Music is free

Welcome, artists & builders.

Today we get into fandom & music’s value. Plus, I’ll breakdown 2 major music industry reports & the opportunities for artists.

Inside Issue #15

💡 Context: Music is free
🛠️ Tools: Sound opens up
📊 Numbers: Music today & tomorrow
🗞️ What You Missed: Why artists can’t strike & more

❗️ The email version of this had a broken link to access the breakdown of Music in the Air & Luminate’s Mid-Year Report. You can get it here.

Music is Free

Music’s been under-financialized for so long we forgot it comes with a price.

The music is now free.

We pay for the convenience.

We never think about money when deciding what to listen to next. We pay with our time & attention, not our wallet.

Overfinancialize

The 1st wave of music NFTs countered this by going hard in the other direction.

Money is central to every interaction.

Flip it.
Sell it for more.

This is an over-correction.

• Financializing music so there’s a value on it = good.

• Over-financializing so that it's the main point = bad.

Profit can’t be the core motivator.

All the authenticity in the artist-fan relationship leaves, creating an asymmetrical bet in the wrong direction:

Profit → they still like you (but keep earning)
Lose → they’re gone

I like the idea of music as an investment.

But resale is a feature, not the core value in a fan-centered format.

Let’s put a price on music that isn’t tied to its ROI.

Fans Just Want to Be Fans

But they do want to upgrade the experience.

Unlock new offerings.
Prove they’re the biggest fan.
Be first in line for tickets & merch.

This is where music NFTs & new models should focus.

Making Music Valuable

People don’t pay for music.

They pay for convenience
They pay for interactivity
They pay for community
They pay for experience
They pay for exclusivity
They pay for ownership
They pay for nostalgia
They pay for premium
They pay for scarcity
They pay for access

What are you offering?

— Rob 

📚️ My 3 Favorite Reads This Week

About why music artists can’t go on strike..

1. Steve Albini shows the reality of what ‘going on strike’ would look like for musicians (Twitter)

2. David Lowery breaks down why the US gov’t does not allow music artists to strike (Twitter)

3. Why songwriters can’t have their own writers strike - yet (Pitchfork)

📊 IN NUMBERS

Music: Now & Coming Soon.

Two big music industry reports just dropped:

1. The mid-year report from Luminate

2. Goldman Sachs’ forecasts (Music in the Air)

I analyzed both.

I’ll focus on 3 big opportunities below, plus 5 more in my full breakdown (you can skip to that here).

1. Fandom is still an untapped opportunity.

How many people are superfans?

• Luminate says 15% of us (over 13)

• Goldman says 20%

But, superfans are under-monetized:

• They spend 1.8x more than others now

• Spent 3x more than others in the download era

• Streaming captures none of it with a single tier

📈 GS Forecasts: Superfan monetization creates net new revenue of $4.2B annually by 2030, mostly from premium streaming tiers where superfans pay 2x normies.

🧠 Streaming can capture some of superfan value. But I believe most is gained in layers on top of streaming that offer something deeper & more connective.

PS: You can’t just segment out & gouge superfans.

2. Direct Fan Relationships Matter More Than Ever

Direct to fan sales are up 20% in the US from last year.

VINYL: ↑26% | 2.1m→2.6m
CD: ↑15% | 1.5m→1.7m
CASSETTE: ↓15% | 73k→62k

And while only 27% of US streaming is current music…63% of direct to fan sales are.

🧠 A direct artist-fan relationship is increasingly key as streaming drowns out to catalog & 100k+ tracks per day. It's a move from monetizing attention to monetizing intent.

3. The Album is Making a Comeback

US physical album sales are up 13% from last year.

VINYL: ↑22% (23.6m) 🚀
CD: ↑4% (17.5m)
CASSETTE: ↑6% (212k) 🤏🏻

Hell, even CDs are up.

Only digital album downloads are down (↓12% to 9m).

📈 GS Forecasts: Physical to move down 15% by 2030…but this is up $1b from their previous forecast (to $3.9b). I think they are wrong & will need another edit after seeing this year’s growth.

🧠 There is huge opportunity to create a new digital album format that people love & value. Something that lets the long tail of ever-increasing niche artists & fans take advantage of this unit of fandom.

4. Rock’s Resurgence 🤘

#2 most streamed genre
#1 album sales
#1 digital albums
#1 physical albums
#1 singles

Rock sells more physical albums than the next 7 genres combined 🤯

Rock: 46.6%
R&B/Hip-Hop: 14.1%
Pop: 10.8%
World: 8.4%
Country: 6.2%
Jazz: 3%
EDM: 1.8%
Christian: 1.3%
Classical: 1.1%
Children: 0.7%
Latin: 0.4% 😲

Rock isn’t just on top, it’s grown every year since 2019

2019: 42.2%
2020: 44%
2021: 44.3%
2022: 45.4%
2023H1: 46.6%

And has moved from 14.7% → 17.1% in stream share in that time.

All statistics can be found in Luminate’s Mid-Year 2023 Report or Music in the Air.

If you enjoyed it, forward it along.

That’s all this week. See you on Twitter or LinkedIn.

- Rob