The Outlook for Music Catalogue Streaming Changes Everything

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The 20,000 Foot View:  Catalogue was a real money spinner for the music industry throughout the sales era. First it underpinned the CD boom (convincing music fans to re-purchase old albums they already owned on prior formats). Then, through the emergence of the digital economy, it provided a stable respite from the volatility of declining overall revenues in the wake of        file sharing. With high margins (recording costs etc are already covered, and many re-issues are premium products) and low marketing costs (fan audiences are already established), catalogue has become the investment fund that labels use to turn artists into superstars. Yet, as the business shifts to the lower margins of streaming and a model based on engagement, the early warning signs are that catalogue will struggle to remain an influential component of labels’ revenue mix. With streaming’s emphasis on the new set to create a world of mega hits and audiences with less inclination towards looking back, catalogue is at a tipping point. Either it changes to meet the market or the market leaves it behind.

Key Findings

• Catalogue acquisitions are at a new high:        million was spent on catalogue rights acquisition in 2017, up from        million in 2015 
• The surge in demand for music catalogues has created a sellers’ market
• Streaming creates new catalogue economics – Bruce Springsteen’s 2003 greatest hits album generated around        million, his five most streamed Spotify tracks just        million
• Streaming catalogue consumption skews towards more recent history:        of catalogue streams in the UK were from the year 2000 and after
• Music catalogue generated        billion in retail revenues in 2017, up from        billion in 2016
• Catalogue revenue will grow to        billion by 2025 but its contribution to recorded music revenues will fall to        from        in 2017
       of all UK catalogue streams in 2017 were for music released in the current decade, up from        in 2016
• Older music fans are abandoning new artist albums which means formats that skew towards older demographics, such as CDs, are becoming more catalogue orientated 
• Catalogue marketing and product strategy requires innovation to thrive in the streaming era
• Success will depend upon harnessing social context and contemporary cultural context

Companies and brands mentioned in this report: Amazon, Apple Music, BMG Music Rights, Downtown Music, Dubsmash, Guardians of the Galaxy, Man in the High Castle, Napster, Musical.ly, Round Hill Music, Sony Music, Spotify, Universal Music Group, Warner Music Group