If you’ve been within earshot of the music industry over the past five years, you’ve probably come across Music in The Air, a thorough and oft-cited report from Lisa Yang at Goldman Sachs. The key takeaway? Industry revenues are projected to reach $131B by 2030. But there are some terrific nuances to her analysis, particularly with respect to consumer behavior in emerging markets that I wanted to share.
The Goldman music industry revenue model explodes between 2015 and 2020. Smartphone penetration and emerging market monetization are key drivers. So, 5 years in, this is the chart you want to see from India:
The appeal of having almost every song in the world in our pockets is universal. So it won’t come as a surprise that the up-and-to-the-right revenue trajectory for our industry is a function of global demand for access to streaming services.
For these projections to meet or exceed expectations, a couple of things have to be true.
First, ~9% of the global smartphone population needs to subscribe to a paid/premium streaming service by 2030, up from ~2% in 2015.
Second, emerging markets need to spend more per capita on recorded music. The average annual spend in emerging markets stood at less than $1 in 2015 compared to around $15 in developed markets. Emerging markets accounted for just ~10% of the global recorded music market in 2015. For context, the Indian market was smaller than that of Norway at the time the Goldman report was written.
So, five years in, if you’re the author of that report, or running a company where those projections have real implications (hey!), a chart like the one I opened with, showing off-the-charts mobile data consumption in India, is a welcome sight and hopefully a harbinger of sustained revenue growth.
Rather than turn this quick post into a full blown essay, if you want to understand why mobile data consumption in India is exploding, Ben Thompson of Stratechery provides a great analysis here: https://stratechery.com/2020/india-jio-and-the-four-internets/