When Goldman Sachs’ Lisa Yang joined Tim Ingham on the Music Business Worldwide Podcast, the financial landscape of the music industry came into sharper focus. Yang, a leading expert in investment strategies related to media, presented an optimistic future for the industry, forecasting over $50 billion in revenue by 2030. This projection encompasses an anticipated 1.2 billion paying streaming subscribers. Beyond the numbers, the podcast delves into how the business will transform in the coming decade, from a focus on Developed Markets to Emerging Markets. In this comprehensive article, we’ll dissect and analyze the key takeaways from the conversation, providing actionable insights for stakeholders in the music industry.
Transitioning from Developed to Emerging Markets
One of the most compelling points of the discussion is the impending shift from Developed Markets to Emerging Markets. Mature markets like the United States and Europe have been the traditional focal points of the music industry. However, Goldman Sachs foresees a burgeoning opportunity in Emerging Markets, particularly in India.
Why India?
India has been singled out due to its burgeoning population, rising economy, and favorable demographics. These factors make it a fertile ground for market growth. With a population that’s largely young and digitally savvy, India presents an untapped potential that can fuel the industry for years to come.
Rethinking Pricing Strategies: Hi-Fi, Audiobooks and More
Yang proposes a reimagining of the current pricing strategies for streaming services, especially in established markets. She predicts a 3% annual rise in streaming subscription prices, a rate comparable to the increase seen in video streaming services. The financial expert also suggests the introduction of new pricing plans and features to augment revenue.
Enhancing Revenue Streams
New features like Hi-Fi audio quality and audiobooks could act as additional revenue streams. These offerings cater to niche audiences who are willing to pay a premium for enhanced experiences, thus diversifying revenue channels for streaming platforms.
Monetizing Artist-Fan Relationships
Yang identifies monetizing artist-fan relationships as an untapped revenue stream. She draws inspiration from markets in Asia like Japan and South Korea. The former has an elaborate merchandising culture, while the latter is home to platforms like Weverse that directly engage fans.
The Superfan Economy
Goldman Sachs estimates that tapping into the “superfan” community can add a staggering $4 billion to the industry’s revenue. This involves premium offerings that superfans are willing to pay for, such as exclusive merchandise, VIP experiences, and limited-edition releases.
Streamlining Royalty Models and Combating Fraud
In the current scenario, Yang urges an overhaul of the royalty model to better benefit artists. She also emphasizes the need to combat streaming fraud, which can inflate numbers and misrepresent revenue distribution.
A New Paradigm in Royalties
The need for a revamped royalty model is pressing. An equitable distribution model can incentivize artists to produce high-quality content, thereby contributing to overall industry growth.
Music Rights and Premium Prospects
Another key takeaway is the bullish outlook on music rights and premium offerings. According to Goldman Sachs, the structural growth drivers in the music industry instill confidence in these aspects. Music rights could become a hot commodity for investors looking for long-term gains.
The Resilience Factor: Standing Strong Amid Challenges
Amid global challenges like the COVID-19 pandemic and inflation, the music industry has displayed remarkable resilience. The sector is anticipated to experience broad-based growth, encompassing various channels like physical sales, vinyl, licensing, and social media monetization.
Insights
The insights presented by Lisa Yang from Goldman Sachs during her conversation with Tim Ingham offer a treasure trove of actionable strategies and future-focused perspectives. As we move towards a new decade, the music industry appears set for transformational shifts that will undoubtedly shape its financial future. These insights provide valuable guidance for artists, investors, and industry stakeholders, enabling them to capitalize on emerging trends and opportunities.
