2018 Wrap-Up: Recorded Music Growth is Strong, but Slower

An end-of-year forecast predicts recorded music revenues will hit $18.9 billion for 2018.
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London, UK (December 21, 2018)—An end-of-year forecast from UK-based media and technology analysis company MIDiA Research predicts that recorded music revenue will hit $18.9 billion this year, an increase of 8.2% over 2017.

According to the forecast that is a slightly lower growth rate than the previous year, which was up 9%. However, net new revenue—$1.4 billion—is almost the same amount as was added the previous year.

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“The recorded music market appears to be settled into a steady, strong growth pattern,” writes MIDiA Research managing director Mark Mulligan. By year’s end, streaming revenue is predicted to have grown 29% to $9.6 billion. But again, he notes, “[T]he absolute amount of new revenue generated was, as with the recorded music total, the same as 2017”—in this case, $2.2 billion.

He adds, “Though the fact that total revenues grew by $0.8 billion less than streaming revenue, indicates the pace at which legacy formats continue to decline.” The growth of streaming in mature markets such as the US and the UK will slow, Mulligan also predicts, but any impact will likely be offset by growth in Japan, Germany, Brazil and Mexico. “Overall market growth, though still strong, will be slower,” he forecasts.

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Mulligan notes that the forecast is an estimate, as other industry numbers, from Warner Music Group (WMG) and global body IFPI, for instance, have not yet been published. “To create our end-of-year revenue estimate, we collected data from record labels, national trade associations and also confidential data from the leading Artist Direct/DIY platforms. We plugged this data into MIDiA’s Music Market Share model and benchmarked against quarterly and full year 2017 growth,” he writes in a blog post.

Shortly after Mulligan posted his forecast WMG published its fiscal fourth quarter and year-end revenue figures, reporting that it had exceeded $4 billion for the first time in 15 years. Top sellers included Ed Sheeran, Cardi B, The Greatest Showman soundtrack, Bruno Mars, Dua Lipa, Bebe Rexha and Lil Pump. Although WMG’s physical sales declined—reflecting the industry as a whole—the company saw growth in music publishing digital, performance, synchronization and mechanical revenues. Digital revenue was up 24.1% and accounted for 57.3% of total revenue, compared to 53.5% in the same quarter last year.

In its report last year, MIDiA was the first to quantify the global revenue contribution of Artists Direct—independents, DIYers and so on. This year, those revenues grew 3%—in other words, three times faster than the overall market—over the 2017 figure, to $643 million. “Artists Direct revenue growth is accelerating in both percentage and absolute terms, with market share up from 2.7% in 2017 to 3.4% in 2018,” Mulligan writes.

The Artists Direct market and other alternative models will come of age in 2019, Mulligan believes. “It’s never been a better time to be an artist, as long as you and/or your management are clued up enough to know what to ask for,” he states.

Mulligan predicts that global recorded revenues will continue to rebound. But those revenues are a far cry from the glory days. “Even if label revenues hit $25 billion (where the market was at in 2000 before the decline) in real terms (i.e. factoring in inflation etc.), that would actually be around half the actual value,” he observes. “While it is not realistic to expect a $50 billion market, getting towards the inflation-reduced $25 billion is certainly a realistic target.”

MIDiA Research • www.midiaresearch.com