Music

Executive summary

Whilst digitally distributed music including streaming has grown, COVID-19 has brought the live music industry to a grinding halt, with live concert events banned for prolonged periods, and no clear indication of when international touring will recommence. While local acts have innovated through the use of streaming services, the live entertainment ecosystem of ticketing, venue, touring, merchandise and music sales has been significantly disrupted and will need support to recover to its prior growth trajectory.

Australia’s total music market came in at A$1.818b in 2019. As consumers continue to embrace a variety of music-streaming brands, that figure is expected to rise to A$2.319b in 2024, increasing at a rate of 4.99 percent CAGR, based on the mid-point forecast scenario.

Forecasts at a glance

Physical Distribution Music Market (A$ millions)

CAGR 2019-2024 based on gradual recovery trajectory

Physical distribution    -11.82%

Digital Distribution Music Market (A$ millions)

CAGR 2019-2024 based on gradual recovery trajectory

Digital distribution  10.31%

 

Live Music Market (A$ millions)

CAGR 2019-2024 based on gradual recovery trajectory

Live Music -0.55%

 

Total Music Market (A$ millions)

CAGR 2019-2024 based on gradual recovery trajectory

Total Music 4.99%

 

The Australian live music scene is undergoing transformation, with ownership changes amongst key players.

The live music and entertainment sector underwent significant changes and consolidation in 2019 - even before the onset of COVID-19 and its devastating impact on this part of the industry. AEG Presents bought a 50 percent stake in Michael Gudinski’s Frontier Touring Company and, separately, Michael Chugg’s Chugg Entertainment forming a joint venture with Frontier. In October 2019, Silverlake Investments purchased Australian-based global entertainment, ticketing and data business TEG50 for what is believed to be in excess of A$1b, showing the value of the integrated offering of the TEG Group across multiple forms of entertainment and ticketing offerings.

Live Nation and TEG’s TEG Dainty are among the power players in a live market worth US$581m in 2019, with the ability to attract significant acts to Australian shores.

The live music sector was severely disrupted with the onset of COVID-19, with live music and entertainment all but shut down, and future ticket sales impacted by the uncertainty as to when events will recommence.

The live entertainment industry was severely impacted by restricted movement and social distancing measures, and ticket sales were stymied by an uncertain touring schedule with border closures and quarantine requirements effectively putting a temporary hold on any touring acts from overseas. Current forecasts anticipate a revenue fall for the live music industry of ~90 percent in 2020, a number that will only recover once the global borders are opened to touring acts.

Streaming has provided some compensation for the music market amid COVID-19, and it is now the largest driver of industry revenues.

Music-streaming has become the pumping heart of the industry, and as COVID-19 continues to drive an acceleration in digital behaviours, it has become a vital pillar to defend revenues in the sector throughout 2020. As of June 2020, Spotify has accumulated 138 million subscribers globally, with monthly active users up to 299 million, having increased subscription penetration in all regions.51

In 2015 revenue related to the digital distribution of music (including downloads and consumer spend on music streaming services) came in at A$336m. That figure had risen to A$882m in 2019, and is expected to surge to A$1.44b by 2024, with a forecast of 10.31 percent CAGR.

Partly due to the growth of streaming, Australia’s recorded music market is stable, notwithstanding the dramatic impact on live performance.

Australia’s music scene continues to push new acts into the global charts, none bigger in 2019 and 2020 than Tones and I, whose hit single Dance Monkey ruled the UK singles chart for 11 weeks, a record for a female solo artist. The single topped the charts in no less than 20 territories and enjoyed top-five success in the US.

A handful of hotly anticipated Australian albums arrived in 2020, including albums by Tame Impala and 5 Seconds of Summer. 5 Seconds of Summer's first three albums all charted at No. 1 in the US, a feat never achieved before by an Australian group. Released in March 2020, their fourth studio album reached number 1 in Australia and the UK, and fell just short of the top spot, reaching number 2 in the US.

The physical distribution of music was worth A$74m in 2019, down from A$89m the previous year, with the decline forecast to continue for years to come. By 2024 the physical distribution of music  in Australia is expected to be worth A$39m, after decreasing at a -11.82 percent CAGR,  based on the mid-point forecast scenario.

During COVID-19 has been the innovation shown by local bands and entertainment companies who have used technology to reinvigorate the sector in a challenging environment.

One of the few upsides to COVID-19 has been the innovation shown by local bands and entertainment companies using streaming technology to host live concerts. Bands such as Powderfinger, Hot Dub Time Machine’s Hot Dub at Home streamed series, and smaller artists are using platforms such as Facebook, YouTube and Twitch to broadcast special events live, adapting to the environment and finding new ways to share a live experience for fans. While it is no replacement for the sweaty mosh pits at The Hordern Pavillion in Sydney or The Palace in Melbourne, it has continued to create a connection with audiences that should hopefully translate to a gradual return to normal for concert ticket sales as venue restrictions are lifted.

With a prolonged absence of international acts, the Australian music industry will have the opportunity to showcase more local talent to new audiences who are likely to be looking for a live music experience in person as soon as it is feasible

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