good news, Warner Music Group in their 2020 report stated, “highest quarterly revenue in history as a standalone company” which was a rise between 4-6% or $4.54 billion in total revenue. Part of this is due to the rise in their digital revenue, or music streaming and sales revenue, at a 16-17% rise. On their end, Sony Music has also seen a prominent rise in profits. In their annual 2020 report, they state due to a sharp rise of 19.5% in music streaming revenue and their overall profits rose 8.1% in profit--around $4.5 billion in 2020.
Another interesting insight: Big Hit Entertainment, based in Korea with BTS, had record profits in 2020. They saw a growth in sales of 36% in 2020 to equate to around $707 million, and an overall net profit of 19%.to equates to around $76 million. They account for their increased profits from a push for record sales, music streaming, merchandise, and social media outreach despite the lack of live shows.
Bringing up the pack, many song funds like Hipgnosis have been moving hard and fast through 2020 by buying up artist’s catalogs. This has worked out well for them as their valuation has risen to $1.7 billion and are due to earn an extra $120 million by the end of their quarter on March 31st, 2021.
This all spells for an interesting development among the greatest actors of the music industry. With these record profits keeping them afloat in 2020, there should be a greater push for streaming and digital sales unlike what we’ve seen, including the remodeling of the live music industry.
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