4 Investment Options For Music Lovers

They say the most successful investors invest in their passions and interests. And while many believe that mostly relates to their favourite brands, it can also extend to their taste in music too.

With most of the world’s biggest artists signed to a music label and streaming their music through at least one platform, there are endless ways that investors can support their work.

While live music may have halted during the pandemic, the music industry is still as lively as ever, with the global recorded music industry on track to reach the value of USD$70.02 billion by 2025.

For those keen to invest in the future of music, here are four investment options to build their stock market soundtrack.

1. Spotify (NYSE: SPOT)

Based in Sweden, Spotify is the world’s biggest on-demand music streaming platform with a market capitalisation USD$44.30 billion. With over 365 million monthly users and 165 million subscribers (as of Q2 2021), Spotify has experienced nothing but growth over the past 12 months.

While almost all major music labels stream their artists’ music through Spotify, the company’s revenues have soared both in subscribers by 20% year-over-year and advertising by 110% year-over-year.

With the addition of podcasts to the platform, the growth and demand of this space have been crucial to Spotify’s recent success, especially with its USD$100 million exclusive deal with Joe Rogan’s popular podcast “The Joe Rogan Experience”. Spotify is even looking to develop its own podcast content, which if monetised well, is expected to help grow the company’s revenue organically at a 200% year-over-year clip moving forward.

The company also announced in August that its top brass was on board with a share repurpose program worth USD$1 billion, which is expected to be carried out over the next five years. This will no doubt boost growth investors’ outlook on the company’s stock.

2. Warner Music Group (NASDAQ: WMG)

Headquartered in New York, Warner Music Group is one of the ‘big three’ recording companies and the third-largest in the global music industry after Universal Music Group and Sony Music Entertainment.

Currently holding contracts with some of the industry’s biggest music artists such as Bruno Mars, Coldplay, Dua Lipa, Stormzy, Wiz Khalifa, Lizzo, Ed Sheeran and Cardi B, Warner Music Group operates some of the largest and most successful labels in the world including Elektra Records, Reprise Records, Warner Records, Parlophone Records (formerly owned by EMI) Atlantic Records and Warner Chappell Music, which is one the world’s most renowned music publishers.

After listing on the Nasdaq in June 2020 with an initial market capitalisation of USD$15 billion, the company has gone from strength-to-strength, at the time of writing, its share price climbing over 36% and up 10.68% year-to-date. Warner Music Group’s recorded music streaming revenue has also grown by 20% in Q3, thanks to the company’s chart-topping new music releases.

Coming off a dull 2020, due to the struggles to record and release new music during the pandemic, Warner Music Group has since seen its stock climb thanks in part to a major deal with TikTok, Universal Music’s loft IPO and the registered public offering stock sale to Morgan Stanley.

3. Tencent Music Group (NYSE: TME)

Tencent Music Group is the leading online music entertainment platform in China, operating four of the most popular music mobile apps in the region including QQ Music, Kugou Music, Kuwo Music and WeSing.

In Q2 2021, Tencent Music Group announced it had reached over 66.2 million paying users, an increase over 40.6% year-over-year, and over 832 million users in total, split between online music and social entertainment.

In February 2021, the consortium led by Tencent Music Group announced that it purchased 20% of Universal Music Group, a move that allowed the company to own more of the industry’s market share. The company already owns around 8.27% of Spotify and has a strategic partnership in place for both platforms to work together.

Despite the upsides the company has experienced to date, at the time of writing, its share price has sunk by more than 60% so far year-to-date, off the back of news that regulators in China have ordered cuts to exclusive licensing deals and crackdowns on live-streaming platforms.

However, as the critical partner for any record label or artist that wants to reach music fans in China, Tencent Music Group still has the potential to be a good investment option for budding investors looking to diversify their portfolio with foreign stocks.

4. Sony Group Corporation (NYSE:SONY)

Sony Group Corporation is the holding company of the Sony Group, which comprises Sony Corporation, Sony Semiconductor Solutions, Sony Entertainment (Sony Pictures and Sony Music Entertainment), Sony Interactive Entertainment, Sony Financial Holdings and others.

Sony Music Entertainment is one of the world’s leading record labels and the brand itself has been very influential in the music industry. The label has publishing rights to some of the world’s most historically famous artists including The Beatles and Michael Jackson, as well as new kids on the block Harry Styles and The Kid Laroi.

In its Q2 earnings, Sony Group Corporation saw its operating profit jump to USD$2.57 billion and its shares consequently climbed by 33% year-to-date.

Sony Music Entertainment globally generated USD$430.4 million of revenue in Q2 2021, which equates to around 10% of Sony Group Corporation’s total revenue.

Overall, stocks from the music industry offer investors ample opportunities to diversify their portfolios and gain exposure to different global companies. Like all stocks, investors should do their research into the company they want to invest in and ensure they only invest what they can afford.

Cover image: Chadchai Krisadapong/Shutterstock.com