The COVID-19 Impact on Music Industry: Streaming, Distribution, and Advertising Challenges
The COVID-19 impact on the music industry has been vast and disruptive, with live event sales suffering the most. The pandemic is expected to cost the industry around $10 billion in lost sponsorships, with delays in recovery expected to last even longer. To better understand these significant changes, here is a breakdown of the main effects of the COVID-19 impact on the music industry.
1. Streaming and Sales Shifts
Since the outbreak, physical music sales, which traditionally account for about a quarter of music revenue, dropped by roughly one third. This decline is unsurprising given retail store closures. Meanwhile, digital sales decreased by approximately 11%, reflecting overall declines in discretionary spending.
Interestingly, listening habits have changed as part of the COVID-19 impact on the music industry. Tencent Music Entertainment (TME) reported that more users in China are streaming music on home devices such as TVs and mobiles. Online music streaming revenue surged 70% year-over-year in the first quarter of 2020.
Spotify echoed similar trends, showing a shift in customer behavior with increased weekend music consumption and a preference for soothing genres. Initial streaming volume dipped by 7-9% in some countries but showed signs of recovery. Simultaneously, video-on-demand music streams have risen, influenced by COVID-19’s boost to media consumption, especially on TV.
2. Distribution Disruptions and Live Event Losses
The COVID-19 impact on the music industry also heavily affected music distribution and live events. Many artists have delayed releasing new material because tours, which are vital promotional tools, have been canceled. The cancellation of a wide range of concerts and festivals means live entertainment revenue has plummeted to near zero.
This drop has cut the overall music industry revenue in half, with ticket sales and sponsorship losses estimated to exceed $10 billion over just six months. Longer shutdowns will only worsen the situation.
Consumer confidence is slow to rebound; surveys show less than half of U.S. consumers would attend concerts or large events without a confirmed vaccine. This hesitation could have lasting effects since about 75% of live show profits go to artists. Yet, data also shows a growing share of live music revenue is concentrated among the top 1% of performers.
3. Advertising Reductions
Advertising budgets have also been slashed during the pandemic, further impacting the COVID-19 impact on the music industry. In early 2020, about 25% of media buyers stopped all music-related advertising, while another 46% reduced their spending. This decline affects both platform revenues and artists’ income.
Digital ad expenditures dropped by an estimated one third. Spotify reported it had no marketing targets in Q1 2020 due to these ad budget cuts, illustrating the widespread impact on promotional efforts.
Supporting Artists and Fans During COVID-19
In response to these challenges, Canyon Entertainment Group is committed to supporting artists and fans through virtual concerts. These online events help musicians generate income during this difficult period while providing fans with live music experiences despite pandemic restrictions.
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