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State of the Music Industry 2024: On Growth, Challenges, and the Need for Tangible Solutions

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State of the Music Industry 2024: On Growth, Challenges, and the Need for Tangible Solutions

Last year, the music industry experienced significant growth through various revenue streams. Nevertheless, it remains a challenging field to enter and remain in for artists and employees alike. In this article, we look critically at the state of the music industry and discuss the current trends and challenges.

Numbers and changes

According to the most recent Global Music Report by IFPI, the music industry has experienced substantial growth in 2023. Global recorded music revenues increased by 10.2%, largely driven by paid streaming subscriptions. Subscription streaming revenues grew by 11.2%, making up 48,9% of the global market. Much of the growth results from ongoing investments by record companies, which spend more than $7.1 billion on A&R and marketing each year.

What do the numbers tell us about the state and future of the music industry? The first, arguably most important observation is that music streaming services remain preferred by consumers and thus highly relevant to artists. For musicians, such findings emphasize the importance of uploading their music to streaming services, where they can be discovered and listened to by their fans.

Music streaming platforms are aware of their position in the market as they continue developing their services. For example, over the last few months, Spotify has introduced several new functions, including an AI playlist feature, and is testing video courses in the UK.

However, they are also developing further restrictions that do not benefit all artists and consumers in the same way. Among them are Spotify’s changes to its royalty payout system, which now requires a song to reach at least 1.000 streams to qualify for monetization. Conversely, Tidal decided to abandon its free subscription model and replace it with a single-tier subscription that costs $10.99 per month. Similarly, Spotify announced it would once again raise its prices.

IFPI emphasizes multiple challenges

Although certain things seem to be going reasonably well in the music business, the industry is also facing multiple challenges, “including streaming fraud, digital piracy in all its forms and, of course, the threat from the abuse of generative artificial intelligence if it is not developed responsibly and with respect for artists’ and labels’ rights,” says Lauri Reichardt (IFPI).

Streaming fraud, royalties, and almost-monopolies

Streaming services have recognized streaming fraud as a critical challenge and continue to implement new systems to tackle the issue. For instance, Spotify does so by detecting fraudulent activity and penalizing culprits by charging them with a per-track penalty. As part of its new changes, the platform decided to stop paying royalties to individuals who upload short noise content. Instead, Spotify will give the money to artists it considers ‘hard-working.’

While the redistribution of royalties will generally benefit artists, money will only go to those whose tracks amass over 1,000 streams. Yet, the disparity in streaming numbers is staggering: According to Bloomberg, in 2023, 45.6 million tracks generated zero streams, while ten tracks generated more than 1 billion streams. Considering that many artists find themselves closer to the 'bottom' of the two extremes, the changes will once again financially privilege already established musicians.

In addition, artists and industry members continue to criticize streaming platforms for their low payouts and their dominance in the music consumption market. This way, they make artists depend on them while also not paying them well enough. In this context, some also highlight the role of the “big three” - Spotify, Apple Music, and Amazon Music - and their monopoly-like status.

Artificial intelligence remains the largest challenge faced by the music industry. Artist’s concerns range across various areas. While some are worried that AI may partly or wholly replace them, others are afraid of copyright infringements and impersonations through so-called deepfakes. Both fears are valid, as AI can already do quite a lot, such as generating beats, writing melodies and lyrics, cloning voices, and creating fake yet realistic videos, among other things.

While some governments have begun introducing laws and regulations to limit AI and protect artists and citizens, many companies ignore the warnings and continue to incorporate AI tools in their products. For instance, despite its shaky situation, TikTok has filed for various patents and trademarks in the US to secure the rights to its music-AI technology. As of now, an ongoing conflict exists between supporters and opponents of AI tools, and the lack of a legal framework will only exacerbate such disputes.

Layoffs and lack of security for employees

Yet, artists are not the only ones facing much insecurity and instability. Although far from struggling financially, over the last few months, several large companies have decided to terminate the contracts of hundreds of their employees. Layoffs occurred at Universal Music Group, Warner Music, YouTube, and Spotify, affecting employees in an unexpected way.

Such decisions are often justified by common yet abstract concepts like growth, innovation, competitiveness, restructuring, and development. Because they sound convincing, they are usually accepted without further questioning. But unless a company is small and in serious financial trouble, layoffs are usually not as necessary as they are believed to be. They are rather the result of an economy that demands growth at the expense of sustainability and fairness.

This is where it gets tricky. Although the music industry has continued to expand, overall growth has slowed down in comparison to previous years. This is partly due to the streaming market becoming increasingly saturated and partly because companies have to find new ways to attract customers for growth beyond raising prices. In the current economic system, companies ‘need’ to present themselves as profitable to shareholders, through whom they can raise money for various activities and, unsurprisingly, further growth. When companies appear less profitable, they will take drastic steps to cut costs - in other words, fire people.

Growth is often taken for granted, but a simple question can easily challenge the validity of the status quo: what is the end goal? Unfortunately, companies seem to ignore that, at this point, it may not be possible for regular consumers to facilitate their growth-related goals. For example, while streaming services continuously raise their subscription prices, many individuals struggle to cover the rising costs of basic necessities caused by inflation and corporations profiting from basic human needs. Moreover, changes to business models and services are rarely met with excitement – just think about Instagram trying to become TikTok, or Netflix introducing a more affordable yet annoying ad plan to make more money by bothering people who already pay to watch shows.

A possible solution to this dire situation may lie in the concept of degrowth. The movement advocates for abandoning the relentless pursuit of growth and prioritizing social and ecological well-being over corporate profits, overproduction, and excess consumption. An approach that prioritizes long-term stability and sustenance over growth and competitiveness would surely help stabilize the lives of consumers and employees alike. Yet, since this is not the priority of the current economic system, layoffs will remain an issue within the industry until larger economic changes occur.

Lastly, industry professionals actively discuss various trends in the music business, current and future ones alike. Among them are:

  • Increase in the consumption and production of regional, non-English music

  • Further personalization of music consumption via AI tools

  • People will continue criticizing celebrities who are unwilling to stand up for human rights (e.g. artists constantly overusing private jets for short-distance travels)

  • Genre blending and the development of even more niche genres

  • Targeting of “super fans,” defined as listeners who engage with artists in various ways

  • Growth in the Middle East & North Africa, Sub-Saharan Africa, Asia, and Latin America

  • Video content will remain highly relevant to music marketing

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