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The business model of music industry, situation in Covid -19
The net worth of the global music industry is over $50 billion, wherein the Indian music industry is valued around $15 billion and Covid-19 impact on the music industry has been huge. We have a few comments on our published blogs regarding future expectations and questions hovering around a fear that say, “is the music industry dead?”
Let’s understand how the music industry operates on a business level to get a clear idea of the domains where music industry economics had affected the most. The music industry has majorly two income sources: live events and recorded music.
Live events make up more than 50% of the total revenue of the music industry, as you already know live events mainly derive their revenue from entry ticket sales and effects of COVID on live music domain is the most severe causality from all other domains.
Recorded music brings revenue from streaming, physical sales, digital downloads, and licensing or collaborating with other companies for music like gaming, TV shows, movies, and advertising.
Currently, recorded music is contributing majorly to the total income. With the lockdown, streaming services and other services have seen an increase in its engagement, finally contributing to the industry’s net income.
The effect on the music Industry
Let’s understand in detail the overall effect of the music industry and how the music industry has changed.
1. Live events
All the music Festivals and concerts cancelled due to coronavirus has a very severe effect on the companies depending on this domain of the music. Live events like shows, celebrity concerts, college fests, fan fests, and others have become almost extinct due to the lockdown or even barely executable due to restrictions.
As most of the events operate on low margins, even a single cancellation can have severe ramifications. Not just on the organisers, but for the visitors and other companies and vendors associated with the event. Similar impact is seen on clubs and venues due to their being on either complete closure or restricted operations.
2. Advertisement Spend
COVID-19 has changed the music industry a lot, and so does its effect on the advertisement. As per the report of the survey by the Interactive Advertising Bureau, during the first half of 2020, almost one-fourth of the media buyers and brands has paused all advertisements and a further reduction of 46% in ads by other brands. This overall has contributed to the reduction of one-third in digital ad spending, the impact of which is faced by ad-supported music channels/ streaming platforms like Spotify, sound cloud and YT music.
This has been an interesting era for music production, in the beginning, the music industry saw a dip in music production but with time artists adopted and became experts in music production using technology, which we have discussed later in the blog.
The distribution of music has been a quiet turnaround. Though there was a dip in offline sales and many artists delayed their releases because of the inability to tour to promote and do live performances.
As most artists gain 75% of the revenue from live performances, they suffer the most due to the lockdown. As per the reports, there was an estimated around $10bn dollar loss in sponsorships in only the first six months of lockdown. On the other side, online streaming and downloads have gained a lot of high numbers, increasing the total number audience to the artists.
Community support in the time of necessity
Both public and private communities are contributing to all individuals and industries affected by covid 19. For the artists and other crew members were also shown support, there has been significant donations from Live Nation Entertainment, UMG (Universal Music Group), Spotify, Youtube Music, TIDAL, Amazon music, etc. Even many public sector/ governments around the world have allotted fund provisions for media, art, and cultural business as a pandemic relief.
New ways are adopted for seamless operations
The first idea from the crew and industry specialist was to broadcast the live events from the venue, but later it changed as of now artists are connecting to the fans directly from their homes. Labels and outlets support them with all the necessary live streaming gears and equipment they require.
Streaming platforms have also added new ways for monetization, like premium memberships for fans so that they can have early access and attend live gatherings with the artists. This, in long term is a very effective way to keep a good connection with the audience and a method that is not affected by any kind of external situation.
That’s all for this blog hope you liked the content and know what kind of change is happening around due to covid-19 impact on music industries, If yes please leave us a comment and share with your friends.
At the end of the blog, I would like to share a point that, though the crisis has resulted in many changes, ups and downs in the industry, but the heart and soul of a musician remains the same which is to love the music and the skills which helps musician to manifest that love for others to relish and enjoy. If you wanna know-how as an artist thing have changed and are evolving, we also know how technology has changed the music industry in the lockdown.