If someone had predicted in 2015 that music would surpass cinema in global earnings, it might have been met with skepticism. At that time, cinemas were thriving as the premier destination for entertainment, while the music industry struggled with the challenges posed by the rise of streaming services. Fast-forward to 2023, and the scenario has changed dramatically.
According to the latest analysis by Will Page, former Chief Economist at Spotify, music has not only caught up but has overtaken cinema in terms of global revenue. Before the pandemic, cinema was 33% larger than music in global earnings. Today, music has outpaced cinema by 38%, reaching an impressive $45.5 billion in 2023, almost doubling their value since 2014. The pandemic forced cinemas worldwide to close for extended periods, and while the industry is recovering, it hasn't rebounded as quickly as expected.
On the other hand, video streaming platforms like Netflix, Amazon Prime Video, and Disney+ have evolved from niche markets to a $100 billion industry, reshaping not only the film industry but also creating new revenue streams for music copyright owners.
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Read this article to explore how the rise of video streaming platforms has contributed to music copyright revenues outgrowing those of cinemas. Discover the mechanisms behind this shift, the types of music rights involved, and the potential for even greater expansion in the music industry.
In our latest article, we highlighted the impressive growth that global music copyrights’ revenues have experienced post-pandemic, which led the music copyrights industry to outpace cinema box office revenues by 38%, reaching $45.5 billion in 2023. The pandemic forced cinemas to close for extended periods, and while the industry is recovering, it hasn't recovered as quickly as expected. The global cinema box office totalled $33.2 billion in 2023, a 29% increase from 2022 but still $8.7 billion below its 2019 peak of $41.9 billion.
Figure 1: Music copyrights' vs. cinema box office revenues (2019-2023)
Source: IFPI Global Music Report, CISAC Global Collections Report, Music & Copyright and Will Page
However, as noted by Will Page in his analysis, comparing cinema's box office revenue to music's copyright income isn't entirely accurate. Box office figures are based on gross consumer spending, whereas music copyright income represents money flowing directly to creators, excluding retailer margins and taxes. When comparing the 'distributor share' (i.e., the revenue returned to film creators), the revenues generated from music copyrights stand out even more, being roughly three times higher than those of cinema.
While cinema has struggled to recover post-pandemic, video streaming platforms like Netflix, Amazon Prime Video, and Disney+ have flourished, attracting audiences who once frequented movie theaters. In just over a decade, these services have grown from niche markets to a $100 billion industry.
The growth of platforms like Netflix has had a beneficial effect on music copyright owners due to the greater royalties paid by video streaming platforms for the use of music content. Unlike traditional cinema - which, according to Will Page's analysis, historically paid relatively little to music copyright holders - video streaming platforms are typically more remunerative because of the broader range of music rights they must acquire for use of music on their content. This includes:
As a consequence, the increased demand for at-home entertainment has significantly increased also the income directed to music copyrights’ holders. According to Will Page, as of today, video streaming platforms pay five times more to music rights owners for the same rights than the box office cinema industry.
This shift in video consumption habits has significantly benefited music publishers and songwriters, who receive substantial income from performance and mechanical royalties when their compositions are used on video streaming platforms. While the recorded music market has experienced growth in synchronization license revenues - necessary for combining music with visual media and remunerative for both publishers (representing songwriters and composers) and record labels (representing the owners of sound recordings) - there is potential for even greater expansion in this sector.