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How to invest in the music industry – Bankrate.com

The music industry is entering a new golden age with technology disrupting how listeners consume music, from concerts in virtual reality to unfettered access to hearing any song at any time. As a result, analysts predict that the v…….

The music industry is entering a new golden age with technology disrupting how listeners consume music, from concerts in virtual reality to unfettered access to hearing any song at any time. As a result, analysts predict that the value of music royalties, licenses, and other related assets will likely rise with increased competition. This trend presents significant opportunities for artists, labels, listeners and investors alike.

Only 30 years ago, music lovers relied on portable CDs and cassette tapes to access their favorite tunes. But with the emergence of the internet and greater access to bandwidth, brands such as Apple, Spotify and YouTube have redefined the music experience. And it’s all for a good reason. Goldman Sachs estimates that music revenue could reach $131 billion by 2030, supported by a spike in music streaming across the globe.

In this beginner’s guide, we explore the investment potential, along with some popular trends in this fast-evolving industry.

Music streaming

Despite massive challenges from the global pandemic, streaming services have continued to grow. Hit songs like Luis Fonsi’s “Despacito” have been viewed on YouTube more than 7.6 billion times, nearly matching the world’s population estimated at 7.8 billion. Other music artists like Katy Perry, Taylor Swift, Rihanna, Shakira, J Balvin, and Ed Sheeran, to name a few, have released songs that generated billions of views, revealing the power of mass distribution.

But none of this would’ve been possible without technology. The music industry is hitting on all cylinders, from streaming companies like Spotify to device makers like Apple, and even social media companies that use big data and analytics to paint a picture of people’s interests.

Theo Wargo/Staff/Getty Images

The streaming model is straightforward. Listeners can access an on-demand music library for free if they agree to listen to advertisements in between songs. Streaming companies then collect premiums on broadcasting those ads. Streaming service providers require monthly subscriptions for those who prefer to listen uninterrupted. Those subscriptions can come with added benefits like curated playlists or family plans.

For music artists, streaming platforms hold a wealth of information as companies dissect listeners’ habits. Apart from collecting royalties, musicians can use streaming data to decide on a tour location, pitch new songs to editors, gather demographics about their audience and even raise money for new projects. Spotify alone hosts over 380 million listeners in 184 markets.

According to the Recording Industry Association of America (RIAA), revenue for streaming services in the U.S. stood at around $10 billion in 2020. That figure accounts for 83 percent of total music industry revenue. Moreover, RIAA says that paid subscriptions to on-demand stream companies increased by 25 percent to 75.5 million subscribers in 2020 from 60.4 million in 2019 — …….

Source: https://www.bankrate.com/investing/how-to-invest-in-music-industry/

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