Insights
The momentum of change is unabated in every corner of the audio landscape as the industry continues its shift toward a digital re-platforming that will unlock tremendous value, driving the anticipated doubling of TAM from $27Bn to $52Bn in the next 10 years
Sector Report: Audio Q2 2021
EXECUTIVE SUMMARY
Q2 2021 Audio Sector Wrap-Up
- The momentum of change is unabated in every corner of the audio landscape as the industry continues its shift toward a digital re-platforming that will unlock tremendous value, driving the anticipated doubling of TAM from $27Bn to $52Bn in the next 10 years
- The Believe Digital IPO is a significant industry event as it represents the first pure-play, digitally native, independent label and artist service platform to list
- Raised $360MM+ in its IPO
- Complete offering includes distribution, marketing solutions, technology, analytics, and advisory
- Goldman Sachs’ latest “Music in the Air” industry report highlighted and confirmed a number of important macro trends, including:
- A faster shift to streaming than anticipated: 443MM paid subscribers (2020) growing to 1.28Bn (2030E)
- Digital distribution landscape will remain competitive and fragmented: SPOT (33%), TME (19%), AMZN + YouTube (19%)
- The 3 majors will continue to dominate with a 70% market share, but are losing streaming market share to independents
- The growing importance of the music catalog, with NPS multiples growing from 12x (2017) to 18x (2020)
- Financing activity continued across the audio market with the following notable transactions: Tiger Global’s $155MM Series F investment into artist economy-focused membership platform Patreon (valuation $4Bn+); and Argo Investment’s $50MM Series D investment into music licensing platform Songtradr
- The M&A market remains healthy with several notable deals announcing throughout the quarter. The deal we like the most is Blackstone’s $385MM acquisition of eOne Music from Hasbro
- One of the best management teams in the business, led by Global President Chris Taylor
- Excellent collection of assets, including Audio Network, Death Row Records, and Dualtone, offers multiple platform-like expansion paths
- Don’t mess with Blackstone when it comes to music – they are proving to be one of the most dialed-in investors in the market