The Limitations of Music Streaming’s Globalising of Revenue

Photo of Zach Fuller
by Zach Fuller

One of music streaming’s great promises is that it creates a more globalised industry. In many ways it is delivering: revenues are rising in markets previously deemed problematic to conduct business within and domestic markets are now flooding with languages other than English—both in no small part down to streaming.

And yet observing the revenues of music companies tells a different story. Take Universal Music Group for example. In 2008, Europe accounted for 42% of Universal Music Group’s total business. That went down to 33% in 2018. However, far from the emerging market narrative (although regions outside of North America and Europe have increased their share of UMG’s revenue from 17% to 21.2%), North America has seen the largest increase of UMG’s total business, going from 41% to 46.1%.

North America accounts for 56% of global music publishing revenue compared to 47% for recorded music. This also skews favourably away from the US’s 40% market share of global subscription revenue. Clearly, certain factors are favouring the US for music publishing, mainly due to the plethora of revenue opportunities being chiefly concentrated in the region. While streaming can be done from anywhere in the world and is thus diversifying regional revenue, publishing opportunities have a few things going for them in North America:

  1. Digital advertising budgets

The US digital advertising market remains the largest in the world. Given the growth in ad-supported streaming revenue, it is natural that the disproportionate value of advertising in the US versus more embryonic digital ad markets will skew total revenue towards North America.

  • Media concentration

Sync deals, licensing opportunities and performance royalties are all higher in the US than other territories. For this reason, it is inevitable that revenues from North America, despite total consumption being more widely distributed than before, will continue to account for a higher proportion of total revenue. It is not to say that growth rates of other territories will not be exponential and meaningful, but they will pale in comparison to the other revenue streams that can be exploited in the US.

The result is an industry that is driving revenue market share away from Europe and in the dual directions of Asia/LatAm and the rest of the world, as well as coalescing in the established territory of North America. While music streaming is levelling the playing field in terms of consumption and driving a significant shift in which music is able to swiftly garner a global audience, as it has done with several Latin American artists over the past three years, publishing revenue opportunities remain favourably concentrated within the US. Until those opportunities are decentralised (which the growing media industries of China and India may well influence), North America will continue to dominate music publishing revenue.

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