We assess the evolving market landscape of the music streaming industry.

Key points:

  • While the Covid-19 pandemic put a pause on live music events, a boom in streaming bolstered the music industry’s revenues.  
  • Despite being highly profitable, music streaming has come under attack from artists concerned by the way it shares its earnings.
  • In the music industry today, we believe people paying for music via streaming platforms represents a significant growth opportunity.

For the music business it has been the worst of times and the best of times. As the Covid-19 pandemic swept across the globe, the live music and entertainment sectors were among the hardest hit. However, music streaming services were some of the industry’s key beneficiaries. Recorded music revenues hit an estimated US$12 billion last year, with streaming accounting for a reported 83%.1

After facing an existential crisis and near financial oblivion just a decade ago, streaming has helped the world’s three largest recording firms within the music industry recover to reach a combined value of approximately US$100bn today.2 While this is good news for both the record companies and major streaming services, what of the artists whose works they promote and distribute?

According to a UK Intellectual Property Office report, the top 1% of artists account for 80% of all streams.3 Against this backdrop, data suggests some recording artists can receive as little as 13% of the income generated by streaming platform providers.4

Business backlash

This news has triggered a growing backlash from musicians hard hit by the pandemic and temporary closure of music venues. According to the trade body UK Music, live music revenues collapsed by about 90% in 2020 and jobs in the British music industry fell by 35% compared to 2019.5

The way that music streaming models are structured means that record labels tend to get most of the revenues. This became more obvious during the pandemic as live performances ceased, and artists that could previously play to stadium audiences or who performed their music at smaller venues suddenly found themselves with nowhere to play and very little other revenue. It became clear that while streaming was attracting new subscribers during the pandemic, many artists were struggling to make a living under lockdown.

Now, ironically, many musicians are struggling to get events staged. Most large concert venues are fully booked throughout 2022, as artists and their promoters have scrambled to make up for performances they lost out on during the pandemic.

Amid the backlash against music streaming business models, Sir Paul McCartney and Kate Bush were among 156 signatories of an open letter of complaint to UK Prime Minister Boris Johnson earlier this year. The letter called on the UK government to bring in new legislation to change the economic model of streaming.6

Despite being highly profitable, music streaming has come under attack from a variety of other artists concerned by the way it shares its revenues, and how the economic streaming pie is divided and administered.

Björn Ulvaeus, from the Swedish pop giants ABBA, also launched a new campaign to make sure musicians do not miss out on millions of pounds worth of royalties through missing and incomplete data identification of artists on streaming platforms.7 Other musicians such as the British singers Emeli Sandé and Alison Goldfrapp have also backed the initiative.

In addition, Chic co-founder Nile Rodgers has unveiled plans for a songwriters’ guild to provide stronger representation of recording artists within the streaming debate. The move followed the release of a report by a UK Digital, Culture, Media and Sport Committee enquiry that concluded the music streaming model needed a “complete reset.”8

We remain optimistic that record companies, streaming platforms and recording artists can reach a more equitable agreement over royalties and ownership. There are already players within the music industry who are genuinely looking at ways to adapt their business models to provide a more balanced share of streaming revenues to recording artists on their roster or streaming platforms. The UK government also appears to have concluded that there should be a fairer split of streaming royalties. While this is a complex area, we hope to see positive change over time.

While streaming has its critics, its platform providers have brought significant benefits to both the music industry and its performers. The ease-of-use access and value for money streaming brings subscribers has vastly increased the number of people paying for music. It has also helped to combat music piracy, as many who once pirated music are now able to subscribe to streaming services at a relatively low cost.

For all the negative headlines streaming attracted in the pandemic, we see strong investment potential in the sector. In the music industry today, we believe people paying for music via streaming platforms represents a significant growth opportunity. Where consumers once paid £10 to buy a single compact disc (CD), they can now spend a similar amount of money every month to gain access to just about any recorded music in the world.

On this basis, consumers are much less likely to give up their music subscriptions which, in turn, could help provide a more stable revenue flow to key players within the music industry. Another strength of investment in music/royalties is that the performance of the asset class is relatively uncorrelated with the economic cycle. The near-universal appeal of music and its importance throughout our lives also gives its commercial strength real longevity.

Yesterday once more

As we get older, music has the power to take us back to earlier (and perhaps happier) periods in our lives. People will listen to new music, but they will always go back and listen to music from their youth. That is a very powerful ‘hook’ as investors in this space are buying into a back catalogue which resonates strongly with listeners and could provide streaming and royalty companies with more certain and stable revenue streams.

While streaming has proved immensely popular in Western markets, we also see strong growth prospects in emerging markets, whose rising middle-class populations may well embrace music streaming. We believe that there is significant potential for growth of audiences in emerging markets such as China, India, Africa and South America. As listeners in emerging markets start to pay for music streaming services, there is an opportunity for the music industry ‘pie’ to grow further.


  1. Recorded music revenue hits $12 billion in 2020 amid pandemic streaming boom, Wall Street Journal, 26 February 2021.
  2. ‘Odds are against you’: the problem with the music streaming boom, Guardian, 2 October 2021.
  3. Ibid.
  4. Music streaming must modernise. Is anybody listening?, MPs on the House of Commons Digital, Culture, Media and Sport Committee, House of Commons Committees, 15 July 2021.
  5. One in three music industry jobs were lost during the pandemic, BBC, 19 October 2021.
  6. Paul McCartney and Kate Bush call for change to music streaming payments, Guardian, 20 April 2021.
  7. Abba’s Bjorn Ulvaeus launches campaign to fix £500m music royalty problem, BBC, 21 September 2021.
  8. Nile Rodgers calls for ‘seat at table’ for songwriters after streaming report, Evening Standard, 15 July 2021.


Paul Flood

Paul Flood

Head of Mixed Assets Investment


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