A way to gamify the music industry even further than it already is!
Society has always had a fascination with investing, from traditional industries to modern technologies. Investing in music, however, is a concept that may sound foreign to many. Yet, with the evolving landscape of the media and entertainment industry, the idea of a music stock market system is not as far-fetched as it may seem.
Imagine a world where music is not just an art form but also a commodity traded on a market. Instead of traditional financial metrics, such as price-to-earnings ratios, we could have price-to-stream values. This innovative approach would revolutionize how we perceive and interact with music.
In this hypothetical scenario, let’s delve into how a music stock market system could potentially work:
How Do We Value the Music and Artist?
Just as with traditional stocks, the value of music shares could fluctuate based on demand, streaming metrics, and overall popularity. Artists and record labels could issue shares representing the rights to their music catalogue.
Recent years have seen artists like Justin Bieber, Katy Perry, Bruce Springsteen and Paul Simon sell their catalogues for hundreds of millions of dollars. Is this a worthwhile deal for the artist or is there value to music than both artist and us think?
Taking Michael Jackson as an example, his music value has been on a steady incline since his meteoric rise to stardoms in the 80s and 90s. Since his death, his music has only become more popular and his Spotify sits at a cool 41.4m listeners.
This is his highest ever count on the platform and 75th in the world which is crazy because he obviously has not released any new music in well over a decade. Music and especially good music is timeless meaning its value will be constantly evolving as we do. His catalogue is currently valued at $1.24bn according to a recent purchase by SMG of a stake in his catalogue. This deal was criticised for undervaluing the artists work but it is a common feature for deals of this nature.
The music stock market would capture and represent the value of an artists and their catalogue. Allowing us to assign a price to their work at any given time because valuing an artists work at a single point of time is too tricky.
Market Mechanisms and Features
There are various ways this music stock market could work but here are some common features we could steal from the traditional stock market.
A Market-Made Price
The pricing for a share of an artist could be based on various factors, such as the artist’s popularity, revenue, and potential for growth. The price could fluctuate based on supply and demand, similar to traditional stock markets.
It is called a market-made price because artist share values are determined by the people listening to the music. If your music cultivates an audience and there is streaming revenue to back it, then your share price will reflect it.
Trading Music Shares
Investors could buy and sell music shares through an online platform dedicated to the music stock market. The platform would provide real-time data on streaming numbers, chart performance, and other relevant factors influencing the value of music shares.
Portfolio Diversification
Investors could create diverse portfolios of music shares, spanning different genres and artists. This would allow them to capitalize on various trends in the music industry and mitigate risk.
Perhaps a more diverse Individual discography stock would be an artist with a vast an expansive discography touching multiple genres. Drake would be a good example of this but maybe not.
Dividends Replaced by Royalty Payments
Just like traditional stocks pay dividends, music shares could generate income through royalty payments. Investors would receive a portion of the streaming revenue generated by the music they hold shares in on a quarterly basis.
This will reward faithful investors of artists by returning some of the streaming revenue back to them. Artists also benefit due to share purchases and the fact they can reinvest raised capital back into their music.
Is A Music Stock Market Viable or Even Desirable?
It would be easy to see where the pitfalls could arise especially with something as expressive and somewhat personal as music. Artists may not want to have to consider their share price and the impact of future releases on this share price but for some it may be motivation to cultivate their sound further.
With that said, how different is it to the way the music industry is run right now? The only difference is that the general public is not involved in the action.
While the concept of a music stock market system may seem novel, it aligns with the evolving digital landscape and changing consumer preferences. As streaming platforms continue to dominate the way we consume music, a market system built around music assets could provide a new avenue for investment and innovation in the industry.
At Asycd, we believe in embracing new opportunities and reimagining traditional concepts. Check out our website here for recent work and to explore creative possibilities.
