Music Listenership Climbs and the Industry Responds
Streaming Service Shares Climb
People around the world are spending more time listening to audio content than they were before the pandemic began. There was an initial dip in listenership on streaming services at the onset of the pandemic, largely because people were not commuting, but now people are tuning in to audio content on streaming services more than ever. This trend is beneficial for streaming services as well as music rights holders. However, it leaves musicians in a difficult position.
Spotify (SPOT) reported that it added more listeners than expected during its third quarter, and that the amount of time people spent listening to content on the platform climbed. Spotify’s shares have jumped more than 60% this year and have more than doubled since the beginning of 2019.
Internationally, other music streaming companies are also seeing success. Shares of Tencent Music Entertainment Group (TME), the Chinese streaming service, have risen over 26% this year.
Music Royalties Investors See Gains
Streaming services are not the only ones benefiting from this uptick in time spent listening to audio content. Music rights holders, who make money whenever a certain song is streamed, purchased, or performed, are also profiting from the trend.
The Hipgnosis Songs Fund (SONG:LN), which owns the rights to over 24,000 songs including “Don’t Stop Believin’” by Journey and “Set Fire to the Rain” by Adele, has seen its shares rise by 6.4% this year. For context, its peers in the FTSE 250 Index have dropped by about 21% during the same period.
Round Hill Music, a 10-year-old music publishing company, announced last month that it is creating a new music royalties fund on the London Stock Exchange. The company aims to raise $375 million to acquire the rights to over 120,000 songs. The fund will focus on hits with a proven record of success, including tracks by Elvis Presley and the Rolling Stones.
The Impact on Musicians
For musicians, whose plans for tours and recording sessions have been upended by the pandemic, selling rights to their music has been a helpful source of income. An uptick in streaming numbers is helpful financially for certain high-profile musicians. However, for musicians with a smaller following, platforms like Spotify can be useful tools for publicity, but do not generate enough income to make up for money lost because of canceled in-person events.
The pandemic has caused challenges for the music world, and some sectors of the industry are weathering this period better than others. However, it is clear that music is bringing solace, inspiration, and fun to listeners around the world and they are spending more time engaging with music online than before the pandemic.
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