Inflation crushes billions earned in the music industry

Big money doesn’t mean big success in the music industry, illustrated with disappointment last year.

A guest post by Bobby Owsinski of Music 3.0.

The last IFPI The report has just been released and looks at how the global music industry fared in 2021. If you take the report at face value, it looks like the music industry had its best year ever. last, with a worldwide total of $25.9 billion. While its 18.5% growth to $4 billion in 2020 was indeed impressive, when you look behind the numbers, you see a different picture.

It’s all about inflation

First, let’s adjust that total income of $25.9 billion for inflation. What you get is $39.2 billion. This means that even though last year’s number appears to be the largest on record, the music industry still has a long way to go before it achieves the status of “greatest year of all time”. 1999. This is still only 2/3 of his best year.

You can’t deny that the music industry is doing very well and that streaming has recovered some of the slowdown in sales, but it hasn’t totally replaced it and maybe never will.

Streaming slowdown

Indeed, the numbers show that while most people are consuming their music through streaming, that growth is slowing. There are now 523 million streaming users worldwide. That number sounds pretty good, but their average payment each month is only $1.96. In 2020 it was $1.90, which means that even if you add an additional 80 million users (which happened last year), the average amount they pay doesn’t matter. increased only slightly.

Now, the fact is that there are still relatively untapped markets like Africa and the Middle East, but as the total pool of users and royalties grows, those markets will pay less for streaming because their savings won’t allow anything beyond that $2 range. , if this.

Free tiers are paid

Finally, the report shows that ad-supported free streaming tiers actually pay more than expected. In fact, that’s almost as much as all physical sales combined. The free tiers earned $4.6 billion while physical sales totaled $5.0 billion.

The downside here is that the margins are so much higher on the physical, so an artist who is successful on the physical will make a lot more money than one with equal success on a free ad tier.

The bottom line is that the music industry is in a good place as the streaming market has matured. The bad news is that the numbers aren’t what they’re supposed to be and a critical part of the business could be slowing down.

Bobby Owsinski is a producer/engineer, author and coach. He is the author of 24 books on recording, music, the music industry and social media.

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