Goldman Sachs’ Lisa Yang: Why I’m bullish about music streaming’s future

Lisa Yang

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Welcome to the latest Music Business Worldwide Podcast. The MBW Podcast is supported by Voly Music.


On this ‘cast, MBW founder Tim Ingham is joined by Lisa Yang, Managing Director of Media & Internet at Goldman Sachs’ Global Investment Research.

Yang keeps a very close eye on the music business – she’s the lead analyst on Goldman’s hugely influential ‘Music In The Air’ paper, a new and updated version of which is released each year.

The latest iteration of ‘Music In The Air’ arrived in June 2023, and contained amongst its 72 pages some stellar financial and data analysis of all corners of the music business.

It also contained Goldman’s headline forecasts for the future – including that the global recorded music industry will be generating over $50 billion dollars by 2030, with some 1.2 billion paying streaming subscribers worldwide.

On this podcast, Ingham asks Yang about her team’s latest forecasts in ‘Music In The Air’, while digging into conclusions from the report about how the global music business will transform in the decade ahead.

Listen to the full podcast above, or read an edited and abridged transcript of some of the highlights below…


Goldman Sachs logo
Your latest music in the air report forecasts that there will be 1.2 billion paying music streaming subscribers in the world by 2030. We’re at around 600-670 million today. What needs to happen between then and now to get the industry to that point?

Since we’ve been publishing our annual Music In The Air updates, since 2016, every single year the number of [global music streaming] subscribers has beaten our expectations.

That [was true] even in 2022, with the [Russia-Ukraine] war, the macro-slowdown, and the cost of living crisis. [That year] the number of paid subscribers exceeded our expectations only by 3 million, but it was still better than what we were forecasting.

That gives us a lot of confidence that we’re going to get there.

Over the next few years, we expect the industry will add about 70 to 80 million new subscriber additions [globally] every year, which is a bit of a slowdown compared to the 80 to 90 million that we saw in recent years.

What’s changing is the mix. We expect a growing proportion of these net adds to come from Emerging Markets [‘EM’], rather than Developed Markets [‘DM’].

I think, roughly, the split [of net subscriber adds in the years ahead] will be 60% EM and 40% DM, whereas in 2019, it was the opposite, 40/60.

In 2022, we probably reached the landmark of [a 50/50] split between EM and DM for the first time.

Given the great experience and value for customers being provided by music streaming platforms [today], and also compared to the penetration of video streaming [or] of video games, we actually think [Goldman’s] forecasts can still prove to be conservative.

The big question [in] how to get to 1.2 billion is, firstly, when do we get to saturation in those more mature markets?

“Given the great experience and value for customers being provided by these music streaming platforms, and also compared to the penetration of video streaming or video games, we actually think these forecasts can still prove to be conservative.”

[For Developed Markets like] the UK, US… we use the Nordic markets as a roadmap.

In the Nordics, we think today we’re already at 55% to 60% [of smartphone users being music streaming subscribers]. There’s no reason why, over time, the US and other Developed Markets won’t catch up with the Nordics [at 60%]. In those [non-Nordic] Developed Markets you’re probably at around 40% [of smartphone users being music streaming subscribers] today.

Directionally, we still see a long runway for growth. There’s some consumer studies that show interest at 70%-plus [of smartphone users] for paid streaming [in Developed Markets]; I think it’s just a question of timing. Think about cable TV, for instance – it’s still growing after over 30 years.

That doesn’t mean getting new customers to join [music streaming subscription] in Developed Markets is going to be easy, but we think we’re going to get there.

Then in Emerging Markets, [average] penetration today of smartphone owners [to being music streaming subscribers] is probably around the mid-single digits.

In this case, we can use China as a roadmap – a great example of how music streaming [subscriber] penetration has progressed over time.

It was at around 4% [of smartphone users in China] in 2019. It has more than tripled since then – today we’re at about 13%.

So our forecast for the whole of EM… is 12% [of smartphone users becoming music streaming subscribers] by 2030, and we think there’s no reason why [other EM markets] wouldn’t over time catch up with China.


if you could pick one ’emerging’ territory that you think is going to be particularly commercially game-changing for the music business in the next seven to 10 years, which would you choose?

I’d probably point to India, as a market where I think we’re still very much scratching the surface in terms of penetration and potential over time.

Firstly, from a macro standpoint and demographic standpoint, this is not a market that can be ignored.

This year India overtook China as the most populated country in the world with over 1.4 billion people. And interestingly, unlike many other countries, its workforce is young and expanding, whereas [in] a market like China, the population is aging, probably even shrinking.

“I’d point to India as a market where I think we’re still very much scratching the surface in terms of penetration and where we see potential over time… From a macro standpoint and demographic standpoint, this is not a market that could be ignored.”

[India is] also now the fifth largest economy in the world. It has recently overtaken the UK. So in that context, the music streaming market is still in its infancy, especially when it comes to music subscriptions.

Nearly 80% of [music] streaming revenue [in India] comes from ad-supported. It’s actually the opposite of other regions [where it’s] 80% or 85% from subscription and 15% from advertising.

There’s already a massive pool of ad-funded users [in India], we think more than 200 million; it’s the third largest market for ad-supported [music] revenue in the world after the US and China.

So there’s a massive pool of users [in India today that] you can tap into and convert to paid users over time.


your forecasts for paid subscriber growth are contingent on the idea that headline streaming subscription prices will rise by an average of 3% per year in established markets like the USA over the next half-decade. How confident are you that Spotify and other leading streaming services will keep on putting their prices up regularly enough to meet that 3% per year average?

I think [the recent Spotify price hike] is not just a one-off, and there will be opportunities to raise prices further over the foreseeable future.

We haven’t actually baked in any price increase in Emerging Markets [to Goldman’s forecasts], despite the fact that our conversations with industry players suggests that Chinese streaming services will also be looking to raise prices [soon].

So why do we think we’re at the tipping point when it comes to music pricing and music monetization in general? One simple observation, as a starting point, is that music is still massively under-monetized.

There’s no reason why music streaming monetization will continue to be disconnected from the growth in music streaming consumption.

“The video streaming industry is a great example in terms of how things could pan out for the music industry… If you look at that industry, major streaming services have raised their prices effectively by 10%, every two to three years.”

We like to look at other industries in parallel. The video streaming industry is a great example in terms of how things could pan out for the music industry.

Obviously, video is more mature – we think it’s probably 10 years ahead of music streaming when it comes to penetration. And if you look at the video industry, major streaming services [like Netflix] have raised their prices, effectively, by 10% every two to three years.

Even after taking into account the Spotify price increase [of 2023] the standard plan of Spotify is still 45% cheaper than Netflix today.

Obviously, a lot will depend on what will be the key priorities of the largest DSPs.

In the last decade, all the strategies [they] put in place were to basically chase volume growth. And volume growth was, at the time, easier to get. But now growth is becoming harder to get, especially in some of those Developed Markets as you’re approaching and exceeding 40% penetration [of smartphone users].

So at some point, [music streaming platforms will] start to think a lot more deeply about monetization, especially at a time of high inflation. If a Spotify or an Apple or an Amazon want to better monetize their users, that becomes their key focus.

They will be able to raise prices, but we think there’s also an opportunity to better segment audiences to increase monetization and categorize ‘superfans’, for example.


Credit: QuiteSimplyStock/Shutterstock
A lot is talked about ‘superfans’. What do you think a more extensive streaming offering for this premium section of superfans might end up looking like? What specifically do you think super fans might end up paying more for?

Firstly, we do think there is a greater propensity for superfans to pay a lot more.

Universal Music has often cited consumer research showing that 30% of their artists’ fans actually could be considered superfans. And superfans used to pay three times more in the download era [than they do in the streaming era each year for music].

So you can see [what] this revenue opportunity could represent. We have assumed it could… add about $4 billion [to music industry revenue, which is] about a 25% uplift to our current paid streaming forecast. [Goldman doesn’t include potential additional ‘superfan’ revenue in its flagship forecasts.]

If you look at most of the new [streaming pricing] plans that have been introduced over the last decade, the aim was mainly to acquire new customers, even at lower price points. These plans have typically been dilutive; think about student plans, or family plans, or the Amazon Music economy plan.

So far, there have only been a few attempts to try to charge a premium for extra features.

So I do think there could be new packages that could come out in the next few quarters or years that could include additional functionality like Hi-Fi, for instance, which today is still offered at no extra cost by Apple Music. It could mean offering additional content like audiobooks. [Or] it could also be charging for maybe more exclusive content, for instance.

“the industry should [consider] how it can better leverage the entire artist-fan relationship.”

More broadly, the industry should [consider] how it can better leverage the entire artist-fan relationship. That could include access to pre-release songs, ticketing, merchandising, virtual concerts, etc., to really try to monetize every single touchpoint between an artist and their fans.

It’s worth pointing out there’s been some interesting initiatives coming out of Asia.

Japan, for example, has been very well known for monetizing superfans. For decades, the record companies [in Japan] have partnered with artist management companies to turn a simple record sale into a full merchandising experience that connect artists with their fans.

There have been various tactics to boost CD sales – included as part of your CD, some voting cards, or tickets to be able to take part in handshake events with your favorite artist, access to special concerts and exclusive pictures etc.

All of that basically just leads fans to buy more CDs.

More recently we’ve seen an interesting initiative coming out of South Korea.

HYBE launched a superfan platform called Weverse, I think, a couple of years ago. And the last time I checked, they had just over 8 million monthly active users. [Subsequent to this conversation being recorded, HYBE surpassed 10 million Weverse users.]

Weverse is a platform that hosts a variety of free and paid content from its artists, such as BTS. It has videos, it provides you with regular updates, day-to-day updates from the artists themselves, and also has a platform to sell merchandise.

So that’s also an example of how some players in Asia have been able to better monetize that artist-fan relationship.


In your latest report, you say that a more sophisticated streaming royalty payment model is now “necessary to replace what we know as pro rata”. Where do you think we’ll ultimately end up? What will the model be? Or will it be many models?

It’s hard to tell, but I think one thing is clear, [which] is that the [pro-rata] model has to change because it just has too many flaws.

The pro-rata model was designed at a time when the industry was still in decline, where the players didn’t have as much importance in terms of driving user consumption. And I think it’s pretty clear that you need a model that could better align with monetization and consumption, and also pay out [in line] with the value that’s actually been generated by a song or an artist.

I can’t think of any other industry in entertainment that values each piece of content the same, which is effectively still the case here.

“I can’t think of any other industry in entertainment that values each piece of content the same, which is effectively still the case here.”

I do think it will take time, because as you know, getting all the majors to agree on [one payment] model takes time. Getting the majors to agree with the DSPs takes even longer! You can see how lengthy the negotiations have been [between the majors and] the likes of TikTok or Spotify; it’s a multi-year process.

The one thing I think that will probably come out in the short term is a way to eliminate streaming fraud. Music Business Worldwide has written a lot about this.

There are many studies that show that probably 3%, 4%, 5%, even up to 10% of streams [today] are considered [to be] fraudulent.

It’s clear everyone in the industry is aligned to tackle fraud, and that could easily redistribute 5% to 10% of recorded music revenue back to real artists. That’s probably the first step in terms of aligning monetization with consumption.

I do think eventually we’ll move towards [something like] UMG’s “artist-centric” model, whatever this actually means today. I think everyone will agree over time [on] a model.


You’re confident in the future for music rights and their worth, and – to use a slightly controversial term – ‘premium’ music rights. Ultimately, What is driving your confidence in these rights and the companies that acquire rights?

The music industry still has a lot of structural growth drivers. That’s what I like about the music business – it’s probably one of the most under-monetized forms of content.

That’s [what] will enable the industry to continue to grow in any macro environment. And I think the last couple of years with COVID, with the war and the [period] of high inflation, the music industry has continued to prove really, really resilient.

But obviously, the mix of [that] growth will change. I do think we’re going to enter a [new] phase of growth, which probably is going to be healthier, because it’s going to be more broad-based.

It’s not just going to rely on streaming. Physical sales have stopped declining; vinyl continues to grow. You get tremendous new opportunities on the licensing side, especially as there’s more money being put into [acquired] catalogs.

A lot of those catalog owners will be thinking about better ways of monetizing their content. And I think licensing and sync opportunities will be huge over time. And I still think we’re at the very early stage of better monetizing those adjacent platforms such as social media, gaming, and the metaverse.

All of this is going to help sustain high single-digit growth rate for the industry for the next decade.


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