Traditionally, the music industry hasn’t been so great to those who choose to invest in it—or even some of the artists who produce the hits. Years ago, the entire sector took a big hit when people started burning CDs and uploading and downloading music from the internet—for free. With Napster reigning supreme, it was difficult for even the most popular acts to turn a profit without touring like crazy. Just a few years prior, the store Tower Records had had its most profitable year ever—and now the entire business sank as a result of the new technology.
However, these days, Wall Street investors are starting to look at the music business in a new light. A lot of this has to do with the advent of streaming, which has irrevocably changed the landscape of an industry that had already been disrupted. With Spotify’s newest numbers set to drop on Wednesday night, investors and analysts are bullish when it comes to music again. With an estimate that over 200 million people will become Spotify subscribers in 2022, the money people are starting to circle their wagons around steaming services for the first time ever. Even venerable institutions such as J.P. Morgan have been singing the praises of streaming, which surprised many of the people who received investor communications from the company. However, Spotify still has its doubters. The fact that the service offers a “free tier” has led many to believe that not all customers can be converted into paying clients.
In the inscrutable world that is Wall Street, it is difficult to see what will and won’t turn a profit. But it would definitely appear that streaming services have caught the fancy of those with deep pockets.