Needham Sees Streaming as Music Industry's Savior, But Forecasts Continued Risk

Needham Insights said the music industry’s future is at risk, though streaming services like Pandora and Spotify “have saved the music business from extinction.” Recorded music revenue stayed “essentially flat” at an annual $15 billion globally since 2010, with streaming services now growing substantially as a share of the market while retail sales continue to shrink, Needham said in a report Monday. Pandora and Spotify are continuing to operate at a loss, so “until their financial futures are secure, a meaningful proportion of music industry revenue is dependent on public and private investors’ willingness to continue to fund their losses,” Needham said. “Any 'Black Swan' event (like 9/11) that closes capital market access could disrupt the entire music industry virtually overnight.” Black Swan theory events are “unexpected events of large magnitude and consequence and their dominant role in history,” Needham said.