Music Halftime Report: A Strong Start to 2024
With many music companies reporting second-quarter earnings, it is a good time to reflect on the strength that the industry has shown in the first half of 2024. In general, streaming and live music have continued to grow, benefiting companies in that space. However, radio companies struggled as ad revenue was weak.[1]
Streaming Was Strong
Streaming remains the dominant means by which individuals listen to music. Using Spotify as a bellwether, streaming continued to grow in the first half of 2024.[2]
Spotify’s total monthly active users (TMAU) increased 14% in the second quarter of 2024 compared to the second quarter of 2023. Premium subscribers increased by 12% compared to last year. As a result, Spotify’s revenue grew 20%.
Spotify’s focus on profitability enabled its gross margin to increase to 29.2% from 24.1%. It generated operating income of $266 million compared to a $247 operating loss in 2023.[3]
While Universal Music Group’s subscription revenue growth disappointed investors, it still increased by nearly 7% in Q2: 24 compared to Q2:2023.[4]
Live Is Alive
After a strong 2023, live music continued to grow in the first half of 2024, as illustrated by Live Nation Entertainment’s (LN) second-quarter earnings report.
LN’s revenue and operating income increased by 7% and 23%, respectively. LN reported that fans bought tickets to live events at all price points. The company sold 183 million fee-baring tickets in the first half of 2024, up 3% from the same time in 2023.
Year-to-date ticket sales for LN concerts were 118 million in the first half, a double-digit increase from 2023. Revenue from onsite spending at live events was also up double-digits, while onsite sponsorship increased by 28%. Confirmed shows were also up double-digits.[5]
Radio Daze
The one area of weakness in the music industry was radio, which faced a soft advertising market.[6]
Music Continues to Grow
The first half of 2024 pointed to a strong global music industry. Individuals continue to listen to
recorded and live music, helping companies in the music industry to experience strong growth.
How May Individuals Gain Exposure to Companies in the Global Music Industry?
The MUSQ Global Music Industry ETF (MUSQ)
The MUSQ Global Music Industry ETF (MUSQ) seeks to provide investment results that, before fees and expenses, correspond to the total return performance of the MUSQ Global Music Industry Index (MUSQIX). The MUSQIX Index is designed to provide exposure to global, publicly traded companies and royalty funds with a core business interest in the global music industry.
MUSQ may provide individuals with an attractive vehicle to gain exposure to the global music industry.
For a complete list of MUSQ holdings, please click here.
Holdings subject to change.
[1] Music Stocks Midyear 2024 Report: Streaming Soars on Subscriber Gains, Radio Nosedives, Billboard, 7/25/24
[2] Unless otherwise noted, all comparisons are between the second quarter of 2024 and the second quarter of 2023
[3] Q2 2024 Update, Spotify, 7/23/24
[4] UMG Second Quarter Results, Universal Music Group, 7/24/24
[5] Live Nation Entertainment Reports Second Quarter 2024 Results, Live Nation Entertainment, July 2024
[6] Music Stocks Midyear 2024 Report: Streaming Soars on Subscriber Gains, Radio Nosedives, Billboard, 7/25/24
MUSQ Global Music Industry Index ETF is offered by prospectus. Carefully consider the investment objectives, risks, charges, and expenses. This and other important information can be found in the MUSQ ETF prospectus, which should be read carefully before investing and can be obtained by visiting https://musqetf.com or by calling 1-855- MUSQ-ETF(687-7383).
Risk Disclosures
There is no guarantee the Fund will achieve its stated objectives.
In addition to the normal risks associated with investing, international investments may involve the risk of capital loss from unfavorable fluctuation in currency values, differences in generally accepted accounting principles or social, economic or political instability in other nations.
Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume.
In addition to the normal risks associated with investing, investments in small- or mid-capitalization companies typically exhibit higher volatility.
The Fund’s concentration in an industry or sector can increase the impact of, and potential losses associated with, the risks from investing in those industries/sectors.
The Fund is non-diversified.
The Fund is new and has a limited operating history for investors to evaluate. A new and smaller fund may not attract sufficient assets to achieve investment and trading efficiencies.
The Fund may invest in securities denominated in foreign currencies. Because the Fund's NAV is determined in U.S. dollars, the Fund's NAV could decline if currencies of the underlying securities depreciate against the U.S. dollar or if there are delays or limits on repatriation of such currencies. Currency exchange rates can be very volatile and can change quickly and unpredictably.
All investing involves risk, and asset allocation and diversification do not guarantee a profit or protection against a loss. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, might be worth more or less than their original cost. ETFs are subject to risks similar to those of stocks, as well as other risks specific to the particular ETF.
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