The music industry’s long-predicted streaming slowdown has officially arrived. The latest global ‘Recorded Music Market Shares’ report from MIDiA Research reveals that record industry growth decelerated from 9.7% year on year in 2023 to 6.5% in 2024. MIDiA pegs global recorded music revenues at $36.2 billion for 2024, up from $34 billion in 2023 and $31 billion in 2022, with $22.2 billion of last year’s revenue coming from streaming.
It’s streaming that is dragging on growth, as streaming expansion fell from 10.3% in 2023 to just 6.2% in 2024. For the first time since streaming became the dominant revenue source, its share of total revenues didn’t increase, plateauing at 61.3% of all global recorded music revenue according to MIDiA’s figures. Even more tellingly, streaming’s contribution to overall industry growth declined significantly, accounting for just 58.5% of new revenue in 2024, compared to 64.6% in 2023.
In other words, for every additional dollar of revenue the record industry made in 2023 - $3 billion dollars - nearly two thirds of that, a massive $1.938 billion - came from streaming. In 2024 the record industry found just $2.2 billion of new revenue, and just $1.287 billion came from streaming.
The golden era of streaming expansion is slowing, with growth rates nearly halving in just one year. Which means the primary engine driving the music industry’s financial recovery for the past decade is no longer growing at the explosive pace it once was. We’re witnessing the early signs of market saturation, where most people who are likely to pay for music streaming services already have them.
This decline is particularly significant because it gives a clear indication that other revenue sources are becoming relatively more important to the industry’s continued growth. So while streaming remains the largest overall revenue source at 61.3% of total industry revenue, its role as the primary growth driver is weakening.
Viewed against inflation in key markets, the streaming stagnation is even more bleak. In the UK, the BPI reported that wholesale revenues grew by 4.8% in 2024 (£1,494.3 million versus £1,425.2 million in 2023), but with inflation at 3.3%, real growth was just 1.5%. In the US, the RIAA reported wholesale revenue growth of just 2.7% against inflation of 2.9% - meaning that using 2024 as a yardstick, the US record industry is actually in recession.
This has some pretty big implications for the record industry, but most particularly the major labels. After the devastating impact of piracy and the slump in CD sales in the 1990s and 2000s, the majors rebuilt their business models around streaming revenue - and more recently have rebuilt the streaming industry to suit their business model.
They’ve become dependent on consistent, substantial year-on-year streaming growth to fund their operations and satisfy shareholders. With streaming growth hitting a dramatic drop-off and streaming’s contribution to new revenue becoming less significant, we’re reaching a critical strategic inflection point in the record industry’s roadmap.
At one level this is not a surprise to anyone - the big dog of major labels, Universal Music, has been foreshadowing ‘Streaming 2.0’ for some time now - a thesis that sets out a path to growing streaming revenue by increasing ARPU - average revenue per user - a plan largely driven by a predicted appetite for a ‘superpremium’ streaming offering.
The positive news is that the gap between streaming’s contribution to total revenue and new revenue (61.3% versus 58.5%) suggests that non-streaming revenue sources are growing at a faster rate than streaming itself. If that growth can be sustained and magnified, the drop off in streaming’s contribution to the overall pie presents some great opportunities for the industry as a whole.
However, to capture that value the major labels will need to diversify revenue streams more broadly, and look beyond the traditional streaming opportunity.
Part of that will be through an exploration of emerging markets - an opportunity that Universal boss Lucian Grainge has recently talked up - but also by investing more heavily in exploiting licensing opportunities for social media, gaming and other digital platforms - or finding new monetisation models altogether.
And one of those new monetisation models, massively hyped in recent years, is the superfan opportunity, premium-priced offerings aimed at dedicated fans willing to pay more for enhanced experiences.
Capitalising on those opportunities may not be as straight forward as the hype suggests, and critically, they may, over the long term, erode the major labels’ dominant position. Meanwhile, a closer examination of MIDiA’s data raises serious questions about whether this strategy can deliver the growth that these companies are promising their investors.
The biggest challenge in growing revenue through the superfan opportunity is a fundamental rights gap. “Unlike Asian labels, Western labels generally don’t have the rights to fully exploit those expanded rights which are kind of core to the superfan opportunity”, explains Mark Mulligan, founder and managing director of MIDiA.
The record industries in key Asian markets like Japan and South Korea typically see ‘expanded rights’ accounting for 30-40% of total revenue, while Western majors lag significantly behind.
This emphasis on expanded rights - which Mulligan explains as “revenues derived principally from monetising the brand of the artist through merch, sponsorships, branding, live and so on” - gives Asian labels an advantage when it comes to monetising fandom across multiple touchpoints. It is that booming and well-developed superfan market that has arguably shaped the hype around the superfan opportunity.
For the West, it creates a somewhat paradoxical situation though - labels need to develop revenue around the superfan offering, and they need access to those expanded rights to do so - but artists won’t grant them without seeing proven value first.
Mulligan elaborates on this fundamental tension, saying, “If you put it into the wider context of artists entering into a deal with the label for the first time, only maybe 13% or even 11% of total recorded music revenues are expanded rights at the moment. It’s growing steadily but it’s not accelerating massively either in terms of share, so let’s work on the assumption that for now most artists are still retaining most of those rights for themselves”.
If you contrast this with current artist expectations, it makes the challenge for labels even more daunting. While Western artists are increasingly seeking lighter-touch commitment with labels, superfan monetisation requires the opposite approach.
“If you compare things to seven or eight years ago where the majority of new frontline major label artists would be looking to sign a normal licensing deal and maybe only having 20% of royalties retained, now most of them are saying ‘yeah, I’ll just have a distribution deal thanks, I’ll keep 80% and you can invoice me for costs and whatever else”, says Mulligan.
The deals artists now want with their labels, and the deals that truly enable the superfan opportunity, are “diametrically opposed”, Mulligan adds.
“One is the ‘I want an incredibly light deal where I keep control and ownership of as much as I possibly can and get as large a revenue share as I can’, while expanded rights is really like that big £80 million deal Robbie Williams signed in 2002 - a true 360 deal. It’s almost back to how labels wanted to be before artists started saying we don’t want to give up as much”.
Mulligan is keen to point out another potentially critical issue with the current thinking around the superfan opportunity and monetisation strategies, which is that many Western labels are focused more on extracting the maximum revenue from fans than on building deeper relationships.
“Both the Korean and Japanese labels still stand out as the models of best practice, not just because they have managed to do it so well, but because they put as much work into building fandom as they do harvesting it”, says Mulligan.
That imbalance is evident in how superfan products are developed, he says. “If you’re building an Ariana Grande hoodie, scented candle and CD bundle - and that does exist! - then really what you’re doing there is you’ve just done loads of consumer research to work out exactly how much money you can extract from the fans, rather than it being about how we are actually helping people feel more like they are fans”.
He points to HYBE’s Weverse platform as an example of a more balanced approach. “When you look at Weverse, within HYBE, as a platform - yes, you are commercialising the fan relationship, but it’s also a place where people can be fans and express their fandom”.
Successful monetisation of the fan relationship requires an understanding that merchandise and fan experiences are not just products, but expressions of identity. “Fandom is simply an effect”, says Mulligan, “it’s not a cause. The cause is identity. When you’re selling a t-shirt or a hoodie or whatever it might be, people are buying it because it’s a way to express your identity”.
The approach to artist development itself may need to shift in order to capitalise on superfan opportunities. Mulligan notes how Asian labels operate with a different mindset from the beginning of the artist development process.
“If you’re someone like HYBE or JYP, the way you start off is you design your artist. You work out - what sort of fans are we going to reach? And then what sort of monetisation opportunities are going to exist with them?”
“For some of them it might be ‘We’re going to build it around manga fans, and it’s going to be all about licensing likeness and image rights’, and then you go out and recruit the band literally based on those parameters, on the sorts of people who are going to appeal to people who will respond to those fandom triggers”.
That approach, he says, creates a readymade market for monetisation. “By the time you actually get to monetising, the market’s already waiting for you - rather than what happens with Western artists which is more like ‘OK, let’s go and research Ariana Grande’s fans to find out what they like best”.
While acknowledging that this fan-led approach to crafting artists to capitalise on monetisation opportunities might seem “incredibly cynical and commercial”, Mulligan is keen to stress that it’s simply how effective fandom monetisation works, and little different to product development in other sectors.
That approach - manufacturing the artist brand to meet specific fan requirements - is, says Mulligan, likely to become “part of A&R strategy at labels. It’s like ‘we’re looking for artists who are going to be able to attract this type of fan’” rather than a purely manufactured, synthetic artist brand.
However, the inevitable consequence, he believes, will be “a slightly more consumer insights led and commercially acute A&R strategy where rather than just looking for artist and genre and audience fit, you’re really honing in on ‘can this artist shift the specific types of products for a specific type of audience”.
There’s a close link between the superfan opportunity and the super-premium opportunity with streaming. A recent Bloomberg report quoted sources saying that Spotify’s long-rumoured ‘super premium tier’ - now apparently dubbed ‘Music Pro’ - will include AI-powered remixing tools and pre-sale access to concert tickets - both added value extras that might appeal to superfans.
The rights gap was highlighted by Live Nation CEO Michael Rapino’s brutal dismissal of streaming platforms’ superfan ambitions, when he told analysts on the company’s recent quarterly earnings call that it doesn’t necessarily make sense for Live Nation to do a deal with streaming services like Spotify, Apple and Amazon “in comparison to other options we have for that pre-sell, which is a very valuable asset”, adding that streaming services are “trying to add a $5 premium to a monthly subscription” but that they “don’t have enough of their own inventory” to drive the value proposition.
Despite that, Universal claims its research shows that 20% of current premium subscribers might adopt higher-priced “super premium” streaming tiers. MIDiA’s forecast is a much more conservative 13% to 15% adoption rate - and that on a timeline to 2031.
“That’s long term adoption”, Mulligan emphasises, “not a ‘you launch it and you’ll be at that number within a few months’”.
Despite those modest projections, MIDiA’s data emphasises just how critical super premium has become to the industry’s growth story. “Super premium cannot come soon enough because there are too many headwinds keeping down ARPU increases”, says Mulligan. “Super premium is so important because just price increases alone are not enough to deliver the growth that the industry needs”.
The success of super premium - as highlighted by Micheal Rapino - will depend heavily on what those tiers actually offer. Simple perks like higher audio quality or merchandise discount may not drive significant uptake. Instead, suggests Mulligan, successful offerings will need to incorporate elements from gaming and social media.
“If the super premium offerings really focus on giving ways that people can demonstrate and communicate their fandom, like the Chinese streaming services do, with stickers and VIP gifting kits, and being able to create your own versions of things and share those... If you could put those in, then that is where you can start being really bullish about how much revenue opportunity there is”.
Getting the approach right - or getting it wrong - could be the difference between a super premium play that thrives or falls flat on its face. “If you can put that layer of functionality in then the opportunity can be great - but if it's just ‘you get to watch some live streams and some concerts and have the ability to buy some merch more cheaply and whatever else’ then adoption will be a lot flatter”.
“The difference would be in terms of scale of opportunity”, he continues. “Do you want a TikTok scale opportunity, or something much smaller?”
MIDiA’s research, says Mulligan, indicates that the music industry needs to think less about converting a large percentage of streaming subscribers, and more about maximising revenue from a smaller group of highly engaged fans - what gaming companies call “whale segmentation”.
“The mentality which has got to be adopted is really thinking about segmenting your superfans in the same way that games companies do, and really focus in on how do you maximise spend in a really quite small percentage of the customer base, which is probably not how the labels are thinking about super premium. They’re thinking along the lines of ‘yeah, we can probably convert half of subscribers to it’, but that’s not what it’s going to be”.
There’s another notable factor at play in the development of a superfan or super premium offering, which is that physical revenue has become increasingly volatile and fandom-dependent, further complicating the industry’s efforts to stabilise growth. Physical revenues were $4.5 billion in 2024, down by 4.8% from 2023 - which had seen growth of 8.8% from 2022 - following a pattern of alternating growth and decline.
“Physical continued its 2020s oscillation in 2024 and the remainder of the decade is likely to see more of the same”, Mulligan notes. “Unlike streaming, physical revenues are more a reflection of fandom monetisation than they are a format performance. As a luxury discretionary spend, physical revenues are more vulnerable to consumer spending pressures”.
That vulnerability - which can be viewed as an analogue for super premium and superfan potential more broadly, both things which also fall into the category of luxury discretionary spend - is evident in the sales data.
“The top ten US albums in 2024 sold an average of 3.7 million ‘units’ compared to 4.6 million in 2023 - a 25.9% decrease”, notes the report. “Physical revenues are inherently far more volatile than steady, predictable, repeated subscription spend, which generates income from a far bigger number of titles, and has much less dependency on new releases”.
It is that heavy dependency on hit releases that creates the inherent instability - and it would be naive to think that a ‘hit-based cycle’ will not also inform volatility in the superfan or super premium market: when big artists with mass appeal are doing big things, superfan and super premium may see an uptick, but if consumers are spending based on only a small number of artists that appeal to them individually, then that spend is more subject to drop away if superfans and super premium subscribers aren’t constantly fed with content that resonates.
Look out for Part 2 of CMU’s interview with Mulligan on Monday.
