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PwC Report : The future of Music

Posted by radio On October - 3 - 2017

South Africa’s music revenue is on a growth curve. Total music revenue was R2.2 billion in 2016, up 2.7% on the previous year. The live music sector continues to be the growth driver as recorded music sales decline. However, while the live segment is set to maintain its momentum, recorded music revenue will begin to revive as South African consumers increasingly sign up to the market’s digital services. Total music revenue is forecast to rise at a CAGR of 5.0% to reach R2.8 billion in 2021.

Recorded music set to rise on the back of healthy streaming growth. As in many markets, audiences are not only turning away from owning physical music product, but they are also set to reduce their consumption of digital downloads, with downloading revenue forecast to decline for the first time in 2017 by 7%. South Africa is able to boast a wide range of music streaming services, with newcomers still coming to market with differentiated, competitive offers, further boosting consumer demand for subscription-based listening.

 

  • Physical recorded music is in steep decline. Sales totalled just R463 million in 2016, down from R562 million in the previous year, and from R992 million in 2012. Physical recorded music revenue is forecast to decrease at a CAGR of -18.4% over the next five years to be worth only R168 million in 2021.

 

  • Live music plays a key, and growing, role. Ticket sales and sponsorship revenue will continue to rise at a pace that will see live music take an increasing share of total music revenue, increasing from 55% in 2016 to 62% in 2021. Live music revenue will rise from R1.2 billion in 2016 to total R1.7 billion in 2021, a CAGR of 7.4% over the forecast period.

 

The headline change in the music industry has to be the marked consumer shift away from purchasing and owning recorded music to showing an increasing preference for subscription-based, music-rental services. A similar trend is being experienced across the globe in the consumer music-streaming spending figures and forecasts, with the rate of change the only significant differentiator.

 

As with other markets, that shift to subscription-based streaming looks to have come at a cost to the music industry, with a sharp decline in digital music downloads, a format that is losing favour in most countries. Music-streaming platforms will continue to grow, with much of that activity driven by the region’s younger demographics.

 

As in many developed markets, streaming has proved the saviour of the recorded music industry in South Africa. A healthy mix of local and international players have combined to create a compelling service for consumers, and uptake is easily enough to offset the fast-declining physical and downloads market.

 

Coupled with a live music market in good shape, the music segment has a positive outlook over the next five years.

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