Know-how has modified how listeners eat music. Music lovers as soon as accessed their favourite tunes on bodily media like cassettes and compact discs, however at present, manufacturers resembling Apple, Spotify and YouTube have redefined the expertise.
Analysts predict that, in consequence, the worth of royalties, licenses and different associated property will rise with elevated competitors, presenting alternatives for artists, labels and traders alike.
This newbie’s information explores the funding potential, some fashionable traits on this fast-evolving trade and how one can begin investing.
Key takeaways
- The music trade is booming and continues to current vital alternatives to potential traders.
- These seeking to spend money on the music trade could wish to think about classes like music streaming, royalties and stay music and concert events.
- There are a number of methods to spend money on the music trade, from shares and exchange-traded funds (ETFs) to crowdfunding platforms.
Methods to spend money on music streaming
Standard artists resembling Taylor Swift, Beyoncé and Ed Sheeran have generated billions of views on YouTube, revealing the ability of expertise and mass distribution within the music trade. And it doesn’t cease there — from streaming corporations like Spotify to gadget makers like Apple and even social media corporations that use large information and analytics to find out individuals’s pursuits and tastes — tech corporations have impacted the music trade in a variety of methods.
After all, streamers have been among the many greatest beneficiaries. In keeping with the Recording Business Affiliation of America (RIAA), income for streaming companies within the U.S. stood at a file excessive of $17.1 billion in 2023, the latest 12 months for which annual figures have been launched. That determine accounts for 84 p.c of complete music trade income. Furthermore, paid subscriptions to streaming corporations elevated by 9 p.c to $11.2 billion in 2023.
These occupied with investing in streaming companies have a number of public corporations to select from. These embrace Spotify (SPOT), Apple (AAPL), Alphabet’s (GOOG) YouTube, Amazon (AMZN), Sirius XM (SIRI) and iHeartMedia (IHRT).
Methods to spend money on music royalties
One other solution to spend money on the music trade is by tapping into music royalties. One of many advantages of investing in royalties is diversification. Traders purpose to diversify their portfolios by varied asset courses resembling shares, actual property, artwork and maybe royalties. Completely different asset courses carry various ranges of danger, so it’s prudent to think about every possibility rigorously and talk about them with a professional monetary advisor.
In an try to revenue from royalties, some traders have turned to crowdfunding corporations like SongVest. Based in 2007, this fintech firm acts as an internet market to purchase and promote music royalties at public sale.
Different platforms, resembling Royalty Change, match traders with artists in search of funding in change for royalties. The corporate claims to have raised greater than $190 million for content material creators by greater than 2,300 offers.
Crowdfunding platforms supply many varieties of royalties, funding durations and licensing agreements, so traders should train due diligence earlier than committing any capital. You may additionally discover it helpful to learn this information evaluating the variations between investing and buying and selling.
Methods to spend money on stay music and concert events
In 2020, the worldwide pandemic dealt a major blow to the stay music trade, with many public corporations dropping greater than half their market worth. Nevertheless, venues have since reopened, and stay occasions have made a full comeback as an funding alternative.
In November 2024, Reside Nation Leisure (LYV), which owns Ticketmaster, introduced that profitability had elevated by 39 p.c to $474 million within the third quarter in comparison with the earlier 12 months. Whereas there’s nonetheless loads of room for progress, pent-up demand for in-person occasions has led to a giant comeback for stay concert events, which in flip creates a chance for funding.
With new indicators of life within the area, traders could wish to think about shares like Madison Sq. Backyard Sports activities (MSGS) and Eventbrite (EB), which might additionally profit from the uptick in attendance.
Regularly requested questions
Backside line
Investing within the music trade offers long-term alternatives. Because the trade evolves, retail traders have entry to public shares, exchange-traded funds and crowdfunding platforms. For these extra in tune with the trade, there’s memorabilia and even music devices resembling classic guitars and pianos that turn into collectors’ objects over time and may fetch tens of 1000’s of {dollars}.
Nevertheless, like every other thematic funding, there are additionally potential dangers. So earlier than investing, evaluate all obtainable data — and perhaps seek the advice of with a monetary advisor — to find out whether or not music appears like a smash hit (or a miss) in your portfolio.
Editorial Disclaimer: All traders are suggested to conduct their very own impartial analysis into funding methods earlier than investing determination. As well as, traders are suggested that previous funding product efficiency isn’t any assure of future value appreciation.
— Bankrate contributor Daniel Bukszpan contributed to an replace of this text.
