European Media
Q-Series: Is music still under-monetised?
The music industry has delivered strong growth over the past five years, benefiting from the adoption of paid streaming.
The music industry has delivered strong growth over the past five years, benefiting from the adoption of paid streaming. During 2024, three of the major music labels experienced a slowdown in growth, while the leading label’s growth rate accelerated to c20%. We note that in the US, the largest overall recorded music market, paid subscriber growth slowed from 7% in H1'23 to 3% in H1'24, while the leading label grew its paid subscriber base by 10% in the same period.
We believe with increased investment by other platforms (marketing, product development, etc.), volume growth could reaccelerate, even in the US.
We believe with increased investment by other platforms (marketing, product development, etc.), volume growth could reaccelerate, even in the US.
UBS Evidence Lab surveyed 4,000 adults in the US, France, UK and Italy during H2'24 who have either paid or ad-supported music subscriptions to either one or more DSP.
Key highlights of the survey are:
- 90% of respondents listen to music weekly while 74% already subscribe to music streaming platforms. We therefore think there is upside to the 42% of US consumers who currently pay for music streaming, although we note that the others could be included in individual or duo plans.
- Younger demographics are much more likely to stream music. c70% of 18-24 year old respondents already pay for music streaming vs just 19% for those aged 65+. This gives us confidence that paid streaming penetration can meaningfully improve.
- 9% of current users of free streaming services said they are very likely to upgrade to a pay service in the next 12 months, equivalent to 8% growth in the number of paid subscribers (Survey data). However, only 3% of respondents who do not use any streaming service (free or paid) said they were very likely to pay for a subscription in the next 12 months
- 81% of non-subscribers pay for at least one subscription video-on-demand service.
- Across three of the leading streaming platforms, between 30 -40% of users stopped their paid subscription due to dissatisfaction with the app experience, personalisation & poor song recommendations - this presents an opportunity for platforms to capitalise on AI innovations to introduce personalised solutions for customers.
Authorized clients of UBS Investment Bank can log in to UBS Neo for the full access.
Authorized clients of UBS Investment Bank can log in to UBS Neo for the full access.