User-generated content could be worth around $6 billion to the music industry over the next two years.
That’s according to a new white paper published by London-based MIDiA Research, in partnership with Audible Magic, entitled The Rising Power of UGC, which examines “the rising power of UGC and the untapped opportunity to monetise the growth in UGC consumer behaviours and new platforms”.
MIDiA estimates that music-related UGC revenue will be worth $4 billion in 2020 alone, with $2.2bn of that being potential music rights holder income.
The report clarifies that “not all of this revenue is currently flowing to rights holders – it is simply an estimate of the potential revenue attributable to music-based UGC”.
Based on “the current trajectory of social media activity”, this opportunity will increase to $5.9bn over the next two years, claims the report, with a revenue potential of $3.2bn for music rights holders.
Key to this growth, notes MIDiA’s report, is China’s buoyant digital marketplace.
Despite TikTok’s continued uncertainty in the US over pressure from the Trump administration and an outright ban in India earlier this year, MIDiA’s report concludes that “the sheer scale of ByteDance’s revenue indicates just how important a player the company is for the UGC music sector”.
Beijing HQ’d ByteDance reported revenues of $17bn for 2019, up from $7bn the previous year.
The rising power of UGC is also reflected by the sharp growth in social media users in 2020, with TikTok confirming last month that its platform has surpassed 100m Monthly Active Users (MAU) in Europe. It has also passed 100m in the US, while Douyin, the Chinese version of the app, has hit 600m MAUs.
Elsewhere, the report argues that “social media is the new music consumption; it just isn’t being fully monetised or utilised” and cites a major label executive as stating that “it is important for music content owners to start imagining UGC as another format or channel for the delivery of music rather than simply as promotion or audience development”.
“To unlock the monetisation of UGC, the content and technology industries need to work better together.”
Adds the report: “Social platforms have evolved into a key cornerstone for the growth of the music industry at scale, and at the same time the increase in UGC activity is generating high valuations for tech-enabled distribution platforms. But where is the revenue for rights holders?
“UGC could generate significant revenues from demographic groups that do not pay for music, but who consume content on social platforms with voracity – especially so in the case of short-form video.
“To unlock the monetisation of UGC, the content and technology industries need to work better together. When it comes to the music industry, the complexity and cumbersome nature of licensing frameworks has been a frustration for technology platforms since the digital age began.
“On the other hand, music rights holders have been frustrated by technology platforms seemingly hiding in safe harbour: leveraging the current ‘safe harbour’ legal frameworks as a way of holding off from entering licensing negotiations at an earlier stage of development and undervaluing the price of content.”Music Business Worldwide