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Goldman Sachs lowered its global growth expectations for the music industry for the next five years, as well as its forecast for global recorded music revenues this year, in a report published Tuesday (June 3).
The Wall Street investment bank’s Music in the Air report, which has become a closely-watched guide for music industry executives and investors, said it expects the global music industry to generate $31.4 billion in net revenues in 2025, a $2.5 billion decline from its 2024 projection of $33.9 billion.
That reflects growth of 6.8% on average from 2025 to 2030, down from the 7.6% compound annual growth rate (CAGR) analysts had previously forecast for that period last year. The primary factors driving that downward revision, Goldman says, are the slowing growth of last year’s recorded music revenues and lower ad-funded streaming growth, both of which contributed to expectations of 7.9% streaming growth on average from 2024-2030, down from the 9.8% previously forecast.
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“2024 was the first year since we began forecasting music industry trends where global music revenues fell short of our expectations,” the authors of the closely watched report wrote. “This was also the first year since we started forecasting music industry revenue where the recorded music market came well below our expectations.”
Goldman also issued new estimates for future growth, projecting that the music industry will grow at a compound annual growth rate of 4.8% for the years 2031 to 2035.
These slower growth forecasts echo findings of earlier reports this year, such as the IFPI’s March findings that global recorded music growth for 2024 was half of what it was in 2023, and the RIAA’s similar report that found that U.S. streaming revenue growth last year slowed to 3% from 7.7% in 2023.
Nonetheless, Goldman analysts said they expect the value of music rights and companies to remain “resilient” amid an uncertain macroeconomic backdrop, and that more frequent streaming subscription price increases and individualized service plans will provide support.
In 2025, Goldman says it expects global music industry revenue growth of 7.7%, down from its previous forecast of 8.3%, with growth in the live music sector and a slight improvement in recorded music revenue growth serving as the main drivers.
Goldman’s revision of its streaming growth outlook within recorded music revenues was due to significantly lower ad-funded streaming, researchers said. Ad-funded streaming growth is expected to slow to 5.7%, compared to its 2024 forecast of 11.3%.
Researchers said these “meaningful changes to our streaming assumptions” stem from a structural shift of more consumers preferring shortform as opposed to longform videos, less upside gained from emerging platforms and the impact of near-term uncertainty.
Those factors also caused Goldman to expect slightly lower subscriber and average revenue per user growth among streaming platforms.
The pace that global music industry revenues have been growing is expected to slow this year, as the industry is “on the cusp of another major structural change” stemming from the changing price of streaming subscriptions, artificial intelligence and new payment models, according to a closely watched report from Goldman Sachs.
In its latest Music in the Air report, published Wednesday, Goldman’s research analysts say they expect global music industry revenues in 2023 to grow by 7.1%, down from an 8% growth projection last year, as live music and publishing growth rates return to more normal ranges of 6% and 8% growth this year respectively. The compound annual growth rate for revenues from 2023 to 2030 ticked up slightly to 7.3%, from 7.1% last year, and streaming revenue is expected to hold steady at an 11%-growth rate, according to the report.
That indicates steady and even more broadbased growth, researchers say, but the industry is about to face a fresh wave of massive changes.
“We believe the music industry is on the cusp of another major structural change given the persistent under-monetisation of music content, outdated streaming royalty payout structures and the deployment of Generative AI,” Goldman researchers wrote in the new report. “In the wake of these developments, we believe a more coordinated and collaborative response from the main stakeholders will be key to ensure that the industry not only continues on its path of sustainable growth but also captures new business opportunities.”
Echoing a frequent refrain of music industry executives, Goldman’s researchers say monetization of music content is way behind the rate of consumption. They estimate that the revenue earned per audio stream has fallen 20% over the past five years, and that the revenue companies earn per hour of music streamed on Spotify is four times lower than for Netflix.
They estimate that up to $4.2 billion in potential revenue could be gained over time by charging different audience segments, such as super fans, more for subscriptions.
Goldman analysts also wrote that the current method of treating all streams lasting less than 30 seconds the same and paying content owners a pro-rata share of streams “needs to evolve…to cope with dilution of market share.” This weakening, they say, is coming from the fast-growing number of songs uploaded to digital service provider (DSP) platforms, fraudulent and artificial streams and “the propensity of algorithms to push lower royalty content.”
Researchers also sounded a positive note on the potential for generative AI to lower barriers for artists, boost music creation capabilities and improve industry productivity overall, with the major music companies best positioned to benefit.
“We believe the quality of the input to large language models is critical and the largest owners of proprietary (intellectual property) are best positioned to leverage the technology,” researchers wrote, noting the industry will need to be aligned in controlling the deployment of that tech.
The report also notes that, despite fears of market dillution from the rush of new content, Universal Music Group and Sony Music Entertainment both maintained their recorded music market share in 2022, with only Warner Music Group losing market share — about half a percentage point — to independents.
“We continue to expect modest dilution of market share over time, mostly driven by the revenue mix shift towards EM, although we believe that the major record labels will continue to expand their presence in EMs through partnerships, investments and bolt-on M&A,” researchers wrote.
Spotify maintains its clear lead among the DSPs with 34.8% of total global market share in 2022, although it edged 60 basis points lower. YouTube Music was the “major gainer,” gaining about 3 percentage points of market share over the past three years to hold market share in 2022.
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