From Taylor Swift t-shirts to Fleetwood Mac Rumors Vinyl LPs, the global music merchandise business will grow to a retail value of $16.3 billion by 2030, according to a new report from MIDiA Research.
Merchandise became a priority for many artists in 2020 when the COVID-19 pandemic shut down the concert business. And as touring resumed and fans opened their wallets, the global merchandise business grew to $13.4 billion in 2023. However, merchandise sales are expected to decline significantly, with MIDiA predicting merchandise sales to grow at a compound annual growth rate (CAGR) of just 2.8% until the end of the decade. But there's still plenty of opportunity — if artists and merch companies don't treat merchandise like a cash grab.
“As the market has become more sophisticated, fan expectations for quality have increased,” says MIDiA Tatiana Chirisano he said in a statement. “But labels focused on monetizing fandom run the risk of 'overharvesting' — exploiting this resource to the point of diminishing returns.”
Music companies, Cirisano added, “need to cultivate deep, long-term excellence to sustain that growth.”
Physical music, which MIDiA considers commodities because many consumers treat vinyl LPs and CDs as collectibles, is projected to peak in 2025 and decline by 2030. Physical commodities such as designer apparel and digital commodities such as virtual goods and NFTs is expected to offset the decline in physical music and increase overall merchandise revenue.
Merchandise is not the most financially attractive part of the music business. That would be digital music, which enjoys both higher margins and higher growth rates. In the first half of 2024, Universal Music Group's recorded music had an earnings before interest, tax, depreciation and amortization (EBITDA) margin of 25.4%, nearly five times its merchandise division's EBITDA margin of 5.3%. And while MIDiA expects merchandise to grow at a CAGR of 2.8% through 2030, Goldman Sachs predicts that the global music streaming market will grow at a CAGR of 9.9% over that time.
But merchandise has always been an important part of the music business due to music fans' never-ending desire for T-shirts and memorabilia of their favorite artists. Consolidation in the merchandising industry began about six years ago, as major labels and some indies invested in merchandising companies to diversify their revenues and expand their services to artist clients.
Warner Music Group, for example, acquired German merchandising company EMP in 2018. Universal Music Group acquired boutique merchandising company Epic Rights in 2019. Sony Music Entertainment made a strategic investment in merchandise company Ceremony of Roses in 2022, and her merchandising company Thread Shop bought the merchandise division of Araca Group in 2019. Also in 2019, indie company EMPIRE took a majority stake in merchandising/e-commerce company Top Drawer Merch / Electric Family.
