The growth is somewhere else

Global recorded music has grown for more than a decade, and the headline rate has become unremarkable. The composition of that growth has not, and it is where the industry's next set of problems sits.

The distribution is lopsided. Industry figures for the last full year report Latin America growing fastest by a wide margin, with Middle East, North Africa and Sub-Saharan Africa close behind and Asia posting double-digit gains.

Those rates are being applied to smaller bases, which is the usual caveat and does not dispose of the point. Two Latin American markets now sit inside the global top ten, which is a change in the shape of the business rather than a rounding effect.

The infrastructure has not moved with the listeners. Rights administration, marketing, catalogue ownership and the executive population remain concentrated in markets that are growing slowly, and the revenue increasingly is not.

That produces a familiar extraction question. Value created by artists and audiences in fast-growing regions flows through structures owned elsewhere, and the share retained locally depends on deals negotiated at a considerable distance.

Local independents have been the main beneficiaries where they exist, because proximity is a real advantage in markets where discovery runs through regional platforms and social patterns that a distant catalogue owner does not observe.

Pricing is the constraint that shapes everything downstream. Subscription prices calibrated to income in wealthy markets do not transfer, so growth in listeners outpaces growth in revenue and per-stream economics compress further.

That compression is felt globally rather than locally, because most services divide a pool. More listening from lower-priced markets dilutes the per-stream rate for everyone, which is an unintended consequence of a pro-rata system meeting uneven incomes.

The strategic response from the majors has been acquisition and partnership in the growing regions, which addresses ownership without addressing the pricing structure underneath.

The plausible outcome is a business whose growth comes from regions its economics were not designed for, and whose per-unit revenue keeps falling while its total keeps rising. Both trends are already visible and neither resolves the other.