It doesn't matter if you’re a musician, a producer, or an A&R rep—market research is essential for building a successful music business. Sitting through hours of reports is tiresome, yet important for building your music business. However, we will save you from hours of research in this article:
In this edition of music markets, we look at the most influential and largest music market in the world: North America. The United States is the largest market for recorded music ever—although Japan briefly topped the list in 2010. As a result, the music industry in us is a trendsetter and incredibly important for all music companies.
American musicians have historically dominated the global music industry. Sure, many iconic bands—such as The Beatles, The Rolling Stones, and Led Zeppelin—were British. However, the cultural significance of American music, including rock and roll, hip-hop, and rap, is profound.
Canada also has a robust and growing music industry. The nation has produced massive global superstars for decades—including Drake, Neil Young, Shania Twain, and Justin Bieber. Despite its small population, Canada has a high GDP per capita and a strong media sector which continues Canada’s powerful music industry.
Let’s take a deeper look at the music industry in us and how it’s performing in 2022:
The Current State of The North American Music Industry
The music industry in North America is as prosperous as ever. The recorded music industry is booming in North America. In 2021, the U.S. recorded music industry generated just shy of $15 billion, which is the most significant tally in history. Staggeringly, you’d need to travel back to 1999—over two decades ago—for the last time the United States music industry generated close to $15 billion when it recorded music revenues of $14.4 billion.
Chairman of the RIAA, Mitch Glazier, stated: “We recognize that, for many, this report’s key takeaway is the topline figure of $15 billion in total recorded music revenues. In nominal terms (not adjusted for inflation), that’s the highest annual revenue figure in our industry’s history, surpassing the $14.6 billion reported in 1999, just before digital piracy wiped out more than half of recorded music’s economic value."
In addition, the Canadian music industry grew by almost 13% in 2021. The current value of the Canadian music industry stands at around $583 million, making it the world’s 8th largest market. The primary driver for the growth was an 18% increase in the streaming industry, which included a 15.6% increase in paid subscription streaming.
Although the global U.S. music market is growing, music stocks have dropped by 44% this year, causing worry to many people in the music industry. The shares of some of America’s top music companies—including Universal Music Group and Warner Music Group—have dropped by around 10%. Spotify's shares have dropped after TikTok’s parent company ByteDance started talking about joining the music streaming industry.
However, the drop in index value for many music companies stems from foreign exchange differences as global economic uncertainty grows. There are still many transactions happening, but we’re potentially about to see a bubble burst which will impact the North American music industry. Many funds, such as SPAC, are having to pause or liquidate right now, hence the growing uncertainty in the music industry. Watch this space.
The growth of catalog songs in the United States is also fascinating. A new report suggests that catalog music accounts for 72.4% of U.S. on-demand audio consumption, which shifts the music industry to a model of a big tech company. The growth of catalog music is good news for record labels and publishers because they own catalog music and new releases. However, it arguably makes it more challenging for upcoming artists to thrive in North America.
The Music Streaming Industry In North America
The steaming industry—unsurprisingly—is booming in North America. The U.S. music streaming revenue should grow to around $14.55 billion in 2022, and the market volume of the U.S. music streaming industry should be worth over $20 billion by 2027. In March 2019, 70% of Spotify’s Global Top-50 Playlist was recorded by United States artists. And in 2018, streaming accounted for 75% of total U.S. recording revenues.
Although the current streaming industry value of $14.55 billion may not seem like a huge amount for the world’s largest economy and most influential music industry, this doesn’t account for customer expenses on concert tickets and merchandise, which make up a large portion of the overall U.S. music industry. Realistically, the United States music industry is closer to a worth of $50 billion. In 2018, for example, Citibank suggested the U.S music industry was worth a total of $43 billion.
In addition, Canada plays a significant role in the music streaming industry, despite its far smaller population. The Canadian streaming industry is worth around $225 million, but it should grow to around $301 million by 2027. Popular streaming services in North America include Spotify, Apple, Amazon Music, Deezer, and Tidal; these are all rising throughout North America and should continue to grow in the music industry.
The Live Music Industry In North America
The COVID-19 pandemic severely harmed the live music industry in us. However, as global and domestic travel restrictions have dropped, North America’s live music industry is heading in the right direction.
The United States is home to some of the world's premier live music events—including Coachella, South by Southwest and Lollapalooza. EDM fans have probably heard of the EDC and Ultra festivals. Country fans will likely know about the CMA festival. Canada is also home to the Shambhala Music Festival and the Veld Music Festival, both massive events on the global music calendar.
As a result, North America continues to be an excellent destination for live musicians. Coachella alone attracts around 500k visitors yearly. Only the Glastonbury Festival in England has the same attraction and notoriety.
According to PwC estimations, the total revenue of the live music industry in the United States is $9.5 billion. Further statistics suggest that around 80% of the live revenue comes from direct ticket sales, where merchandise accounts for another 20%. These are the best and most accurate ways to gauge the live music industry.
However, it can be challenging to accurately measure the live music industry because there is no consensus when it comes to revenue. That’s because of the secondary ticket and black market. For example, ticket touts often gain large profits from selling tickets, which makes it difficult to determine actual revenues.
Radio Airplay In North America
North America has a population of almost 375 million (November 2022.) Therefore, airplay still plays a massive role in the North American music industry. The United States is the fourth-largest country worldwide, with a massively fragmented music industry that stretches across 9 million km2. Due to the diverse nature of each state, music preferences can change. As a result, the United States is a group of local markets instead of one homogenous music industry.
The localized nature of the radio enables stations to engage with regional cultural context, which is something a unified streaming system is yet to fully offer. Consequently, radio broadcasts can often compete with streaming services of all types.
The United States also has one of the largest numbers of cars per capita—mainly due to its infrastructure. There are 271 million vehicles in operation in the United States as of Q4 2017. And such a huge car population is why American radio stations continue to be so successful. Around 70% of Americans label satellite radio, such as SiriusXM, as their leading in-car source of audio.
So what is the future of radio in the United States? Although radio is hugely influential, many U.S. radio stations have stagnated in recent years. In addition, the bankruptcy of iHeart—one of North America’s most successful radio stations—suggests there is an air of vulnerability for radio airplay.
The main challenge for the U.S. radio industry is the growth in streaming, which continues to explode. The primary demographic for the streaming industry is 18 to 30. If the U.S. radio industry is to thrive in the future, it must capture the youth of North America; otherwise, we will see a rapid decline.
The U.S. Continues To Be the Global Music Trendsetter
Earlier in this article, we discussed how the United States is the global trendsetter in music. That hasn’t changed in the 21st century, despite the world’s music landscape changing. Hip-hop music started in the United States, and the first rock and roll song was recorded in the United States. Blues and jazz—two genres that dominated global music in the 20th century—also began in the United States.
Sure, there are many other global trendsetters. In the English-speaking world, Britain has always delivered incredibly successful acts—including The Beatles, the Spice Girls, Adele, and countless more. France and South Korea also have important music industries that cross international borders. Still, nothing quite compares to the power of how the U.S. sets global music trends. And, as a result, the North American music industry will always be extremely powerful and influential.
There is one genre, however, that doesn't cross international borders in the United States, and that’s country music. The genre, which is incredibly successful in the United States, is almost non-existent globally. That proves that success in the United States doesn't mean success worldwide.
The North American music industry, which is still dominated by the United States, is rapidly growing in the digital age. Canada is following the success of the music industry south of its border. Regardless of the changes in worldwide music production, the U.S. market will remain the most powerful and most successful for years to come.
It’s the industry that every band and artist wants to succeed in; it’s the industry that will shape the success of music in the 21st century.
Artist development largely depends on giving the right tools for artists to be successful. With the increase in digital streaming and the changing role of music labels, it’s essential to help musicians manage their music rights and music revenues. At Reprtoir, we provide software that helps music publishers optimize their operations to help artists succeed. Have you tried using Reprtoir to develop your artist? Let us know how it went!