Music Is Now Worth More than Movies
Music industry revenues grew for the tenth consecutive year, surpassing cinema’s pre-pandemic sales peak, according to a report from Pivotal Economics.[1] Strong growth in streaming and a renaissance in vinyl records helped propel music’s results.
The Global Value of Music Leapfrogs Over Cinema
Annual revenues from copyrighted music were $45.5 billion in 2023, an increase of 25% from pandemic-riddled 2021 and double the 2014 figure, according to the report. That compares with box office spending of $33.2 billion in 2023 and cinema’s pre-pandemic record of $41.9 billion in 2019.
Music’s 2023 revenues also increased by 11% over 2022’s levels. The report estimates that when 2024’s numbers are tallied, music’s revenues will likely have doubled within a decade.
To put this in perspective, in 2019, the value of cinema was 33% bigger than music. However, in 2023, music’s revenues are 38% bigger than cinema’s.
Cinema’s Value Likely Overstated
The value ascribed to cinema is likely overstated since box office revenues include the retailer’s margin (the movie studios only get a certain percentage of revenues returned) and taxes. Distributor share, or revenue that flows back to the distributor, is a better estimate of money returned to movie creators. By that measure, only 50% of cinema’s 2023 take provided value to movie creators.
How the Revenue Pie Expanded
Revenues at record labels grew at a 12% annual rate since 2021, buoyed by strong growth in streaming. However, growth in physical medium revenues outpaced streaming growth in percentage terms, rising 13.4%, with vinyl exhibiting annual growth of 15.4%. Vinyl will likely overtake CDs in terms of revenue.
The report also showed that 63% of the revenue pie goes to artists and labels and 37% to songwriters, publishers, and their collective management organizations (CMOs).[2]
CMOs experienced annual growth of 11%. Live performance licensing now exceeds that of general licensing for public performances, such as background music in restaurants and hotels.
Cinema’s Pain is Streaming’s Gain
The shift to streaming is a boon to the music industry. Streaming pays almost five times more for content than box office.
The British Invasion Continues
The globalization of music continues as more than one-third of streams in the U.S. are from non-American artists. Britain is the largest importer of music to the US. Mexico overtook Canada to claim the number two spot. Mexico now makes more money on their U.S. streams than they make back home.
How May Individuals Gain Exposure to the Music Industry?
The MUSQ Global Music Industry ETF (MUSQ)
The MUSQ Global Music Industry ETF (MUSQ) seeks to provide investment results that, before fees and expenses, correspond to the total return performance of the MUSQ Global Music Industry Index (MUSQIX). The MUSQIX Index is designed to provide exposure to global, publicly traded companies and royalty funds with a core business interest in the global music industry.
MUSQ may provide individuals with an attractive vehicle to gain exposure to the global music industry.
[1] All data sourced from: Music Smashes Box Office Records: Global Value Of Music Copyright Soars To $45.5bn, Now Worth More Than Cinema, Pivot, 11/25/24
[2] A collective management organization (CMO) is a non-profit that register, track, collect, and pay royalties on behalf of rights holders.
MUSQ Global Music Industry Index ETF is offered by prospectus. Carefully consider the investment objectives, risks, charges, and expenses. This and other important information can be found in the MUSQ ETF prospectus, which should be read carefully before investing and can be obtained by visiting https://musqetf.com or by calling 1-855- MUSQ-ETF(687-7383).
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