The rapidly changing landscape of the music industry

As the continued resurgence of vinyl breathes new life into the traditional music format, the online environment and emerging technologies are responsible for seismic changes in the landscape of the music industry. As fans today embrace classic, modern and futuristic ways of consuming music, coupled with the resumption of live events post-pandemic, the outlook for the global music industry is optimistic.

Financial giants Goldman Sachs predicts that global music market revenues – incorporating recorded music, music publishing and live events – will reach $87.6 billion by the end of this year and grow to $153 billion. billion dollars by 2030.

The financial institution’s bullish forecast comes after the International Federation of the Phonographic Industry (IFPI) announced “the highest revenue levels of this millennium” for 2021.

Global recorded music industry revenue – generated by physical sales, streaming, downloads, performing rights and synchronization – has grown from $21.9 billion in 2020 to $25.9 billion. dollars in 2021, according to IFPI’s Global Music Report 2022. 2021, compared to $4.3 billion in 2020, while streaming revenue continued to dominate, rising from $13.6 billion to $16.9 billion.

“In 2021, the global recorded music market grew by 18.5% – a marked increase over the previous year’s growth rate (over 7.2%),” the IFPI report states. . “Once again, streaming – particularly paid subscription streaming – was a key driver of overall growth. .9% in 2020.”

With a 31% market share, the Swedish company Spotify is the largest audio streaming platform in the world and counts Apple Music, Amazon Music, YouTube Music, SoundCloud and Deezer among its competitors. Since its launch in 2006, Spotify has paid more than $30 billion in royalties to the music industry, including a record $7 billion last year.

According to data from Spotify, more than 50,000 artists generated $10,000 through the streaming platform last year, and for the first time ever, more than 1,000 artists generated over $1 million.“Not only is streaming generating record revenue for the music industry, but there are also more artists than ever sharing in that success,” said Spotify founder and CEO Daniel Ek, saying the company was making “significant new progress towards a more dynamic world”. and a diverse music industry”.

Highlighting that 25% of all sales went to the top 50 artists of the CD era, Ek added, “On Spotify, that number has now been halved, with only 12% coming from the top 50. The numbers we share show that Spotify is improving the music industry of the past, and more and more artists are able to stand out in the age of streaming.

Meanwhile, YouTube is aiming for Spotify’s crown. It paid out over $6 billion to the music industry between July 2021 and June 2022, a year-over-year (YoY) increase of $2 billion. Lyor Cohen, Global Head of Music at YouTube, said: “We want our dual ad and subscription engine to be the number one revenue contributor to the industry by 2025.”

With “exceptional revenue growth” of 35%, the Middle East and North Africa has become the world’s fastest growing region for recorded music revenue in 2021, according to the report. IFPI. Reflecting on the region’s rapid growth, Moe Hamzeh, Managing Director of Warner Music Middle East, said: “The growth has come from increased DSP [digital service provider] number of subscriptions, but also an increase in social media consumption and the increased prominence of music on platforms like TikTok, Snapchat, Instagram Reels and YouTube Shorts – these are now mainstays in the music discovery of people.

Indeed, in March, short-form video hosting service TikTok launched SoundOn, an “all-in-one music marketing and distribution platform designed to empower new and unknown artists, helping them develop and build their careers”. Operational in the US, UK, Brazil and Indonesia, SoundOn allows artists to upload their music directly to TikTok and start collecting royalties. Closer to home, developments in the MENA region’s music industry have unfolded at an accelerated pace in recent years, with several UAE companies at the forefront of change.

Abu Dhabi-based streaming platform Anghami – the first Arab tech company to go public in the United States – posted total revenue of $35.5 million last year, an increase of 16 % over 2020. With 19.5 million active users, Anghami’s positive trajectory continues with the company reporting revenue of $21.1 million in the first half of 2022, an increase of 29 % year-on-year.

Additionally, Anghami has teamed up with Sony Music Middle East to launch Vibe Music Arabia label last year. In a bid to transition from a music streaming platform to an entertainment platform, Anghami also acquired event and concert company Spotlight Events in July, saying the acquisition would unlock synergies and opportunities between the physical worlds. and digital.

“While Spotlight Events will provide a stage for artists to perform and reach their offline audiences, Anghami’s technology will bridge the gap between the offline and online worlds by providing access to exclusive concerts through its video streaming capabilities. live and creating immersive experiences via AR and VR,” Anghami said in
A declaration.

However, as musicians call for reforms and fairer compensation in the streaming economy – Spotify pays artists an average of $0.0033 per stream – two UAE companies are among those determined to disrupt the status quo by leveraging emerging technologies.

Talal Alafghani, co-founder and COO of NIFTY Souq, the first and largest NFT marketplace in the MENA region, believes that NFTs – non-fungible tokens – have the potential to revolutionize the music industry, a sentiment echoed by EDM giant Steve Aoki. Calling himself a “futurist,” Aoki said earlier this year that he has made more money from NFTs than from 10 years of musical advancements.

Using the Ethereum and Polygon blockchain and smart contracts, NIFTY Souq’s goals are to build a bridge between artists, musicians and blockchain, support the growth of native crypto NFT artists, and offer low costs keystrokes for all creators launching NFTs on the platform, helping artists set affordable prices.

“In today’s music industry, many artists are tied to intermediaries such as music labels and streaming platforms,” ​​says Alafghani. “NFTs give creators complete control and ownership of their creations. They can independently release their music to the public and skip the middleman. With this new technology, artists reclaim full ownership of their work. They can sell music NFTs directly to their fans and earn money from secondary market resales.

“There is a strong incentive for artists to use NFTs to publish and sell their work and the industry is already starting to move in this direction,” adds Alafghani. “At this rate, I think streaming services will no longer dominate the music industry by 2030.”

Launched last year as a marketplace and auction platform for creating, selling and buying NFTs, NIFTY Souq recently secured an initial investment of $1.5 million, which will be invested in the technology and business development.

Described as “a solution to common problems in the music industry as a whole”, UAE-based company AudioSwim is an NFT music ecosystem and digital music distribution platform that allows artists and fans to buy and sell NFTs and music royalties around the world. Providing “digital services for the forward-thinking musician”, the company’s mission is “to leverage the latest technologies and help artists have more creative freedom”, says founder Albert Carter.

AudioSwim allows fans to invest in artists locally by purchasing a percentage of future royalties from a given release, with minimum buy-ins determined by an artist’s sales history. If the song becomes a commercial success, fans receive a share of the royalties proportional to their initial investment.

For 2030, Carter has bold ambitions. “We aim to be the premier digital music distribution company and music royalty platform on the planet,” says Carter. “We want to make NFTs more user-friendly through our streaming platform and plan to blend online and offline seamlessly by integrating metaverse, virtual reality and augmented reality into the way artists interact with their fans. Ultimately, by 2030, we will be recognized as the leading digital music community that takes artists’ careers to the next level.

Indeed, with blockchain, AI, metaverse, gaming platforms and other emerging Web3 disruptors providing more and more opportunities for fans to engage with music in new and increasingly diverse, the next big upheaval in the music industry is firmly on the horizon.