a $40+ billion industry

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Hey! Thanks again for all the guest post submissions for when I’m on pat leave. Excited to dig in. If you haven’t checked out our Trapital Report yet, you can download it here.

Today’s memo and episode tackle a big question: how much money does music industry generate annually? It’s not as straightforward as it may seem. Each year, former Spotify chief economist, author, and friend of the podcast, Will Page, answers this question in his annual report. He joins me and Tati Cirisano from MIDiA Research on the show to talk about the report and major trends in music.

You can listen to the episode or read a few highlights below.

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the true value of music

A quick Google search of the music industry’s annual revenue will likely show a number around $26 billion. But that’s only for the recorded music side of the industry. It doesn’t account for publishing, collective management organizations, and other areas that generate revenue whenever music gets played.

Will Page’s annual report on global music copyright paints a more complete picture. It places the 2022 value at $41.5 billion. Recorded accounts for 63% of that figure, while songwriters, publishers, and their CMOs get 37%.

The report is a reminder of how fragmented music is. While the major record labels do own several music publishing companies, both sides are still invested in maximizing their own turf. This fragmentation extends to live music and merchandise, which are also led by different companies.

Let’s compare music to the NBA, where ticket sales, broadcast rights, merchandise, and sponsorship all account for the league’s $10 billion in annual revenue. If people only focused on broadcast rights revenue, which brings in over $5 billion, then the perception would be that the NBA is as valuable as La Liga, the second most popular pro soccer league in the world.

For better or worse, perception matters. Policymakers, investors, and executives make decisions based on top-line numbers. For an industry like music, which is heavily influenced by narratives, there should be a collective effort to push the hell out of Will’s reporting.

You can listen to the full episode here or read below for more highlights.

content purchased but not consumed

The vinyl sales boom is strong thanks to the 50% of vinyl consumers who don’t own a record player. But of the 50% who do own a player, a majority of them still don’t play those records. This is often framed as a generational shift, but it also tracks historical consumer behavior patterns of ownership and access.

The reasons people buy vinyl are broad, much like the decision to buy a book, magazine, DVD, or even an e-book.

It may be for consumption, but it may also be for projection. Some people want to be seen as the type of person who reads The Economist, The New Yorker, or The Atlantic. They’re displayed on coffee tables primarily for the display! These purchases can also be for self-expression. For instance, The Miseducation of Lauryn Hill is a landmark piece of culture that influenced a generation. People want to display it in their homes like a piece of art, even if they listen to the album on streaming and never open up the vinyl.

The same is true for movies. A movie buff may buy Pulp Fiction on VHS as a collector’s item, but still primarily watch it on one of the video streaming platforms. These purchases can also be gifts for others or to show support for the artist, author, or filmmaker.

Music, like most forms of entertainment, thrived on the wide range of reasons people bought albums. Consumption was the intended goal, but consumption did not impact revenue.

Music streaming flipped this dynamic. Streaming is a utility that generates revenue solely on consumption. Those broad use cases that apply to content ownership are largely gone.

There may be some connection consumers have with individual streaming services. U.S. based hip-hop fans may enjoy Apple Music due to its initial focus on rappers like Drake. Spotify Wrapped is an annual moment that may attract users to the service so they can share their own results. And in Tidal’s early days, it attracted some fans who wanted to support Jay Z, Black-owned business, and the higher payouts for artists compared to alternative platforms. There are differences, but it’s still a different consumer purchase than buying an album or any other form of media.

“back catalog” needs a rebrand

Songs older than 18 months are considered back catalog. They account for over 70% of music consumption, and that number has grown steadily through the streaming era. But that segment is largely driven by “shallow catalog,” songs that are just a few years old.

Will’s report showed the Luminate breakdown of music consumption by decades.

A large majority of the back catalog is songs that came out in the past 13 years. Streaming over-indexed on millennials. They are streaming SZA’s CTRL (2017). They are streaming Kendrick Lamar’s Good Kid, m.A.A.d city, which has stayed on the Billboard charts for 11 straight years.

The decades’ breakdown is much more valuable, especially since we’re a few days away from Harry Styles’ Harry’s House being labeled as a back catalog.

Listen to the rest of our episode with Will and Tati for more on:

• why publishing will continue to grow
• why “back catalog” is misleading
• how to speed up vinyl production

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money moves

• Dua Lipa buys the rights to her publishing​
• why concerts are the future of the music business​
• SNL’s skit on museum of hip-hop panel (hilarious, so well done)
• get the Trapital Report here​
• ​global music copyright report

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