Streaming’s Potential: Profits and a Broader, More Diversified Music Industry

Spotify's report on the streaming industry noted trends that may persist into 2024 including a more diversified music industry and the rise of non-English music.

 

Spotify paid out record payments to the music industry in 2023, according to their annual Music Economics Report.[1] Just as notable is how Spotify and the streaming industry may democratize the music industry, paving the way for a broader group of artists to find commercial success.
 

Record Payments to the Music Industry

Spotify paid over $9 billion to the music industry in 2023, the highest annual payment from any single retailer. Spotify’s payments have tripled over the past six years and its 2023 payment represents a significant portion of the $48 billion it has paid out since its founding in 2006.
 

Promoting a More Diversified Music Industry

Spotify may be creating a more diversified music industry as non-English music rises in popularity. Additionally, the platform offers more artists the opportunity to find audiences for their music.
 

The Rise of Non-English Music

More than half of artists who generated at least $10,000 in streaming revenue were from countries where English is not the first language.
 

Independent Artists Received Half of 2023 Payments

Independent artists received $4.5 billion in payments from Spotify. This was the first year that independents accounted for half of Spotify’s payments.
 

Democratizing Access to the Music Industry

Many radio stations only play Top 40 tracks, and record stores may only carry the music of a few thousand names. However, streaming may allow a wider variety of artists to enter the music business.

During 2023, 80% of all artists who received $1MM in payments were not household names, and 80% didn’t have a song that reached the Top 50 on Spotify’s Daily Global Songs chart.

Streaming platforms allow more artists to make their music available to the public. More than 10 million artists uploaded at least a single track on Spotify in 2023, and 8 million had less than ten tracks.
 

Fostering Career Growth

Streaming platforms may also foster career growth for more artists. Nearly half of the artists who generated at least $10,000 in streaming revenue in 2017 are now generating more than $50,000 and likely more than $200,000 when other record revenue sources are factored in. 

Even artists with low exposure on Spotify may generate significant revenue. The 50,000th-ranked artist on Spotify generated at least $16,500 on the platform and likely $65,000 when other streaming and recorded services are considered.
 

Streaming May Offer Opportunity

Streaming may allow a wider variety of artists to enter the music business. It may also offer the opportunity for more companies to make more money as their catalog gains access to a wider audience. And it may create a more exciting and creative music industry.

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.

 

 

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[1] All data sourced from: Loud & Clear: Our Annual Music Economics Report, Spotify, 3/19/24