We had suggested in 2020 that 2021 was going to be a strong year for the recorded music market. It turns out that 2021 was the fastest growing year in living memory, with growth across most formats, in stark contrast to 2020 when streaming was the only growth segment.
After 2020 was constrained by the global pandemic, the global recorded music market grew by leaps and bounds in 2021, growing 24.7% to $28.8 billion (highest annual growth in modern times) . Growth in 2020 was much more modest (7%), but this reflects the suppressive effect of the global pandemic in the first half of the year.
2021 has been a big year for the music industry, with a record amount spent on music catalog acquisitions and IPOs for Warner Music Group (WMG), Universal Music Group (UMG) and Believe Digital. These developments proved to be symptoms of strong growth in the global market, along with recorded music revenues.
Streaming revenue reached $18.5 billion, up 29.3% from 2020, adding $4.2 billion – also a record increase. A key driver of streaming growth was non-DSP revenue, representing deals with Meta, TikTok, Snap, Peloton and Twitch. Revenue from non-DSP streaming recorded music totaled $1.5 billion in 2021, a massive increase from 2020. DSP streaming (Spotify, Apple Music, Amazon Music, YouTube Music, etc.) also grew strongly increased to $17 billion.
UMG remained the largest label, with $8.2 billion, giving it a market share of just under 29%. However, for the second consecutive year, Sony Music Group (SMG) was the fastest growing large company and increased its market share by growing significantly faster than the total market. For the first time since 2017, the majors have not seen their collective market share decline.
Independents also had a good year, with strong growth on both large and small labels. But it was, once again, direct artists (i.e. self-released artists) who were the big winners, generating $1.5 billion in revenue and increasing market share to 5, 3%. They also added more revenue than the previous year, which the segment has done every year since 2015. However, as 2021 was characterized by a strong performance from all segments, the increase in artists’ market share direct was lower than in previous years.
The concept of evenly distributed growth was also reflected in geographies and formats, with physics and the like (i.e. performance and timing) all increasing sharply. Physical growth has been so strong that revenues have exceeded 2018 levels.
The recorded music market looked vulnerable in 2020, relying entirely on streaming for growth, with the outlook inextricably tied to that of DSPs. 2021 has been a very different story, with growth on most fronts, but mostly an increase in non-DSP revenue, reflecting an increasingly diverse future in which labels can worry a little less about the prospect of slower subscriber growth in mature markets. When coupled with longer-term growth opportunities (NFT, metaverse, etc.), the outlook is positively positive. Although 2021 was boosted by exceptional circumstances (e.g. the rebalancing of the wider economy after the Covid 2020 depression, and a large portion of non-DSP revenue being in the form of one-off payments), year-on-year growth 24.7%, signals the dawning of a new era for an increasingly diverse recorded music industry.
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