The Future of Music Investment: Trends and Opportunities for Private Equity

The global music industry is experiencing a period of rapid transformation, with streaming services, live events, and catalogue acquisitions driving substantial revenue growth. For C-suite executives and private equity investors, the sector presents numerous opportunities; particularly as emerging technologies and evolving consumer behaviours reshape the landscape.

A Booming Market with Expanding Revenue Streams

The music industry is now worth over $100 billion, with recording revenue accounting for approximately 45% of the total market. While streaming platforms remain the primary revenue generator, accounting for 35% of industry earnings, the live music sector is witnessing a resurgence with ticket sales and sponsorship deals adding significant value.

The Role of Streaming and Subscription Growth

Streaming services have proven their resilience and indispensable value to consumers, even as subscription prices rise. Major DSPs like Spotify, YouTube Music, Apple Music, and Amazon Music have increased premium subscription fees from $9.99 to $10.99 between 2011 and 2022, yet subscriber growth remains robust.

Key statistics include:

• Spotify’s premium subscribers rose by 12% from 226 million in Q3 2023 to 252 million in Q3 2024, despite the price hike in July 2023.
• Globally, music streaming subscribers have surged from 305 million in H1 2019 to 713 million in Q3 2023—an 18.5% growth—while the average time spent listening has climbed from 17.8 hours per week in 2018 to 20.7 hours in 2023.
• Audio song streams have also quadrupled since 2017, reaching 4,108 billion in 2023, reflecting a 27.6% increase from 2021.

This ability to raise prices without significant churn underscores streaming’s entrenched role in daily life, driving global streaming revenue to over $19 billion in 2023. For private equity investors, this resilience signals a stable and expanding market ripe for further growth and monetization.

Emerging Investment Themes: AI, Live Music, and Fan Monetisation

Generative AI and Music Creation

Generative AI (GenAI) is disrupting the music industry. Its rise is democratising music creation, enabling independent artists to create compositions with minimal resources, unlike traditional success avenues of signing multi-year label contracts. Investors are eyeing AI-powered tools including:

• Hybe acquired Supertone, a Generative AI tool for voice synthesis,for $32 million.
• Epidemic Sound’s AI-driven royalty-free music library, backed by EQT and Blackstone Growth.

While AI opens doors for greater creativity, it also introduces legal challenges regarding copyright and royalties, necessitating stronger rights management technologies to protect existing catalogues.

Live Music and Experiential Investments

Despite the rise of digital music, live music remains a lucrative segment, with festival operators and venue technology platforms attracting PE funding. Notable recent transactions include KKR’s acquisition of Superstruct Live Entertainment for $1.3 billion in 2024, and Frontier Growth’s $30 million investment in atVenu, a live event merchandise management tool.

Moving out of post-COVID-19 conditions, consumers are willing to pay a premium for immersive experiences. Investors and businesses such as TikTok are exploring fan engagement platforms and exclusive content models to fuel superfan monetisation strategies.

Superfan Monetization: Unlocking New Revenue Streams

The music industry is pivoting towards superfan monetization to capitalize on the dedication of its most passionate listeners, opening new revenue streams for platforms and investors alike. Superfans, though a small fraction of the audience, are willing to spend more on exclusive content, early ticket access, and premium experiences.

Spotify, for instance, is rumoured to be developing a superfan tier, potentially offering perks like artist-curated playlists, behind-the-scenes content, and priority concert ticket access. This model builds on the industry’s thriving ecosystem, where the number of tracks added to Spotify daily has risen from 45,000 in 2018 to 104,000 in 2023 (an 18% increase), and the number of artists earning over $10,000 annually has grown from 23,400 in 2017 to 66,600 in 2023.

With DSPs already demonstrating pricing power—evidenced by sustained subscriber growth post-price hikes—superfan tiers could significantly boost per-user revenue, currently at $0.08 per hour streamed on Spotify (2021) compared to Netflix’s $0.18 (2023). For private equity, this trend offers a compelling opportunity to invest in a dynamic market poised to deepen fan engagement and profitability

The Music Investment Landscape is Evolving

The music industry offers robust investment opportunities for private equity firms and institutional investors. From catalogue acquisitions to AI disruption and live music innovations, the sector continues to thrive amid digital transformation and fuel global economies.

For investors seeking long-term, stable returns, the music business presents a compelling case—combining cultural significance, technological advancements, and scalable revenue streams.

Now is the time to capitalise on the future of music investment. Please contact our experts using the buttons below to discuss our insights and strategic support today.