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My user name already reveals a certain affinity with music to those in the know. Music is something special for me - it accompanies, reflects moods and often stays where words end. So in this article, I take a look at the music industry from an investor's perspective: Where is value actually being created here, who is benefiting from the streaming boom, and which companies are making money from the return of great live experiences?
Music has always been a business with emotions - and with returns. Since streaming replaced the old model of CD sales, the industry has transformed into a global data and rights business. Today, it is no longer just artists, labels and concert promoters who earn money, but also investors who rely on digital platforms, rights catalogs and live experiences. The music industry is no longer a subject of nostalgia, but a sector with recurring cash flows, platform dynamics and the potential to remain one of the most profitable cultural industries in the coming years.
The pandemic was the stress test: physical events fell away, while streaming exploded. Since then, the sector has been growing twice over - online and on stage. According to the IFPI, the global music market has recently risen to over 28 billion US dollars, driven by more than 600 million paying streaming subscribers worldwide. However, it is not so much the volume that is decisive as the monetization. Anyone investing today should understand where the leverage lies: with platforms that control data and behavior - or with rights holders who profit from the same songs for decades.
A first obvious player is $SPOT (-0.5%) (Spotify Technology S.A.), the dominant streaming platform with over 600 million monthly active users. The business model is based on scaling: music rights are licensed, advertising revenues and subscription revenues increase linearly with the user base. After years of growth, Spotify is now entering the margin expansion phase. Price increases in core markets, new product levels such as "Superfan Clubs" and the integration of podcasts and audiobooks are shifting the model from volume to value.
Key figures: Revenue growth around 7% YoY, EBITDA margin ~11.6% → Rule of 40 ≈ 18.6%. PEG ratio approx. 2.1×, P/E ratio ~45, free cash flow yield approx. 1.5 %.
Spotify is therefore clearly below the ideal "Rule of 40" threshold - growth and profitability are solid, but not excellent. For investors: the story is intact, the model works, but the valuation requires sustainable operating leverage.
On the other side are the rights holders. $WMG (+2.31%) (Warner Music Group) is one of the three major labels worldwide, alongside Universal and Sony. Unlike Spotify, Warner owns the heart of the industry - the songs themselves. Revenues from streaming, synchronization, film rights and live events ensure predictable cash flows. Warner is not a high-growth stock, but a classic cash machine with a structural tailwind.
Key figures: Sales growth ~6.4 %, operating margin ~14 % → Rule of 40 ≈ 20.5 %. PEG ratio approx. 2.0×, P/E ratio ~34, free cash flow yield ~2 %.
Warner thus remains slightly below target, reflecting the more mature phase of the company: stable, but less dynamic. Margins are solid, the moat is real - music rights are not expiring. The fact that growth comes at a high price remains critical: Artist contracts are complex, catalogs are expensive, and the power of the platforms squeezes margins. Nevertheless, WMG is one of those companies that work with time, not against it.
Between these poles - platform vs. rights - a third market has emerged: the trade in music catalogs. Companies such as Hipgnosis Songs Fund, Round Hill Music and Kobalt have shown that music IP can be a predictable asset. The returns come from license fees and royalties, which continue to flow even during recessions. Private equity houses such as $BX (+2.09%) Blackstone and Apollo have long since stepped in. The idea behind it: Songs don't age, they are rediscovered - on TikTok, in series, in advertising. Anyone who owns unique rights to a handful of global hits has a kind of musical bond with inflation protection.
But the music industry does not end with rights and streams. Another anchor of growth lies in the physical experience - live events. Here dominates$EVD (+0.6%) (CTS Eventim AG & Co. KGaA) from Germany, Europe's largest ticketing and concert group. Eventim combines two highly profitable business models: platform and production. Through its ticket network, the company controls access to millions of fans, while at the same time acting as an organizer of festivals, arena shows and tours. Vertical integration - from digital booking to the stage - creates margin advantages and pricing power.
Key figures: Revenue growth ~6%, EBITDA margin ~19% → Rule of 40 ≈ 25%. PEG ratio difficult to compare (partly negative due to cyclical business model), P/E ratio ~29, free cash flow yield ~3 %.
Eventim is therefore also below the Rule of 40 mark, but impresses with its pricing power, network effects and cash flow strength. For investors, the Group offers a kind of counterweight to the digital models - real, scalable and relatively independent of the streaming cycle.
A comparison can be made: All three stocks are below the Rule of 40 threshold, but use different levers: Spotify via data and subscription economics, Warner via rights ownership and licensing streams, Eventim via live experiences and pricing power. Whoever invests in the music industry ultimately decides between platform, catalog or audience.
An alternative route is via the ETF $MUSQ which bundles companies along the entire value chain - from labels to streaming and live events. This is an efficient solution for investors who do not want to opt for individual shares. The ETF mixes well-known names such as Spotify, Universal, Warner and Live Nation with technology companies in the audio environment. The risk lies in the correlation: music is a small, highly concentrated market. If you want to diversify, you should be aware that these companies have similar global macro drivers - advertising market, consumption, interest rates, emotion.
Opportunities and risks are close together. The opportunities: The industry continues to grow, streaming revenues are increasing, live business is booming and music IP is becoming a strategic asset. The risks: Overvaluation, falling margins, regulatory pressure and platform power. The decisive factor will be who retains control over data and distribution. Those who only supply content will become interchangeable. Whoever controls access dictates the price.
For investors, a multi-stage approach is therefore a good idea: Platform stocks like Spotify for growth, rights holders like Warner for stability, promoters like Eventim for physical cash flow, specialized IP funds for passive income. Many shares trade at valuation premiums that presuppose long-term growth - but the structural demand for music remains. Streaming grows with every generation, rights do not become obsolete and live experiences cannot be substituted digitally.
Whether the music industry actually becomes a new defensive growth sector depends on the next cycle. If interest rates remain high, capital-intensive rights funds will suffer; if the economy picks up, streaming and live will benefit. However, music remains a consumer good with emotional value - and emotion sells, even on the balance sheet. Investors who want to invest in the soundtrack of the world have to decide whether they prefer to focus on data or content. On platform logic, rights ownership or experiences. Anything can work in the music industry - if you get the timing right.
Questions for the community:
How do you assess the relationship between digital and physical business models in the music industry?
Do you see Eventim as a structural beneficiary of the new live wave - or will streaming remain the dominant investment theme?
