The Goldman Sachs’ Music In The Air 2020 Report — An Executive Summary

Don’t have time to go through the 80 page Goldman Sachs “Music in the Air” report. Don’t worry we have summarised the main points for you here in a 4 minute read.

• Total global record industry net/wholesale revenues will reach $20.8bn this year.
• Up 3%, or $600m, on the $20.2bn wholesale figure the record industry generated in 2019.
• BUT down by 8% — or by $1.8bn — on the Goldman’s prior forecast ($22.6bn) for this year.
• Goldman’s 2020 forecast reduction due to the expected negative impact of COVID-19 on record business income streams like licensing, physical sales and streaming ad revenues.
• Goldman has also wiped $2.2bn, specifically, off its forecast for the amount of money consumers will spend on paid streaming in 2020 — down from a prior prediction of $20.5bn to $18.3bn.

• Paid subscribers have been revised up increasing from a prior forecast of 397m to 416m. That 416m figure in turn represents a jump of 75m on the official tally of music streaming subs seen in 2019 (341m).

• Subscribers being revised upwards and revenue revised down means there has been a significant fall in the Average Revenue Per User (ARPU).
• In 2019 global paid streaming ARPU levelled out at $51.90 on an annual retail basis (i.e. $4.33 per month), down from the firm’s prior projection of $57.50 ($4.79 per month).
• Goldman estimates the average music streaming subscriber worldwide in 2020 will pay over $10 less per year than it did previously — down from $56.60 ($4.72 per month) to $46.00 ($3.83 per month).
• Q1 2020, Spotify’s ARPU fell below $5 per mth, partly because of the 3 month for free program.
• Goldman’s projected paid music streaming ARPU for a decade’s time — in 2030 — also falls, to $44 per year (i.e. $3.67 per month), due to greater dilution from emerging markets , family plans and bundles.
• ARPU levels will concern record labels and artists, but will be balanced by the solid growth in revenue predictions.

• Goldman forecasts suggest that by 2030 the industry will generate very close to the same amount of money for the music business that it previously suggested.
• Ad-funded streaming will generate $23.3bn in 2030, up by a substantial $3.6bn on the investment bank’s prior 2030 forecast.
• Despite the current pandemic, Goldman also thinks ad-funded music streaming revenues will grow by $900m in 2020, from $6.1bn to $7.0bn — not far off the $1.1bn growth the category saw in 2019.
• Forecast annual paid subscription revenues for 2030 have been reduced by Goldman (dropping by $2bn on its prior forecast, to $51.9bn).
• Overall (net/wholesale) industry revenues will hit $44.6bn in 2030, a slight decrease (-$200m) on its prior forecast.
• Goldman now believes that there will be more paying music subscribers by 2030 (1.22bn) than it did before (1.15bn).

• Goldman is also forecasting a 3.5% YoY rise in publishing industry revenues in both 2020 and 2021, despite the impact of the pandemic.
• Music publishing will be slightly more resilient given its diversified revenue streams and lag in revenue recognition.
• As for live music, Goldman forecasts total global live revenues will fall to just $7bn in 2020, down from its pre-COVID forecast of $28.8bn.
• Goldman is forecasting that the live industry will rebound to $29.1bn global annual revenues in 2023, and is sticking to an unchanged prediction that this number will rise again to $38.7bn in 2030.
• 12% of the global music industry’s 341m paying streaming subscribers in 2019 were based in China, compared to 24% based in the US.
• By 2030, China will claim the biggest share of the world’s music streaming subscribers, with 20% of those 1.22bn subs, while the United States will sit in second place, on 13%.