New Report: Music Industry Outperforms Cinema

A recent report from a former executive at Spotify has revealed that the music industry has surpassed the global film industry for the first time. The value of music copyrights has climbed 11% in 2023 to equal roughly £36 billion, making the industry 38% higher than the film industry’s £26.21 billion in 2023’s box office receipts.

Challenging Times for Cinema

While the figures indicate that the music industry is outperforming expectations, they are also indicative of a challenging period for the film market. Last year was hampered by the simultaneous actors’ and writers’ strikes, with big-budget projects such as Oppenheimer helping to keep cinemas afloat during the period. Cinema has been heavily impacted by the rise in home entertainment, as viewers’ screen time has shifted to video streaming platforms.

However, this year has resulted in surprise success for a string of independent films, particularly of the horror genre. Taking inspiration from Blumhouse’s low-budget horror model, Neon’s Longlegs, IFC’s Late Night With the Devil, and Paramount’s Smile 2 have performed strongly at the box office against their budgets.

The entertainment industry as a whole has latched on to the horror trend, such as within the iGaming industry. For example, newly-released online slot Dreadworks follows in the mould of these popular horrors, and the popularity across all forms of entertainment shows how the horror genre is able to become so lucrative at the box office.

Furthermore, the Thanksgiving weekend also saw audience support for indies, with Heretic, A Real Pain, and Conclave breaking the top 10 in box office takings. The shift in audience viewing habits could force Hollywood to change course to meet market demand and stifle its losses to remain competitive with music.

Music’s Surprising Surge

The recent report was fronted by Will Page, the former Chief Economist of Spotify and PRS for Music, on Page’s Pivotal Economics website. It outlines that of the £36 billion generated from music, £18 billion came from recorded music revenues, a 12% spike year-on-year. Meanwhile, £8.15 billion was brought in by collective management organisations (CMOS), and £2.65 billion was generated in direct publisher income.

Page notes that the £36 billion figure is an increase of 26% since 2021 revenues and almost double the figure calculated in 2014. “Next year (when we calculate 2024) we may see copyright having doubled within a decade. Make no mistake: it’s boom time,” Page wrote.

Music’s surge in revenues is especially surprising when considering that in 2019, cinema was 33% larger than music copyright. Page’s report also points out that when it comes to distributor profits, revenues are closer to £13 billion, as cinema owners take half of box office earnings. This puts the value of music rights holders closer to triple that of cinema’s takings.

Interestingly, the rise of home entertainment has helped to boost music copyright revenues. While cinemas don’t pay royalties for film music, streamers must acquire performing and mechanical use rights. They must also pay higher tariffs — almost double the headline rates paid by cinemas. Additionally, their large audiences help musicians gain greater exposure.

“This shift in attention, from a couple of hours in front of the silver screen to those same hours on your sofa, has significant ramifications on the value of music copyright, past, present, and future,” wrote Page. Another major driver of the industry’s huge growth is the emerging markets of Asia, Africa, and Latin America.

Boosts from Emerging Markets

According to the mid-year report from entertainment industry monitor Luminate, the global on-demand music streams have reached 2.29 trillion, amounting to a 15.1% rise in international stream volume. According to Page’s report, the volume has been a result of explosive growth in ad-supported streams in emerging regions of the Global South.

There has also been rapid growth in international music markets, including South Korea’s K-pop industry. The nation has joined the US, UK, and Sweden as the largest net exporters of music compositions, with exports exceeding its imports. The UK has exported 1.6 times as much music as it imported in 2023, while Sweden exported 1.8 times as much.

India’s connection to online streaming platforms has also exploded, and the nation is predicted to overtake the US as the biggest streaming market by volume in the coming year. This is related to a trend called “glocalisation”, whereby locals are opting to consume music in their local language rather than international music.

One of the benefits of the boom in emerging markets is that music has become a source of income for artists in lower-income countries. When the songs reach a global market, the copyright income per song played is higher than it would be at home. For example, Mexican artists’ £275 million in US earnings far exceed the £118 million they’d earn if the same volume of streams were solely from Mexico.

However, it’s not always local artists behind local hits, meaning global artists don’t always keep all the revenues. Swedish and Bulgarian songwriters have been known to travel to South Korea to work with K-pop artists. Therefore, the songwriting royalties return to Europe while the recording rights stay in Korea.

Physical Music Sales Propel Music Further

Photo by Eduardo Romero/Pexels

As streaming volumes hit new highs, there has been a sizeable up tick in the purchase of physical media such as CDs and vinyl. Vinyl record sales rose by 15.4 per cent in 2024, with £800 million expected to be generated by the end of the year in the US alone. In the UK, vinyl sales increased 12.4% in the first half of 2024, with more than 3 million units sold.

For the first time since the 1980s, vinyl has overtaken CD sales. Regarding the physical music trend, it’s apparent that it isn’t entirely informed by nostalgia. Audiences are flocking to the haptic experience of physical media over digital forms, as well as the controlled nature in which vinyl records play from start to finish unless physically interfered with.

Despite rapid changes in the music industry, the recent report indicates a robust future for the sector. While cinema recovers from a tumultuous 2023, music is set for one of its most profitable periods yet thanks to emerging global markets, the return of physical media, and a digital streaming boom.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.