Key Insights from the Music in the Air Report on Music Monetisation

Streaming revenue remains a central focus of the report. The evolving subscription landscape now sees both global streaming revenues and ad-supported revenue markets adjusting to a mix of factors such as lower ARPU in emerging markets, a more aggressive mix shift toward freemium users, and improvements in premium pricing strategies^[1]. In the recorded music sector, the report underlines that while streaming growth is slowing, lower revenue forecasts there are somewhat offset by stronger growth in physical sales, performance rights, and downloads. The longstanding 'pro rata' model for royalty payments is being re-examined. New initiatives by leading platforms such as Spotify and Deezer aim to implement an artist-centric model, which focuses on rewarding professional artists and reducing dilution through fraudulent or low-value streams. For instance, Spotify’s recent model changes include raising the minimum threshold for a track to qualify for royalties and aggressive measures to cap user-generated streams, steps intended to shift more revenue toward emerging and established artists alike^[1].

The report provides detailed analysis on the state of ad-supported streaming. Although 2023 witnessed a modest increase for ad-supported streaming revenue, the growth rate lagged behind expectations due to broader macroeconomic concerns and a softer recovery in the global advertising market. Specifically, ad-supported audio and video revenues grew at 8% and 5% respectively in 2023, which was notably lower than the numbers experienced previously. These changes are attributed to factors such as a slower-than-expected ramp-up in emerging platform deals and less favorable licensing terms, particularly with platforms like TikTok. The report indicates that while short-term growth in the ad-supported segment remains subdued, longer-term projections still anticipate a gradual return to low double-digit growth as the global advertising market stabilizes and streaming platforms further differentiate their ad products^[1].

One of the more striking trends highlighted in the report is the rapid growth and evolving dynamics in emerging markets. Emerging regions, including parts of Asia, Latin America, and Africa, are now responsible for a significant share of new subscriber net additions. In 2023, emerging markets contributed to around 60% of net subscriber growth; this is expected to increase to roughly 70% by 2030, even though the revenue contribution may lag due to lower ARPU levels. The report explains that the average revenue per user in emerging markets is approximately four times lower than that of developed markets. This disparity has driven a dual focus: while volume growth in emerging markets remains a priority, there is also an opportunity for gradual pricing improvements as incomes rise and market penetration deepens. Additionally, local music genres and non-English acts are capturing significant domestic and international attention, reflecting a broader redistribution of market share among major and independent artists^[1].

Beyond digital music, the report emphasizes that live music and merchandising continue to present robust growth opportunities. The live music sector experienced a particularly strong rebound in 2023, with revenues significantly exceeding those of the previous year. The resurgence in touring and large-scale stadium events has not only boosted ticket sales but also driven ancillary revenue growth in merchandise and related live experiences. The report also notes that record labels and music companies recognize that live music revenue streams, though less directly linked to the traditional recording and streaming model, provide essential counterbalances to slower growth segments and help to raise overall industry forecasts^[1].

Generative AI is another pivotal area discussed in the report. Initial concerns about AI-driven content disrupting traditional revenue models have been largely allayed over the past 12 months. While there is ongoing experimentation with generative AI, the bulk of the output remains non-professional and low in quality, which means it is unlikely to see widespread deployment on major streaming platforms. Instead, the value of AI is expected to be captured primarily through its use in assisting professional artists in the music creation process and enhancing marketing efforts. Nevertheless, intellectual property (IP) and copyright challenges persist. For example, there have already been notable increases in AI-generated songs that conflict with artists' copyrighted material. The report predicts that regulatory frameworks in the US, Europe, and the UK will soon play a significant role in defining how AI-generated content is licensed and monetised, with several legislative proposals already in motion aimed at protecting artists’ rights and ensuring transparency in AI training models^[1].

The report also highlights the growing opportunity to better segment the consumer base to boost monetisation beyond standard subscription models. Currently, streaming platforms charge a flat rate irrespective of engagement levels. However, a significant opportunity lies in identifying and monetising superfans—users who are willing to pay up to twice as much as average subscribers for enhanced, exclusive access to their favorite artists. The report estimates that expanding premium offerings for superfans could yield an incremental revenue uplift of around 13% by 2030. Several major industry players are already exploring this avenue through dedicated apps and premium content tiers that promise to deepen the artist-fan relationship while offering higher revenue potential through targeted, value-added services^[1].