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U.S. music revenue on pace to reach new record by 2025: Report

Digital Media Association CEO Garrett Levin joins Yahoo Finance’s Zack Guzman to break down a new report that reveals the growth and revenue potential for the streaming music industry.

Video Transcript

ZACK GUZMAN: On 2020's impact, though, just to continue the discussion on entertainment, it's been a big year for streaming for music, which had already been a big year last year when we look at the revenues from streaming in the US hitting $10.3 billion in 2019. That accounted for more than 3/4 of the total revenue in the US recording industry. It's a big market here, and no doubt going to be a larger portion here as touring takes a hit due to the pandemic.

And here to discuss that with us is Digital Media Association CEO Garrett Levin. He's also, I should note, the CEO of this group that represents the biggest names in streaming music. That would include Spotify, Apple, Pandora, YouTube, and Amazon. So no better person to talk to about all this.

And Garrett, I mean, when we talk about it, I know it's huge, but how has 2020 differed from even the big year in streaming that we saw last year? And what do you think's ahead?

GARRETT LEVIN: Yeah, it's a great question, Zack. And thanks for having me on the show. I think one of the things that we're seeing-- and we talk about this a little bit in the report we just put out-- is that listening through things like smart speakers has gone up dramatically.

Over 40% of smart speaker listeners are now listening over six hours a week to music on the speakers. And I think that's a real testament to the innovation that's been happening in this space that has driven those revenues that you started off with.

The other thing, the flip-side of this that we've seen in 2020 is the negative impact on other aspects of the industry from the pandemic, particularly in the live sector. Historically, streaming and live have had this very synergistic relationship. The data that streaming services have allows artists to target their touring, find their audiences where they are. And you know, their audiences are all at home right now.

The members of DMA are incredibly supportive of a lot of the efforts that are going on here in DC, where I am, to try to get some help to independent venues to make sure that when we come out the other side of this, artists can get back on the road as soon as possible and as safely as possible, because it's obviously such a critical element to all of this.

ZACK GUZMAN: Well, I know you represent these big streaming giants. So you know, there might be more reason for you to be on the benefit side, the pro-side of streaming here. But I'd be curious to get your take on how that data that you're discussing here might impact the rise of some of those more indie artists who might be able to make money here not being some big-name artist that's going to get mainstream radio play, but also opening doors for those more independent artists who might just be making music in their bedroom, kind of leveraging the data you're discussing and figuring out a way to make it all work.

GARRETT LEVIN: Yeah. I mean, look, we really believe that one of the superpowers of streaming services is that ability to discover and that ability for music fans to find music they didn't even know they would love and then be introduced to it.

Certainly, when you've got it on your phone or in your car or on a little device in your house, the ability to call up, you know, 50-plus million songs when you want, and the kind of curation and programming that happens behind the scenes at these innovative companies, I think we really have seen a real rise of independent artists breaking through in ways that just were not really possible under the traditional business models.

And I think that's a real credit to both the quality of the music that they're putting out and the ability for the streaming services to introduce people to that great music.

ZACK GUZMAN: Yeah. I mean, you highlight a few of those examples in the report, Lil Nas X being one that we've talked about on this show. But you talk about kind of the rise of all this tech playing a big role in the broadening base of people paying for music subscriptions, whether it's, you know, Apple or YouTube or Amazon, what have you.

But when you think about that, I mean, how important does the actual data experience become, I guess in your perception, of clinging to those users? It seems, from the outside looking in, you could trade them off, and what's the difference between a Spotify and an Apple Music?

But in using these, you are giving up kind of the data that they have on you to know your songs, your playlists, and everything else. So how does that stickiness play into how music fans, I guess, interact with their favorite musicians through all this as well?

GARRETT LEVIN: You know, I think it's a great question. I think, you know, we have gone in the music industry from a period of questioning about whether anybody would pay for music again not that long ago to bringing in, you know, close to 100 million paying users of these services. I think about my parents, who kind of went from buying CDs to not paying for music at all, because it was too complicated, to now they have a smart speaker and they've got a subscription to one of these services again.

On the question of the differentiation between the services, one of the things that we did in the report-- which I continue to find fascinating-- is we looked at the top 10 tracks on those five platforms. And the differences between the five services is actually really interesting if you dig into it. And it suggests that they actually are differentiating their products and reaching different audiences and that they are building that kind of loyalty with their users that goes to the ability to kind of serve the people who are subscribing the things that they want, the fans getting what they want and what they need.

ZACK GUZMAN: That's a very good point. We've come a long way since the fears of Napster ending the music industry altogether. Clearly not the case here in 2020, as streaming has become so important to even listen to anything. Live music not really out there right now.

But Garrett Levin, appreciate you taking the time. He is Digital Media Association CEO. Thanks again for the chat.

GARRETT LEVIN: Thanks for having me.