COVID-19’s Impact on Music: An Analysis of the Industry Post-Lockdown

The coronavirus pandemic has undoubtedly impacted all aspects of our everyday lives in a plethora of ways. Restaurants, movie theaters, bars–all businesses and industries have been affected to some extent by the deadly virus and the required reimagining of the “new normal” that we work to define, as we slowly return to life outside of our homes. However, the world of entertainment has been especially impacted. Businesses in the entertainment industry—specifically, the music industry—were among the first to close, and will likely be some of the last to reopen. The global industry is worth over $50 billion, with two major income streams. Ticket sales and live performances make up the 50% of total revenues that come from live music. On the other hand, recorded music is the other major income stream for the industry, combining revenues from streaming, physical sales and licensing royalties. This article is going to examine how the music industry in the United States has been affected by the COVID-19 pandemic. I’ll be approaching the article by examining COVID-19’s impact through three different lenses: Streaming, Touring, and Production.

  1. STREAMING

The most obvious lens to examine the scope of the coronavirus’ impact on music is through sales, the numbers measuring our consumption of music. Following the beginning of the pandemic, physical sales—representative of 25% of recorded music revenue—have fallen by about one-third, while digital sales have fallen 11%. These numbers align with downward trends in discretionary spending, so it’s no surprise that sales are low in the music industry, much like every other industry. However, I’d like to focus on streaming exclusively for the rest of this section, given its rising prominence in the past few years. It’s no surprise that the adoption of streaming services by both music labels and consumers has revolutionized the music industry. Recorded music sales today are close to the industry’s pre-piracy peak, and streaming is to thank for this resurgence in the music industry. Streaming accounts for 85% of total audio consumption, as well as half of recorded music revenue in general. 

Image: PwC, World Economic Forum

At first glance, one would think that when practically the entire nation is in quarantine for months, they’d lean on on-demand music even more to pass the time. With that type of logic, one would imagine that streaming went through the roof and actually thrived in quarantine, similar to how the video-game industry thrived once COVID-19 forced millions to spend all their hours at home. I definitely had this outlook prior to writing this article, as I myself increased my consumption of streamed music once PA’s stay-at-home order went into effect. Interestingly enough, however, the data indicates otherwise. While streaming is still growing, its growth slowed down significantly once stay-at-home orders and lockdowns swept the nation. According to a midyear report from Nielsen Music/MRC Data, activity on major streaming platforms such as Spotify and Apple Music started the year up 20.4% over 2019. However, this metric was reduced to an increase of only 13.8% from March to July. The clearest source of this slowed growth is thinking about where the masses listen to music. While it brings me joy thinking about the Penn community listening to all of their music during study sessions at Stommons or Van Pelt, the reality is that the majority of music streamed everyday is consumed in two settings—in the car and at the gym.

Just one day of gyms being closed nationwide would cause a drastic change in the amount of music that’s being listened to. To put this into perspective, think of your daily routine (if you work out, which I don’t). The average gym-goer spends anywhere from 45 minutes to two hours working out, each minute of their routine being accompanied by the tunes of their choice. As of 2018, 23% of Americans were getting an adequate amount of weekly exercise, which equates to about 75 million people. Just imagine how many millions of hours of music are streamed by US gym-goers in a single day, let alone the music they will also listen to on their gym commute. Suddenly halting the massive amount of daily music streamed just from gym-goers already can have a detrimental effect to the industry.

While these numbers are troubling for the music world, luckily, streaming platforms started 2020 strong enough to carry the industry through the troubling months caused by the coronavirus. Listeners streamed enough music between January and July (361.2 million albums) that consumer audio consumption was up nearly 10 points over 2019 for the year so far. Streaming accounts for 85% of total audio consumption, so it’s still safe to assume that streaming hasn’t sustained significant damage from the pandemic. 

What is most interesting, however, is that the main difference in post-COVID streaming lies in what is actually being streamed. Spotify noted that daily listening habits are more reflective of typical weekend consumption, with relaxing music genres rising in popularity. Additionally, the pandemic has caused an increase in music video streams. These are all likely due to the amount of time individuals are spending at home during these months. While relaxing, background music has seen a steady increase in streams since the pandemic began, it still doesn’t dethrone the dominant genre in music streaming: Hip-Hop. According to the Nielsen midyear report, nine of the 10 most-consumed artists come from Hip-Hop and R&B, including A-listers such as Drake, The Weeknd, and Lil Uzi Vert. The only top-10 artist that wasn’t from either genre? Billie Eilish, who already has acknowledged that her “punk-pop” sound is heavily influenced by rap. There have been significant changes in streams since the COVID-19 pandemic took off in the United States, but it’s still safe to say that streaming has remained stable thanks to a very strong start early into 2020, as well as the new types of streamed music that compensates for the music lost in daily routines or commutes.

Via mn2s

1. TOURING

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This section hits close to home, because I was actually scheduled to attend a concert this summer. Oh Halsey, there’s always next summer :’) . However, the impacts of COVID-19 are definitely not exclusive to just those who planned to attend the Manic world tour this summer. The touring and concert sector of the music industry has unquestionably sustained the most damage from the pandemic, with the entire market essentially being wiped out instantly due to restrictions on large gatherings. Revenue from live performances is essentially zero, effectively cutting the industry’s total revenue in half. All musical concerts and tours scheduled for Summer or Fall of 2020 in North America have been cancelled or postponed to Summer or Fall of 2021. Cancelled performances range from local Philadelphia artists planning to go on tour; highly-anticipated tours from live-concert veterans such as The Weeknd or Harry Styles; and even some of the largest music festivals, such as Coachella, Rolling Loud, and even Philadelphia’s own Made In America festival.

Putting aside the substance or type of concert scheduled to perform, the coronavirus has a devastating effect on music venues themselves. The shutdown of live events completely freezes the $26 billion in sponsorship investments within entertainment venues in the US for 2020. This “sponsorship limbo,” as I’ll call it, is a huge waste of money given that hardly anyone can reap the benefits from it. A six-month suspension of live events would cause $10 billion of this market to be lost or otherwise negatively-effected, and with the trajectory of COVID-19 in the United States, it’s likely that margin will continue to grow if more tours are cancelled through the fall and winter seasons. That presents a huge opportunity cost (sorry, I’m an Econ major) when you think about how else sponsoring companies could have used that $10 billion, rather than leaving it to collect dust in empty venues and get lost within the vast amounts of postponed-marketing campaigns.

On a more micro level, the closures of these venues have significant impacts on their workers. Look at Philly’s Wells Fargo Stadium, the eighth-largest indoor arena in the US, holding a capacity of nearly 22,000 spectators. The stadium has nearly 1000 day-of-show employees managing tickets, security, concessions, and ushering for the venue. Many of these workers (the same ones helping with the Flyers and Sixers games housed in the stadium) already don’t receive ample compensation for their work, and the abrupt halt of their jobs has caused a devastating effect. Many stadium owners pledged money for their workers in light of no live events being held, but the question still remains of how long these workers will be unemployed for, especially as the weeks of unemployment benefits run low. This problem is exacerbated if stadium workers are employed by third-party event contractors, such as Philadelphia-based Aramark, making them ineligible for money pledged by a certain arena since they aren’t directly employed by the stadium or team.

While the end of concerts had rippling effects on the music industry as well as its hourly workers, it also carries a damaging effect on the artists themselves. The music industry is one that has many players involved, especially when it comes to factors like distribution. Much of the money that artists make from album sales or music streams gets distributed to parties such as their music labels, songwriters, streaming services, and publishing companies. Because of this, many artists rely on touring and other live performances to earn the majority of their money.  To examine this, we’ll do a small tour analysis of one of my favorite artists, Halsey. Fresh off her third studio album, Manic, Halsey was one of the most highly-anticipated touring artists of the summer. Her international leg of the Manic world tour was highly successful during the early 2020 months that she was able to perform. The North American installment of the tour was scheduled to kick off on June 2nd in Seattle, Washington, followed by a series of outdoor-amphitheater performances across the US and Canada for the remainder of the summer. To see how much money would have been made from this tour, let’s look at Halsey’s last headlining tour:

The hopeless fountain kingdom (hfk) world tour immediately followed the release of Halsey’s sophomore studio album of the same name. Accompanied by Canadian Rapper (and member of Drake’s OVO entourage, see my last article) PartyNextDoor and pop-singer Charlie XCX, Halsey performed 28 shows during the North American installment, selling 340,983 tickets total. This set of performances grossed $9.2 million and quickly cemented Halsey as a superstar performer. The success of her past tours, as well as the early success of Manic, provide a good foundation for the millions in potential revenue lost due to the postponement from coronavirus. The economic damage is even worse when considering the other parties that are involved with the performances, including those close to the artist themself. No artist can do all the work of being a celebrity by themself; they have to pay their personal agents, security, makeup artists, stage crews (especially if they use stunts during their concerts, something Halsey has utilized a lot in her past tours), and many other parties. 

As this analysis has shown, touring is a very complicated process that has so many components to it, as well as so many heads to pay. That process is detrimental to all parties involved when it all comes to an abrupt halt. While few artists cancelled their tours entirely, there is still sustained damage for postponing tours, as it instantly congests the event schedules of these venues, many of which plan events very far in advance. From the workers, to the venue sponsors, to the artists and crews themselves, the concert and touring market has been obliterated by COVID-19. With live concerts unquestionably being among the last events to be reintroduced, it’s hard to tell how the touring market will rebound from these months of shutdown.

2. PRODUCTION

The coronavirus has also had a notable impact on artists’ schedules for producing and releasing music. The pandemic’s damage has resulted in the delaying of albums for even some of the most anticipated artists of the year, such as Alicia Keys and Lady Gaga, both of whom were scheduled to drop new projects. The main issue is less about the production of the music itself, most of which is already done in a small, intimate studio setting. The issue in production and releases lies in promotion. In the age where music is being consumed primarily on digital platforms like Spotify and Apple Music, promotion is a critical factor for artists, especially those that don’t have a huge following on conventional social media as artists like Drake do, who would find little difficulty in promoting new music to his 69.6 million Instagram followers. Many artists use touring as an important factor in their release schedule, with tours being one of the main ways an artist promotes a new release. However, as we covered in the previous section, artists have to hold off on touring entirely, making release schedules tricky for labels and artists alike.

The issue of promotion is even more critical when you consider the other ways that artists promote. Think about television, specifically late-night television. According to Nielsen data, the first 8-12 weeks after a song or album is released is the optimal time for artists to gain exposure through television appearances, with many artists preferring to do this earlier. For example, Lorde proved this through her string of late-night performances when she was on the rise in 2013. During the week of Lorde’s live performance of “Royals” on Late Night with Jimmy Fallon, the song had a 28% increase in streams, and her Wikipedia page was up 66%. Meanwhile, she also had over 3 million live viewers when she appeared to perform on the Late Show with David Letterman

There’s no night like Saturday night in the world of musical promotion. Saturday Night Live (SNL) has featured over 600 musical performers since its inception in 1975. The show has held the capacity to provide rising stars, legends, or indie artists a successful platform that’s being broadcasted to a national audience. SNL has cemented its ability to elevate the success of musical artists, with many hosts following the example. However, talk show hosts such as Jimmy Kimmel and Ellen DeGeneres have not held tapings with live audiences since their productions have shut down in March, leading to yet another abrupt halt in the world of being a performing artist. 

These setbacks are not exclusive to artists hoping to promote themselves through television. Other common sources of promotion for musicians include press opportunities and interviews, radio station features, record store appearances/signings, and even pop-up merchandise stores. Again, those that lack a huge internet following, as well as artists who primarily rely on physical sales, suffer from these opportunities suddenly disappearing. Promotion also includes general marketing and advertising. The wave of delays in the release of music caused a quarter of all media brands to pause all advertising for the first half of 2020, with an additional 46% reducing their spending. For these reasons, young artists who primarily rely on building a social media presence are the ones who are less affected by COVID-19 impacting their release date.


3. GETTING CREATIVE

Tory Lanez broadcasting his viral quarantine production, “Quarantine Radio”

While the music industry continues to suffer from the COVID-19 pandemic, the shift towards digital media and interactions has prompted many artists to get creative in the way they engage with their fans. For starters, when considering the long-term, all artists are honoring purchased concert tickets for the rescheduled dates, as well as offering full refunds to those unavailable to attend the rescheduled shows. The music industry is also getting creative with how they’re engaging fans through the months of quarantine. Ticket companies and live venues have started to partner with a growing amount of artists to hold exclusive virtual concerts.

On a larger scale, the COVID-19 pandemic has underlined the potential for a whole new realm of cross-industry partnerships. For example, the popular video game Fortnite partnered with rapper Travis Scott to hold a live, in-game virtual concert that attracted 30 million viewers; Jason Derulo has kept fans entertained through his partnership with popular social media platform, TikTok; Tory Lanez shattered viewership records with his viral Instagram livestream series, “Quarantine Radio.” The list goes on, with hundreds of artists finding ways to stay engaged with viewers during quarantine. 

https://twitter.com/FortniteGame/status/1254817584676929537?s=20

If COVID-19 has taught us anything from examining its impacts on the industry, it’s that streaming is undoubtedly the safest and most reliable option for the future of music. Streaming services have carried the music industry through this pandemic, mitigating some of the losses in revenue from income streams such as physical sales. While the industry has still sustained significant losses in revenue due to the decimation of concerts and other in-person appearances, streaming has helped the show go on. There are still numerous uncertainties in the music industry, as well as the entertainment world as a whole. The current trajectory of coronavirus in the US still raises the big question of when live concerts will return—as well as who will still be willing to attend such a densely populated space. While the future of music is uncertain, one certainty is the power of music. The months of shutdown have repurposed music in a sense for consumers. Many communities living amongst stay-at-home mandates used the power of music to unite residents during their time stuck indoors. Economics aside, the COVID-19 pandemic has jeopardized the lives and safety of millions worldwide. Knowing that music has been able to bring strength and unity to communities in such a bleak time paints a silver lining for us as we look forward. Hopefully music still heals us in the way it has to this point, and the industry will hopefully heal in due time as well. Until then, when you’re streaming the latest hits, continue to appreciate the role of music…and wear a damn mask.

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