Monday, April 18, 2016

The global downturn in the music industry may finally be over

Written by James Cook — Things might finally be looking up for the music industry.

Credit Suisse published an analyst note on April 4 which predicts that 2016 will be the year that the music industry finally recovers from the dip in revenue it's been in since 1998.

The note says that Credit Suisse expects revenue from paid streaming services to grow nearly six times from 2015 to 2020. The financial services company is also bullish on Apple's longterm prospects: It expects the Cupertino company will ultimately control around 45% of the distribution in paid music streaming.

Credit Suisse highlights how countries like Sweden and Norway have been ahead of the curve when it comes to music streaming — and how they are a likely model for other markets.

"Sweden and Norway offer a vision of the future of the music industry – these markets have high levels of broadband penetration; fast mobile data networks; and high smartphone penetration," Credit Suisse writes. "All are conditions which exist in many other developed markets and we regard it as probably conservative to assume that penetration of paid streaming services in these countries will reach 25% by 2020. This is particularly the case given the entry of Apple into the market – its installed base of loyal customers with a high propensity to transact put Apple Music in a good position to drive penetration higher over time, in our view."

Many musicians have been reluctant to embrace streaming services, but it sounds like they're going to have to get used to them. Elsewhere in the note, Credit Suisse says that it doesn't expect to see a resurgence in the sales of digital downloads — that's services like buying albums on iTunes — at any point in the next few decades.

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