While the coronavirus is first and foremost a devastating health crisis, there’s no doubt that it has also had a huge socio-economic impact across the globe.
One of the most adversely-affected industries has been the music sector, with the niche’s collapse completely undermining the 11% growth recorded in 2019. As a result of Covid-19, it’s thought that the UK music industry will halve in size this year, with this decline likely to take years to reverse.
However, there are some elements of the music industry that are continuing to thrive, so the outlook for the sector isn’t completely bleak. We’ll take a closer look at the industry below while asking what the future has in store for UK artists and musicians.
A Look at the Market Today
As we’ve already touched on, the UK music industry is set to halve in size this year, with the live events niche decimated and artists unable to generate income through touring and international (or even domestic) performances.
However, the digital landscape is decidedly rosier, with streaming sites such as Spotify surging by 17% in March 2020 as the pandemic began to rage across the globe.
This was triggered by an impressive 31% hike in paid subscriptions amid the lockdown, as consumers spent a growing amount of time at home and the demand for online streaming service increased across all entertainment verticals.
According to Spotify’s first quarter financials from 2020, the brand beat its earnings estimates comfortably, and while revenue estimates for the same period ultimately fell short, the company undoubtedly saw significant growth as the corporeal music sector was locked down.
Does the Future Belong to Streaming?
Of course, this simply accelerated a trend that was already prevalent in the music sector, with online streaming and downloads having become the preferred methods of consuming music in the UK.
This is thanks largely to the freemium business model that underpins the Spotify platform, which enables users to choose various subscription levels to suit their consumption tastes and individual budgets.
The same model also underpins competitors such as YouTube, TikTok and Apple Music, enabling them to minimise their overheads and the actual cost of downloading music to customers. This combination of flexibility and affordability is central to streaming platforms’ success, particularly during times of socio-economic hardship.
As a result of this, 2019 saw a scenario where services like Spotify and Apple Music grew by 26% to account for 80% of the music industry’s revenue. So, while corporeal music sales also increased during this time, they did so at a much slower and less impressive rate.
What Does the Future Hold for the Music Industry?
With these points in mind, it would be wrong to call the coronavirus pandemic a game-changer for the music industry in the UK, as it has actually done little more than accelerate a trend that was already irresistible in the marketplace.
What’s really interesting is how Spotify and Apple Music are looking to expand further into the music industry, both in terms of ‘exclusives’ and the ability of artists to manage their careers through streaming platforms.
It was Apple who blazed a trail for signing up artists exclusively in 2018, when they scooped up A-listers such as Taylor Swift, Drake, Frank Ocean and Chance the Ripper.
Spotify have since moved into this space too, while also signing a deal with Merlin that will allow the global digital rights agency for the independent label sector to participate in flexible release policies online.
This will entice a number of artists to work exclusively with streaming services, particularly with Spotify now offering a larger number of ways for artists and their teams to leverage in-depth analytics and manage launches successfully. This definitely hints at the future of the UK market industry, especially as streaming platforms continue to grow and diversify over time.
This should also alert investors, with your forex broker able to offer access to various indexes that include companies such as Spotify and Apple Music.
These entities definitely represent attractive options for investors in the medium and longer-term, with streaming already the dominant method of consuming music and other entertainment verticals in 2021.
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