Recorded music market 2022 | Reality bites

Following a spectacular year of growth in 2021, global recorded music revenue growth slowed significantly in 2022 due to the combined impact of global economic headwinds and growth slowdown in mature streaming markets. Context, though, is everything – not many industries can deliver solid growth while the global economy is in turmoil, ad markets are falling and many emerging tech sectors are in crisis.

Global recorded music growth has oscillated in recent years, slowing in the pandemic, booming in 2021, and then returning to more modest growth in 2022.

2022 was a year of realignment for much of the global economy, and the music business had to contend not only with the wider trend of the cost-of-living-crisis, but also rising interest rates softening music catalogue M+A demand and the long expected streaming slowdown kicking in. It is testament to the solidity of the recorded music market that, despite these multiple headwinds, global revenues grew by 6.7% to reach $31.2 billion in 2022. While this was significantly down on the 24.8% registered in 2021, it illustrates the strong role music plays in consumers’ lives, especially in uncertain times when escapism and identity are more important than ever. The persistent value of music was even more strongly illustrated by music publishing, which grew by 16.6% in 2022.

Streaming was again the main driver of industry growth, with revenues up by $1.5 billion in 2022 (8.3% growth), though this was less than half the $4.2 billion added in 2021.  The slowdown was underpinned by a) slowing subscriptions growth in mature markets; b) a slowdown in ad-supported revenues, reflecting wider advertising market dynamics. Music subscriber growth was markedly stronger, up by 13.7% to 652 million, however, the more mature North America and Europe regions accounted for just a third of the growth. Emerging markets will become a progressively larger part of global streaming growth, but due to lower ARPU and low shares of Anglo repertoire, the divergence between growth revenue and subscriber growth rates seen in 2022 will become a long-term market characteristic.

Independent labels and artists direct both strongly out-performed the wider streaming market, growing streaming revenues by 13.9% and 17.9% respectively. In terms of total recorded music revenues, 

UMG added more recorded music revenue in 2022 than the other two majors, adding $0.5 billion to reach $9.2 billion, giving it a 29.5% share of the global recorded music market. UMG’s percentage growth (6.2%), though, was slower than SMG’s (8.7%), with SMG gaining 0.4 points of market share.

Artists direct (i.e., artists who release without labels, directly via a distributor) were the big success story once again, growing by 16.6% in 2022 to generate $1.7 billion of recorded music revenue, giving it a 5.7% market share, up from 5.2% in 2021. 

Independent labels also outgrew the wider market (up by 7.1%), and the combined market share of artists direct and independent labels reached 34.6% in 2022, up from 34.0% in 2021. Though it is worth noting that this does not include the additional revenue from independent labels distributed by major labels.

Combined, independent labels and artists direct, were the largest single market segment with $10.8 billion.

Though overall market growth was down in 2022 compared to 2021, 2021 was in many respects a year of artificially accentuated, post-Covid growth, while 2022 was at the opposite end of the scale, with a host of economic headwinds. In this context, 6.7% growth for 2022 could be considered even more of an achievement than the 24.8% achieved in 2021.

The full report and dataset (with quarterly revenue by segment and format going back to Q1 2015) will be shortly available to MIDiA clients. If you are not a MIDiA client and would like to learn how to get access to our research, data and analysis, email stephen@midiaresearch.com

Recorded Music Revenues Hit $21.5 Billion in 2019

With IPOs from Warner Music and Universal Music pending and continued institutional investment into music catalogues, the music business is firmly in the sights of big money. The performance of the recorded music business in 2019 is going to heat up interest even further. The global recorded music industry continued its resurgence in 2019 with a fifth successive year of growth. Global revenues grew by 11.4% in 2019 to reach $21.5 billion, an increase of $2.2 billion on 2018. That growth was bigger than 2018 in both absolute and relative terms. Whichever way you look at it, growth accelerated, and – crucially – this growth was achieved even though streaming revenue growth slowed.

These are the key trends that underpinned growth:

• Independence is on the rise: The major record labels retained the lion’s share of the overall market in 2019, accounting for 67.5% of the total – down half a point from 68.0% in 2018. The remaining 32.5% accounted for by independent labels and artists combined was up 0.5 points from 2017 and 4.6 points from 2015. Artists direct – i.e. artists without record labels – was again the fastest-growing segment of the market, growing by 32.1% in 2019 to reach $873 million, representing 4.1% of the total market, up from 1.7% in 2015.
• Big year for Universal: Universal Music Group was the big winner among the majors, growing both faster than the other two majors and the total market to reach 30% market share. Universal also added more revenue in 2019 ($729 million) than Warner Music and Sony Music combined ($650 million).
• Race for 2^nd heats up: In 2015 Warner Music’s recorded music revenue was just 67% of Sony Music’s, and at the end of 2019 that share had increased to 93%. Just $279 million separated Warner and Sony at the end of 2019. Based on 2019 growth rates, Warner would be level with Sony by the end of 2022.
• Still stream powered: Streaming was again the key source of growth, up 24% year-on-year to reach $11.9 billion, representing 56% of all label revenues. But growth is slowing; streaming revenue grew by $2.3 billion, which was $64 million less than in 2018. The reason that the total market was able to grow as fast as it did in spite of this is because downloads and physical fell by $0.4 billion less than in 2018. So, ironically, it was the improved performance of legacy formats that enabled streaming’s performance to be good enough to drive 11.4% growth. 

Despite the inevitable slowdown in streaming revenue growth, the recorded music market managed to not only consolidate on its strong 2018 performance but improve upon it in 2019. The continued boom in recorded music revenues is accompanied by a growing complexity to the underlying business, with increased diversification of business models and artist/label relationships. Over the next few years continued revenue growth will be both accompanied and driven by business model innovation and disruption.