Music Investors Unconcerned With Slowing Streaming Growth

Music investors remain largely unconcerned about the slowing growth in streaming and revenue within the recorded music industry, despite recent data showing a deceleration in some markets, due to a combination of long-term optimism, untapped global potential, and evolving strategies to maximize returns. 

Here’s why their confidence persists:

First, the broader trajectory of the music industry suggests sustained growth, even if the pace has moderated in mature markets like the U.S. Industry insiders, as reported last week by Billboard, point to Goldman Sachs’ widely respected forecast projecting an 8% annual growth rate for global recorded music and publishing revenue through 2030. This aligns with Universal Music Group’s outlook of 8-10% subscription growth through 2028, a projection equity analysts have embraced.

A key factor is the untapped potential in emerging markets. 

While U.S. and U.K. subscription penetration rates hover in the high 40% range, countries like Poland (17%), Brazil (16%), China (13%), Indonesia (1.8%), and India (1.3%) signal massive room for expansion, according to MIDiA data. Investors see these low penetration rates as a promise of future subscribers, bolstered by streaming platforms’ ability to build local infrastructure and convert free users to paid tiers over time. The IFPI’s 2024 Global Music Report, cited in sources like The Economic Times, confirms this optimism, with regions like the Middle East and North Africa (up 22.8%) and Latin America (up 19.4%) driving double-digit revenue spikes, offsetting slower growth in saturated markets.

Price increases in mature markets further ease concerns. After years of static subscription fees—often described as “subsidized” relative to music’s value by investors like Jeremy Tucker of Raven Music Partners—platforms like Apple Music, Amazon Music, and Deezer raised prices in 2022, with Spotify hinting at similar moves. This shift, now that global subscribers exceed 818 million (MIDiA), allows labels and services to extract more per user, cushioning the impact of slower subscriber growth. Investors view this as a sign that the industry can pivot from scale to profitability without losing momentum.

Technology, particularly artificial intelligence, also fuels confidence. Insiders anticipate AI will enhance catalog value by enabling cost-effective translations of songs into multiple languages, expanding global reach, and improving royalty collection efficiency. These incremental gains—less flashy than a biopic-driven catalog surge but financially sound—align with investors’ focus on steady returns over time. A music investment expert cited by Billboard emphasizes this shift to “better execution,” suggesting that after 15 years of chasing subscribers, the next phase prioritizes optimizing existing assets.