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Contextualizing Music History and the Potential of Streaming

18012019_music industry

Contextualizing Music History and the Potential of Streaming

The music sector over the last four decades has shifted through technology like very few other industries. Moving from vinyl, cassettes, CDs, MP3s to streaming, music has never gone out of style. Yet despite this it hasn’t been smooth sailing for the industry, far from it.

Music revenues peaked in 1999/2000 at $21.5 billion before tumbling in the wake of Napster’s digital disruption igniting a world of music piracy. Napster was shut down in 2002, only a couple of years after the peak, but as they say, the toothpaste was out of tube. What followed devastated the music industry for over 15 years with pirated music and listeners reluctance to pay for songs, causing revenues to contract by approximately 65 per cent to a low of around $7.0 billion just a few years ago.

Recently however, the trend of contraction has stopped and music streaming has finally started to grow again. As can be seen from the chart below, the music industry in terms of revenues remains a fraction of its peak, however consumer behaviour is changing with people willing to pay for music again via Spotify, Apple Music, etc. In fact we are seeing exponential growth in music streaming revenues with Vivendi (VIV FP) via its ownership of the world’s largest music label, Universal Music Group, very well positioned to benefit from what appears to be a secular growth story.

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The Montgomery Global Funds own shares in Vivendi. This article was prepared 17 January with the information we have today, and our view may change. It does not constitute formal advice or professional investment advice. If you wish to trade Vivendi you should seek financial advice.


Amit joined MGIM in April 2018 as a Senior Research Analyst after spending seven years as a credit analyst at Credit Agricole and Citigroup, based in New York. Prior to this, Amit was an investment banker with Citigroup for five years in New York and Sydney, focusing on Media and Telecoms; Metals and Mining; and Consumer Products.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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