MBW’s Stat Of The Week is a series in which we highlight a data point that deserves the attention of the global music industry. Stat Of the Week is supported by Music Group Fivea technology-driven record label, distribution and rights management company.
There has been a lot of debate surrounding the power of fandom in the creative industry over the years.
In 2008, Kevin Kelly, former editor of wired, writing the 1,000 True Fans essay, which suggested that an internet creator only needed 1,000 superfans to live from their art.
In 2020, Li Jin, co-founder of Variant Fund, propose that a creator only needs 100 true fans to live from their work.
One thing’s for sure, so-called “superfans,” who are willing to spend more than the average fan on merchandise, music, and other content, are a lucrative target audience for artists and their teams.
And as mainstream players in the music industry begin to push for alternative streaming payment models, such as the “artist-centric” model offered by Universal Music Group, this is the superfan category. which could rewrite music industry revenue history in the years to come.
Speaking on UMG’s first quarter earnings call, Michael Nash, EVP and Chief Digital Officer of UMG, said an “artist-centric” model would seek to increase revenue stream “superfans” – or in other words, individuals who are willing to pay more for subscriptions in exchange for additional content.
“Our consumer research indicates that among (music streaming) subscribers, approximately 30% are superfans of one or more of our artists,” Nash said.
He added, “How does this relate to the centered artist? When you start to focus on the artist-fan relationship, those high-value relationships drive the business model of the platform, so you (can start) segmenting around high-intent, high-integrity artist-fan relationships. and artist-fan.
Recent sats published by US market monitor Luminate have shed light on the extent of these “high value relationships” between artists and fans in the US.
According to Luminate’s mid-year music report, which you can read in full here, 15% of the general population in the United States are “superfans”.
Luminate breaks down what it means to be a superfan, explaining that for its report, its methodology defines a superfan as “a music listener aged 13 and older who engages with an artist and their content in multiple ways, from streaming to media. social through purchase”. physical music or merchandising items to attend live performances”.
“Superfans,” according to Luminate’s report, spend 80% more about music each month compared to the average US-based music listener. Additionally, physical buyers of music in formats such as vinyl, CDs or cassettes are more than twice as likely (+128%) to be music superfans.
Millennial music listeners, on the other hand, spend more 22% more and Gen Z music listeners are spending more 13% more about music compared to the average American music listener, according to Luminate’s report.
Luminate also highlights Direct-to-Consumer (D2C) sales growth to underscore the buying power of the superfan category.
According to Luminate, D2C music sales from artist stores increased by more than 20% in H1, with D2C vinyl sales up 26% YoY in H1, 3.6 million copies. Meanwhile, 1.7 million CDs were sold direct to consumer in the first half of the year, an increase of 15% YoY (see below).
One startling stat highlighted by Luminate is that 62.5% of total D2C product sales are “current” versions.
As Luminate noted in the diagram below, this bucks the trend of streaming consumption.
According to Luminate’s mid-year report, 538.9 million equivalent album sales units (TAC) recorded in H1 2023, 72.8% (392.1 million) were registered as “Music Catalog”.
The share of “current” music in total US album consumption in the first six months of 2023 was 27.2%Or 146.8 million TAC units.
Luminate sets ‘Current’ like everything published in the 18 months before it is streamed/downloaded/purchased. Anything older than 18 months when it is streamed/downloaded/purchased is defined as ‘Catalog’.
Breaking down superfan activity by gender, Luminate reports that K Pop fans spend 75% more money on music per month than the average US music listener.
According to Luminate, K-Pop fans are also done 69% more likely than fans of major genres such as pop, R&B, hip-hop and rock to purchase a vinyl album in the next 12 months.
Afropop and Afrobeats fans, meanwhile, spend 121% more money on music categories per month than the average US-based music listener, according to Luminate.
EDM Fans Spend More 63% more money on music categories per month than the average US music listener.
The potential financial impact of the superfan category was also recently highlighted by Goldman Sachs.
In Goldman’s latest music in the air report, he said that if 20% of paid streaming subscribers today could be categorized as “superfans” and further, if those “superfans” were willing to spend double what a non-superfan spends on digital music each year, that implies a $4.2 billion annual revenue opportunity (currently untapped) for the recording industry.
As explained in our recent analysis of the Goldman report, that $4.2 billion represents a “Total Addressable Market” (TAM).
Goldman Sachs is also modeling a scenario in which things get off to a much slower start, with just ten% of “superfans” (i.e. 2% of total subscribers) paying double the price of their streaming service in the first year after launching a superfan-oriented product.
However, if this percentage of addressable “superfans” paying for additional access could gradually increase to 70% by 2030, says Goldman, it could end up earning extra Over $4 billion to the recorded music industry every year.
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