Signal in the Noise Vol. 234: Can the music industry overcome the superstar squeeze?

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Signal in the Noise Vol. 234: Can the music industry overcome the superstar squeeze?

Barclays | Signal in the Noise Vol. 234

FIGURE 3. Time spent on audio being roughly comparable over this period

Note: Daily hours spent per person are compiled from multiple sources with differing methodologies. Pre-2004 estimates

are based on the Statistical Abstract of the United States (U.S. Census), with recorded music measured on a per person

basis (age 12+) and radio on a per adult basis (age 18+). Recorded music in this period primarily reflects physical formats

and does not fully capture digital playback (e.g., MP3 players or computer-based listening), which may result in an

understatement of total audio consumption in that period. Post-2014 figures are sourced from Edison Research across

individuals aged 13+ since US government data isn’t reported in the historical format anymore

Source: Barclays Research estimates, US Census, Edison Research

This is also why Spotify has been recently looking for ways to restructure its pricing models,

which could be a significant negative for the music industry as a whole even though these

efforts are still small. In this respect, Spotify’s decisions to split audio books into a separate

pricing tier and create a bundle structure and, more recently, to create multiple super fan

products instead of a single super fan tier speak to this diverging incentives.

In an “all you can eat” model where there are no content based pricing tiers, music tends to

benefit substantially as consumers placing higher value on non music content, which tends to

have lower content costs, would in effect cross subsidize music. In some ways this is similar to

the way legacy cable bundles cross subsidized sports at the expense of other entertainment

genres.