Streaming 2.0: What May the Next Generation of Streaming Look Like?
The music industry may be entering an era of Streaming 2.0, with subscribers expected to reach 1 billion by 2028 and to hit 2 billion, according to Universal Music Group (UMG) CEO Lucian Grainge.[1] What may the next generation of streaming look like, according to Grainge?
From One-Size Fits All
Up to this point, streaming has been focused on subscription growth – offering an all-encompassing product to the maximum number of subscribers. Its value proposition was “all the music, any time, anywhere, and simple digital monetization strategies focused on customer growth.
Three Fundamental Facts
Three fundamental facts about UMG’s business are driving their Streaming 2.0 strategy. These are:
- Streaming changed everything, resulting in a leap forward in music access and monetization
- Super Fandom is a core component of music industry economics, which is not being fully realized
- Music is universal and fundamental to the human experience
To a Segmented Customer Proposition
Streaming 2.0 rests on the assumption that music subscriptions are significantly under-monetized and have strong potential for growth in average revenue per user (ARPU).
Music spending per person is only 50% of what is was at its peak in 1999 when physical mediums dominated music consumption.
As a result, the next iteration of streaming will likely see:
- Innovation
- Customer Segmentation
- Geographic Expansion
- Greater value through a combination of both subscriber and ARPU growth
Streaming 2.0 will likely see more engaging and appealing consumer experiences, including specially designed new products and premium tiers for superfans. These may include pricier premium tiers that give listeners a reason to upgrade their plans.
This is not unique to UMG. Spotify is reportedly working on a “Supremium” offering, which features high-fidelity audio.
Artist-Centric Models
Streaming 2.0 may also move an artist-centric model where a greater share of revenues generated by streaming platforms will go to those who make music professionally rather than one-off hobbyists or white noise creators.
Streaming 2.0 may have the potential to greatly increase music industry revenues.
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.
[1] All data sourced from: Taylor, Sam, The Music Industry Is Entering the Era of Streaming 2.0 and Could Be On Course for 2 Billion Paying Subscribers Says Universal Music Boss Lucian Grainge, Complete Music Update, 9/18/24
For a complete list of MUSQ holdings, please click here.
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