Once you adjust this figure for inflation, you will find that global recorded music industry has almost been cut in half over the past two decades. Almost immediately, you can attribute this to music piracy and the dismantling of the ‘album’ by services such as iTunes which allows consumers to download one track if they wish to.
With the industry going through a transformation in the form of streaming subscription services, it is this aspect that can lead the music industry out of the pit that it finds itself in. Of course, if streaming services take a turn for the worse, and as indicated by Credit Suisse, then the industry could experience revenue growth in the coming years.
But streaming will remain a niche activity given that Spotify only has about 15 million subscribers while Apple and YouTube are now planning to offer their own subscription audio products as well.
But there’s room for growth as clearly indicated by a Vivendi study that owns the biggest music label Universal. They forecast that by 2020, almost 5% of smartphone users will be paying for a streaming service and which amounts to almost 250 million users.
These streaming subscriptions cost $120 a year and which is even more than what was spent when the industry was at its peak. So, there’s potential that consumers might be spending more money on music than ever in the future.
That said, there’s still a long way to get there and which is why record labels and musicians are skeptical about it – and this is despite the fact that the profit margins on digital music is much more than physical music.