COVID-19 and The Music Industry
Updated: May 6, 2020
Music consumption is higher now than at any time since around 2006. The download format is now antiquated, and the consumers concept of music ownership is largely a thing of the past. We’re firmly embedded in the streaming age. According to a mid-year report by Nielson in 2019, streaming accounted for 78% of all music consumption. Streaming has been pivotal in returning our industry to growth and years of decline are now behind us.
This has brought about other changes as a result. We’ve moved into a post-album economy. The song is taking centre stage as streaming algorithms and playlists drive discovery. In many ways this is liberating – artists can jump off the two-year creation-delivery cycle and release more content and take more creative side steps in doing so. Local music trends are able to find global music audiences and non-English language tracks are breaking through more than ever before. There’s much to be excited about in the big picture and I maintain that there’s never been a better time to work in the music industry; change presents a wide-open door of opportunity.
Of course, the impact of COVID-19 is apparent. Although recent reports of Spotify reaching 130 million paying subscribers is great, we should also remember that a subscriber increase does not necessarily lead to a streaming increase. Global streams from Spotify’s Top 200 chart dropped around 11% in the week commencing March 13th – that’s when many countries around the world began lock down measures.
Why would this happen? Some may assume that if people are at home they’d be listening to more music. But if we take into account the abrupt decline of commuters, bars, shops, restaurants and so on that would have been streaming music (often on a loop) the data makes sense. But we should look at these numbers alongside other more positive metrics. In that same week we saw a spike in video streaming of around 14%. Perhaps instead of streaming music on a commute, people are choosing to stream music on visual platforms when at home. Indeed, Deezer reported that their daily spike had moved from rush hour (7am) to between 9 and 10am. This seems indicative of that consumer change.
Another fascinating pivot has come from radio. We’ve seen a dramatic increase in radio listenership. The BBC reported an 18% increase, and Global similarly saw a 15% rise. US radio stations have reported even more impressive results. But why is this? Streaming music on platforms like Spotify isn’t a communal experience right now. Playlists are generally listened to alone. Radio on the other hand has a sense of community – people listening together at the same time. In uncertain times I think we appreciate such shared experiences… and radio has the added benefit of being able to include news updates. Perhaps there are lessons to be learned for DSPs from radio when life returns to normal – how do we build social connection into a streaming platform?
With streaming down, and concerts, tours and festivals cancelled, musicians are facing an unprecedented challenge, and often financial hardship – that’s undeniable. My entire career, be it as a director of SMB: The School of Music Business, artist manager, or board member for Jump: European Music Market Accelerator, has been about highlighting the huge role music plays in the fabric of our lives. The people that create, manage, promote, release, administrate or protect music, are massively important. They need to be supported at all times, but particularly during times like these.
It’s to the credit of the incredible music industry we’re in, that many companies and organisations have stepped up to the challenge. Bandcamp waived its revenue share early in the crisis. A relief fund has been set up by Spotify and they’ve implemented a new method for fans to donate directly to artists. Help Musicians UK, PRS For Music, PPL, BPI and others have all launched initiatives, donated and generally done truly noble work. Government’s need to do all they can to protect musicians and music businesses and recognise the nuances of our industry and how artists monetise, to ensure performers and stakeholders don’t fall between the cracks of any financial support available.
In the industry, it’s the live music sector that has been hit the hardest. With live concerts, festivals, and any large gathering, cancelled or postponed, the implications are far reaching. Live Nation and AEG have suspended all tours. Major festivals such as SXSW, Glastonbury and Coachella are off. Many independent festivals and venues are fighting for survival. It’s smaller venues that face the biggest challenge. A venue with a 200 capacity simply won’t be able to implement social distancing measures that look likely to be imposed for some time after the lockdown. Musicians Union report that UK artists have lost £14 million in earnings during March alone. We’re waiting patiently for the nightmare to end, but at a governmental level, as much as possible needs to be done to ensure these creators and businesses can survive and come through the other side.
As always, artists are adapting and finding solace in their creations and their audiences. The importance of human connection has long been at the core of how we market music successfully. Streaming services deliver listeners, but it’s not listeners that provide a strong revenue source, it’s fans. Musicians are using live streaming and a universal shared experience, to connect with an audience in an authentic and human way, turning casual listeners into devoted fans in the process.
It’s also interesting that sales of instruments and music making software has boomed during lockdown. With artists having the time and the ability to record at home, we could see a wave of new releases when life resumes, and possibly a growth in streaming numbers as a result.
What is certainly true, is that the music industry has proven itself to be extremely resilient over the last 40 years … and with support from consumers and governments, it will undoubtedly bounce back. We also recognise just how important music is! We mustn’t forget the songs, the performers or the song writers that we’ve turned to for solace and escapism, once life has returned to something resembling normality.
We should be extremely grateful to music, it's creators and our industry professionals.