Goldman Sachs Predicts $28 Billion Streaming Music Market, But Should Anyone Care? – Forbes
Goldman Sachs raised some eyebrows recently with it’s latest Music In The Air report that predicted the streaming music market alone would increase to $28 billion per year by the year 2030. Sounds great, but considering that the industry’s greatest revenue year to date brought in $27.4 billion (in 1996 during the height of the CD era), Goldman’s figure might be more than a bit optimistic. While everyone connected with the music business would be delirious with joy should the forecast occur, one has to look at this figure with a certain amount of caution for a number of reasons.
The Price Isn’t Right
First, as industry consultant Mark Mulligan points out, the current annual average revenue per user for streaming music is around $33 (based on last year’s $3.5 billion in streaming revenue from 106 million paid subscribers). It would take approximately 853 million paid subscribers to reach that mark at this ARPU. Of course, this is based on the now standard $9.99 per month subscription rate (or the equivalent value in countries outside the U.S.).
Most industry pundits feel that in order to really scale subscriptions, that $9.99 monthly rate has to drop to somewhere around $4.99. While 850 million users seems like a stretch in a world of 7 billion people, double that amount seems a far greater reach at this point. Then again, no one thought that Facebook would hit 2 billion users worldwide, so maybe that number isn’t as far-fetched as it seems.
That said, the biggest impediment to a lower price point is the major record labels, who continue to insist that the $9.99 monthly price be maintained. One would think that it would take a big slowdown in growth before that thinking might change, which may come about (too late, I might add) from the next point.
The Disruption Will Surely Come
Historically, the music industry is always one of the first to embrace a new technology. Goldman’s predictions are for 2030, but so much technologically can happen within those 13 years that could negate that prediction. It’s not hard to imagine that either a new format or delivery system can emerge in that time frame that could skew that $28 billion annual revenue model upward or downward in a big way.
From the piano roll to the lacquer record to vinyl record to 8 track tape to cassette to CD to download to streaming (and a few others in between), the industry will always embrace something new, and most cases, it leads to a revenue surge that was unforeseen just a few years previous. Count on the unexpected to happen, and probably sooner than later.
A Little Self-Serving?