Three Reasons to Consider an Investment in Music
Considering an investment in music may become appealing when you factor in the flourishing streaming platforms, the thrill of live music performances, and the potential for industry-wide growth.
The global music industry is experiencing positive trends that may make it an attractive investment opportunity for individuals. Streaming is experiencing rapid growth, live music performances are shattering pre-pandemic levels and are expected to continue growing, and the overall industry is growing globally.
How can individuals gain exposure to the global music industry and its expected growth?
Streaming Is Experiencing Strong Growth
Streaming has become the dominant medium through which individuals consume music, accounting for 67% of global recorded music revenue in 2022.[1]
Streaming has experienced strong growth in 2023. According to a report from entertainment data and insights company Luminate, over one trillion on-demand audio streams were accumulated by the end of March 2023, the fastest pace to reach that number in a calendar year. In the first half of 2023, an average of 112,000 new tracks were pushed live daily, an increase over the 93,400 average for all of 2022.[2]
Markets outside of the US are showing strong growth in streaming, with Asia, Latin America, and Southern Africa seeing increases in the number of streams of 107%, 83%, and 70%, respectively.
Live Music Is Outpacing Pre-Pandemic Levels
Revenue from live music performances reached $22.7 billion in 2019 before declining to $3.9 billion in 2020 due to the COVID-19 pandemic. However, buoyed by a desire to attend live events and high-profile tours from artists including Taylor Swift, Beyonce, Harry Styles, Bruce Springsteen, Elton John, Coldplay, and others, 2023 revenue is on track to hit an estimated $34 billion in 2023, according to Goldman Sachs.[3]
Goldman Sachs expects live music revenues to grow at a compound annual growth rate (CAGR) of 5% in the 2023-2030 period, while Allied Market Research[4] pegs growth at closer to 10% over the same period.
Underscoring the growth in live music was leading live music promotion and ticketing company Live Nation, which reported that revenue increased by 27% in the second quarter of 2023 compared to the second quarter of 2022. Concert and ticketing revenue grew by 29% and 23% during this period.[5]
It’s All About the Growth
The global music industry experienced record revenues of $26.2 billion in 2022, representing a 9% increase over 2021.[6]
The global music market is expected to grow by $50.46 billion from 2022-2026, representing a compound annual growth rate (CAGR) of 11.8%.[7] A CAGR of 7.3% is expected through 2030.[8]
Underlying these growth assumptions is the expectation that global paid streaming revenue and music publishing revenue are expected to grow at a CAGR of 10% and 7.6% through 2030, respectively.
Consider MUSQ for Focused Exposure to 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.
[1] For more information, please see the MUSQ Investment Case
[2] Luminate Midyear Music Report, Luminate, 7/12/23
[3] Yang, Lisa, et al, Music In the Air, Goldman Sachs Equity Research, 6/28/23
[4] Music Event Market Research 2031, Allied Market Research, Oct 2022
[5] Live Nation Entertainment Reports Second Quarter 2023 Results, Live Nation Earnings Release, 7/23/23
[6] Global Music Report 2023, IFPI, 2023
[7] Global Music Market 2022-2026, Research and Markets website, Retrieved 6/1/23
[8] Kerven, Daniel. Music Outlook 2023, Fundamental View, Themes for 2023 and a Modest UMG Upgrade to Start the Year, J.P. Morgan Equity Research, January 18, 2023
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.
ETF shares are traded on exchanges, and are traded and priced throughout the trading day. ETFs permit an investor to purchase a selling interest in a portfolio of stocks throughout the trading day. Because ETFs trade on an exchange, ETF shares are bought and sold at market price (not NAV). The prices of ETFs may sometimes vary significantly from the NAVs of a ETFs’ underlying securities. Brokerage commissions will reduce returns.
Exchange Traded Concepts, LLC serves as the investment advisor. The Funds are distributed by SEI Investments Distribution Co., which is not affiliated with Exchange Traded Concepts, LLC or any of its affiliates.