U.S. Music Revenue Reached $11 Billion in 2019, But It’s Still Not at Its Peak
American music fans racked up an unprecedented one trillion streams in 2019, drawing in $28.2 million per day for the U.S. music industry. Yet that’s still not enough to take the industry back to its CD-era glory days.
The Digital Music Association (DiMA) — a trade body whose membership comprises Amazon, Apple, Pandora, Spotify, and YouTube — released a highly optimistic annual report on Thursday that forecasts strong continued growth in the U.S. music market, despite COVID-19’s derailment of most entertainment sectors in 2020. The 43-page report, assembled by Midia Research using consumer surveys and data from the member companies, points to digital music subscriptions, technological innovations, and diversified audio product offerings as drivers of that growth, and it predicts that U.S. music revenue will finally topple its heights-of-the-CD-empire record of $14.6 billion by 2025. (In 2019, revenue reached $11 billion, with about 80% of that coming from streaming.)
“If mapping the U.S. market against other market’s paths to maturity, we should’ve seen growth slowing more quickly than it is,” Mark Mulligan, managing director of Midia, tells Rolling Stone. “The U.S. is a late-stage streaming market and growth is slowing. Penetration is beginning to tap out. The competitive landscape is very well-defined. But there’s still this significant amount of momentum.”
That momentum is being led by new products piquing the interests of music fans — as well as, of course, marketing dollars from the digital service providers themselves. Mulligan adds that Midia reworked its global forecasting after COVID, but his team’s long-term outlook for the U.S. is still “remarkably similar to what it was before COVID” because of the stronger-than-expected growth in 2019 and because of the unique resilience of digital streaming to wider economic trends. Music streaming services have not been as affected by the pandemic as major labels, who are exposed to downturns in physical retail, public performance royalties, and film/TV sync deals, for example.
“What we continue to see from our member companies is relentless innovation and experimentation — within even their own service offerings — around what it is that fans and consumers want access to,” says Garrett Levin, DiMA’s CEO.
The report pinpoints podcasts, car dashboards, high-definition music, data dashboards, editorial content, and smart speakers as areas ripe for future growth. Smart speakers are a particular point of curiosity: The number of Amazon Echos, Apple HomePods, Google Homes, and other such devices in U.S. households has quadrupled in the last two years, jumping from 19 million in 2017 to 71 million in 2019. DiMA and Midia’s research also shows that, in the second quarter of 2020 — when most people in the country were locked at home — 43% of smart speaker listeners pumped music for more than six hours a week, compared to only 29% of U.S. music listeners in general.
“Smart speakers extend the total addressable market,” Mulligan says. “Streaming’s addressable market used to be the number of people who have got a phone with a data plan. But now you can market to older people. A fifty-something who never really got into downloads and probably still has CDs around the house isn’t thinking about taking their smartphone around and listening to music on it — but they are thinking about listening to music at home.”
The five tech giants that make up DiMA are also rolling out new offerings by the dozen these days, offering fans and artists much more than just access to music. Asked how DiMA will track new products such as analytics dashboards and bundled audio-visual subscriptions, Levin says the group “will certainly have to think about what kind of data gets recorded from the services” later on if the companies’ audio product offerings continue to diversify — but the annual report is not planning changes to its metrics or methodology yet.