Akin to most Grateful Dead tunes, “They Love Each Other” is not a well-known song and wasn’t a typical earworm heard on the radio around its release in 1976.  Regardless, this love song remains a favorite among Deadheads and has been played at a few special events (like weddings and memorial services) throughout the years.   

To this day, just like how your favorite songs from the past can represent a moment in time, hearing it can evoke happiness, nostalgia, and familiarity.

    Merry run around, sailing up and down 

    Looking for a shove in some direction

    Got it from the top, it's nothing you can stop

    Lord, you know they made a fine connection

    They love each other.

    Lord, can you see that it’s true?

Time traveling – Music’s true power is shown when it transports us to other times and places. It can unite us, rally us, and bring joy to our lives. Beyond that, music also has an impact on the business world and economy. In fact, Apple, the largest company in the world, was greatly influenced by the very power of music. 

An industry transformation – The reason you may not have heard of “They Love Each Other” is because for decades, unless you attended a live performance or had the bootleg cassette tape, you had no way to experience or share the song. But today, thanks to Steve Jobs and team, anyone can listen to this song, or any others, on-demand.  

In October of 2001, Apple introduced the iPod — forever changing the music business. Jobs recognized music’s unique power to create and trigger a memory, and he used it to shape the trajectory of his company and the stock market.  Could one draw the conclusion that music fueled the growth of the largest company in the world (Apple) and helped drive the stock market higher?

A source of enjoyment … and revenue – The iPod led to the creation of music subscription services and, as a result, a steady income stream for Apple from iTunes music downloads. Today, it is estimated that iTunes brings in $6 billion a year of Apple’s revenue.  

But Apple isn’t the only company taking advantage of the power of music. For instance, YouTube’s music service has grown past 50 million subscribers and audio streaming company Spotify is now valued at over $44 billion.  

According to the Recording Industry Association of America (RIAA), in 2020, the entire U.S. record industry received 83% of its revenue from streaming services. It is estimated that $10 billion was spent on music streaming.

And the International Federation of the Phonographic Industry (IFPI), the organization that represents the recorded music industry worldwide, reported that despite the Covid-19 pandemic, the global recorded music market grew by 7.4% last year — the sixth consecutive year of growth. Figures released in IFPI’s Global Music Report show total revenues for 2020 were $21.6 billion.

Where do we go from here? – According to Goldman Sachs, from 2019 to 2030, global music revenues are forecasted to almost double from $77 billion to $142 billion . It remains to be seen how music streaming prices will evolve, as other entertainment streaming platforms, like Netflix, continually increase prices.

It’s likely that as market demand continues to grow, and smartphone use grows in tandem, so will costs for standard music streaming subscriptions, which has remained an average of $9.99 for the past decade. The structures between artists, royalties, and streaming platforms will also likely evolve and become more nuanced.

Here comes the closer – “They Love Each Other” reminds us of music’s emotional power, and how music streaming allows us to recall our favorite tunes at any place and time. The modern miracle of music streaming not only fuels emotions for consumers but can also produce big profits from those companies playing in the music industry.

The contribution and significance to the global economy of music will only deepen, as it remains the undeniable element that can transfix across generations, culture, and time.

INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS OR INVESTMENT STRATEGIES. BLOOMBERG IS THE SOURCE OF MARKET DATA. INVESTMENTS INVOLVE RISK AND ARE NOT GUARANTEED. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RETURNS. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.