For the first half of 2024, the stock market was a microcosm of the changes in the balance of power in the music industry. Streaming stocks soared as investors rewarded companies that grew their paid subscriber bases. Radio stocks tumbled as companies struggled to cope with a soft advertising market.
Spotify was the best-performing stock in the 20-company Billboard Global Music Index (BGMI) for the measurement period, January 2-June 28, 2024. Shares of the Swedish company, which is traded on the New York Stock Exchange, jumped 67.4 % to $314.45 on June 28 and hit $331.08 on June 5 — the highest point since February 2021, the month the shares closed at an all-time high of $387.44. Subscribers rose to 239 million at the end of March, up 14% from the year-ago period.
A year and a half ago, Spotify closed 2022 at $70.05, down 66% for the year. The remarkable turnaround came from a change in business strategy. In its formative years, Spotify funded its rapid growth at the expense of profits. Investors have tacitly approved this strategy. But after a pandemic-fueled boom in streaming stocks, investors grew weary of growth-obsessed companies and demanded sustainable margins and better results. (Netflix sank 51% in 2022 and has since recovered, too.) So Spotify moved to become “relentlessly inventive,” as CEO Daniel Ek We set it by laying off nearly a quarter of its workforce and cutting many of its high-cost exclusive podcasts, including a deal with Prince Harry and Meghan Markle's Archewell Audio. It also raised prices globally — twice in the United States, the United Kingdom and Australia — to further boost margins.
The six streaming companies in the BGMI posted an average gain of 21.8%, which outpaced the 18.3% average gain of all stocks in the index. China's Tencent Music Entertainment surged 55.8 percent as paid subscribers in the first quarter rose 20.2 percent year-on-year to 113.5 million, helping offset a sharply declining social entertainment business. LiveOne improved 12.1% as the company ended its fiscal year (ended March 31) with a 30% increase in paid subscribers and a 19% increase in revenue. Anghami, based in Abu Dhabi, United Arab Emirates, rose 2.9 percent and improved when video streaming platform OSN+ acquired a 55.5 percent stake in April. Paris-based Deezer was the exception, down 19.2%.
Only the companies in acquisitions came close to the performance of the streaming leaders. London-listed investment trust Hipgnosis Songs Fund rose 42.2% to 1,024 pounds ($1.30) as a result of Blackstone's offer — which was backed by HSF's board and accepted by shareholders on 8 July — to buy the company's shares at 1.05 pounds ($1.31) apiece, a 49.2% premium over the pre-offer price. Similarly, Believe climbed 40.0% to £14.70 ($15.79) after a consortium led by CEO Denis Ladegaillerie increased its stake to 95% through a tender offer at 15 pounds ($16.11), a 21% premium to the takeover bid announcement.
At the other end of the spectrum, radio companies — iHeartMedia, Cumulus Media and SiriusXM — lost an average of 56.4%. Cumulus fell 61.7% as first-quarter revenue fell nearly 3%. iHeartMedia plunged 59.2% and lost 36% on May 10 alone after the company's second-quarter revenue forecast came in below analysts' expectations. SiriusXM fell 48.3% after losing 445,000 self-paying satellite radio subscribers in 2023 and slow uptake of its revamped, cheaper streaming app launched in November. Lower average revenue per user and an “uncertain” advertising market means the company expects full-year revenue to fall more than 2% this year.
All four live music ticketing companies turned a profit at mid-year and averaged an 8.8% gain. Live Nation likely would have fared better than the 0.2 percent gain had the U.S. Justice Department not filed an antitrust lawsuit on May 23 that seeks to break up the company's promotion and ticketing businesses. Germany's CTS Eventim, which bought Vivendi's festival and ticketing business in June, rose 24.4% on the back of a 22% rise in 2023 revenue and expectations of “modest growth” in 2024. MSG Entertainment and sister company Sphere Entertainment gained 7.315% and , respectively.
Record labels and music publishers fell an average of 4.4% excluding HSF and Believe (and rose 8.6% including them). Reservoir Media gained 10.8 percent, Universal Music Group rose 7.6 percent, and K-pop companies SM Entertainment and HYBE fell 12.7 percent and 13.3 percent, respectively. Warner Music Group lost 14.4%.
This story appeared in the July 20, 2024 issue of Advertising sign.
from our partners at https://www.billboard.com/pro/music-stocks-midyear-2024-spotify-streamers-up-radio-down/
