How the Music Industry is Affected by COVID – 19

Since the outbreak of the coronavirus, the music industry has experienced a big hit and is losing a lot of revenue due to live-performance. Additionally, artists are far more reserved, and they rarely decide to release new songs. 

The global music industry is worth over $50 billion and has two major income streams, which are live music, and recorded music like digital downloads, streaming, physical sales and etc.

Covid-19 accelerated more underlying trends in the music industry, such as the importance of streaming. Streaming grew by 50% in total revenue in the past six years, and artists are now more focused on this segment than ever before.

In this article, we will underline some of the effects of COVID – 19 that directly affected the business model of music.

Advertising Spend

The marketing situation is the same in almost all industries. From Dropshipping businesses to automotive industry, it all has come done close to the minimum. Even the best teams in the NBA betting odds are reducing their advertising costs, considering how the sport is on hold due to COVID-19 risks. 

Companies introduced reductions in advertising spending due to COVID – 19. Experts predict that the marketing sector will take a few years to recover from this situation, and it is the same with the music industry.

Recent statistics show us that more 45% of companies worldwide reduce the spending on advertising by half their budgets. Digital ad spending has experienced one-third reduction, which affected the ad-supported music channels, both total industry revenue as well as individual income for artists.

Even big streaming platforms like Spotify announced that it missed the first quarter of their advertising targets. 

Sales and streaming

Unsurprisingly, due to limited social interaction and closed retail stores, physical sales of music are down by one-third. On the other hand, even though most of the people were at home, digital sales have fallen slightly more than 10%. This is due to the fall of discretionary spending.

A situation like this has the power to change how people listen and interact with music. Since the outbreak of the coronavirus, people changed the ways they are listening to music by using more TV applications and other smart devices.

On the other hand, the music subscription revenues increased by 70% in the first quarter of 2020. This means that people were limited in their unnecessary spending, but still like to listen to music. 

Music Distribution

As we mentioned before, many artists decided to postpone their album on single releases to later in the year. The reason why artists delay the release of new music is the limitation of transport and distribution. One of the best ways to promote new singles is by tours, and additionally, they are the main source of income for artists. 

There is a huge list of major concerts that have been canceled due to large gatherings bans. This means that the revenue from a live performance is almost zero. 

With this lost revenue, the total music industry revenue is cut in half. But that’s not all. Since there are no concerts, there are no merchandise sales aside, which will cost the industry close to $10 billion in sponsorships.

The music industry has experienced a big hit, and there will also be post-pandemic challenges that might be hard to overcome. Firstly, people will change how they interact with music and changing their listening habits, which means that there must be a change in advertisement tactics.

Furthermore, since the coronavirus cannot disappear, live music concerts will be limited for a long period of time, at least until there is a proven vaccine that will make everybody immune. As we mentioned, 75% of artist income comes from tours and live concerts. This means that they need to make a change and adapt their work to the situation.

Maybe in the future, we will see digital concerts where artists play live songs using the latest video streaming technologies. 

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