MBW Reacts is a sequence of analytical commentaries from Music Enterprise Worldwide written in response to main current leisure occasions or information tales. Solely MBW+ subscribers have limitless entry to those articles. MBW Reacts is supported by JKBX, a expertise platform that gives shoppers entry to music royalties as an asset class.
Prepare for the superfan goldrush.
As playlists develop into much less influential, the music creator economic system explodes, and shoppers’ consideration continues to be divided throughout a number of leisure platforms, fostering nearer relationships between artists and followers – and monetizing these connections – is excessive on the agenda for a few of the trade’s key leaders.
Grainge issued his personal New 12 months observe to UMG’s international workforce, through which he forecast an ongoing shift within the wider streaming market in direction of an ‘artist-centric’ royalties mannequin.
UMG’s Chairman and CEO then made an attention-grabbing announcement.
Following UMG’s focus over the previous yr on getting streaming platforms to undertake an ‘artist-centric’ method, UMG’s technique, he stated, will now be centered on “strengthening the artist-fan relationship”, particularly via “superfan experiencesand merchandise”.
“The subsequent focus of our technique shall be to develop the pie for all artists, by strengthening the artist-fan relationship via superfan experiences and merchandise.”
Sir Lucian Grainge
Mentioned Grainge: “The subsequent focus of our technique shall be to develop the pie for all artists, by strengthening the artist-fan relationship via superfan experiences and merchandise.”
He even revealed that UMG is “already in superior discussions with [its] platform companions concerning this part and can have extra to announce within the coming months”.
Grainge’s feedback observe vital current strikes by UMG to faucet into the superfan market.
Over in Japan, for instance, UMG just lately launched a superstore devoted to superfans.
And in Germany, 5 months in the past Common just lately launched YOUniverse, a “digital and interactive fan platform…the place followers can meet and work together, and in future even meet their idols”.
The query now’s, what is going to these newsuperfan experiences seem like?
Take into consideration Spotify. Would a Drake ‘superfan’, for instance, subscribe to a ‘restricted tier’ of the artist’s content material (assume: bonus tracks, commentary, artist Q&As and so forth.) through a platform like Spotify for an extra, say, $3 extra per 30 days?
Suppose Drake had been to transform simply 1% of his 83 million-plus month-to-month Spotify listeners to pay an extra $3 for unique content material. In that case, he would generate over $2.4 million per 30 days from this income supply a month alone.
(As MBW has beforehand identified, Spotify truly already has a mechanic that might work with such an providing: Audiobooks. Whereas 150,000-plus audiobooks have been obtainable as a part of Spotify Premium since October, many are nonetheless locked on the platform and require an extra buy to unlock.)
The Weverse risk
Outdoors of DSP companions, might we see the likes of Common Music Group mannequin new ‘superfan’ platforms on HYBE’s Weverse service?
MBW has beforehand steered that Weverse is forward of the curve within the superfan discipline.
The app brings collectively artist-related content material comparable to music movies, teasers, motion pictures and dwell streams. It additionally has a merch platform generally known as Weverse Store, a music participant referred to as Weverse albums, and a Ok-Pop-centric music publication referred to as Weverse Journal.
And it’s turning into more and more well-liked with music followers.
HYBE reviews that its person base grew to 10.5 million MAUs in Q3 2023, from 9.5 million MAUs within the earlier quarter (see beneath).
And HYBE’s ‘Fan Membership’ revenues, pushed through Weverse, grew 21.3% YoY to 21.03 billion South Korea Gained ($15.8m) in Q3.
Supply: HYBE financials
In response to Weverse’s 2023 Fandom development report, these 10 million month-to-month lively customers are situated throughout 245 international locations and areas.
The platform says that it witnessed a “vital surge” in new customers in 2023 in Asia together with Korea, China, Indonesia, the Philippines, India and Japan together with United States “serving as focal factors for brand new person acquisition”.
Moreover, Weverse says that it skilled “spectacular development charges” in Africa (+46.8%) and the CenterEast (+25%) in 2023.
Weverse reported that in 2023, every person on its platform spent a median of 215 minutes per 30 days (+46% YoY) and visited the platform for a median of 10.2 days per 30 days (+10.4% YoY).
These followers aren’t simply taking part in round on Weverse, both – they’re spending actual cash.
In response to HYBE, the Weverse store offered over 18.3 million objects in 2023 alone – a median of 7.7 purchases per person (see beneath).
Talking withBloomberg in December, Weverse’s President Joon Choi steered that he was optimistic that extra e-commerce would naturally blossom on Weverse in future.
He commented: “As soon as now we have extra various genres and attain month-to-month lively customers of round 30 to 50 million, we are able to supply extra revenue–making fashions that’d fulfill each followers and artists.”
Supply: Weverse 2023 Fandom report
Along with merch, Weverse has discovered explicit success with live-streams of each live shows and different ‘candid’ content material.
In February 2023 for instance, Jung Kook drew 16 million real-time views for his “at-home dwell stream”, whereas Enhypen’s efficiency throughout their ‘Darkish Blood Particular Showcase’ in Might garnered 2.4 million actual time views.
Weverse says that it hosted a complete of 4,310 dwell streams in 2023 quadrupling the variety of dwell streams held in 2022.
Along with rising its shopper person base, the Weverse app can be turning into more and more well-liked with artists.
Weverse reported that in 2023, the variety of artists on its app surged from 71 to 117. Eleven non-Korean artists joined its ranks in 2023.
One factor that Western Music executives may level out? Regardless of Weverse’s increasing artist roster, it’s HYBE-signed Ok-Pop acts specifically that proceed to see essentially the most success on the platform.
Weverse reported thatBTS, Tomorrow x Together,and Enyhpenhaveamassedthelargestfollowingsonitsservice –withBTSaloneaccumulating24millionfollowers.
In the meantime, in This fall 2023, SM Leisure artists together with EXO, Purple Velvet and aespa additionally joined Weverse.
Supply: Weverse 2023 Fandom report
But in response to Weverse, 90% of the artists at present on its platform are signed to labels aside from HYBE.
Notably, we’ve beforehand reported how the Weverse app has branched out past HYBE-signed acts, constructing fan communities for the likes of singer-songwriter GracieAbrams (Interscope Information), Alexander23 (Republic) and JeremyZucker (Interscope).
All three of these artists are signed to Common labels, following an experimental deal inked between Weverse and UMG that dates again to 2020.
The large query, then: May Weverse – utilizing its current verticals together with merch, fan communities, and dwell streams – now discover success with Western superstars like Taylor Swift, Drake, or Olivia Rodrigo?
And, having inked an ongoing international strategic partnership with HYBE in 2021, might we now see Common Music Group – with ‘superfans’ on the high of Sir Lucian Grainge’s agenda – develop even nearer to Weverse? Or at the least use its learnings from experimenting on Weverse to raised courtroom ‘superfans’ within the months forward?
Supply: Weverse 2023 Fandom report
Superfans: The numbers
Common’s concentrate on the superfan class arrives alongside current proof of the influence this shopper phase is having on the music enterprise.
US market monitor Luminate, in its 12 months Finish report for 2023 (printed Wednesday, January 11), revealed that 18% of US music listeners are superfans. That is up from 15%reported by Luminate for the primary half of final yr.
Luminate additionally reviews that these superfans spend 68% extra money on music every month and 76% extra on bodily music per 30 days than the common U.S. music listener.
Additionally they spend 126% extra on artist merch than the common music listener, and that Gen Z spends over 51% extra money on artist merch than the common US music listener.
Luminate additionally reviews that US D2C gross sales had been up 38.6% in 2023 to 11.8 million complete and that vinyl D2C gross sales are up 39.8%YoY.
Moreover, over 60% of all US D2C Gross sales had been present titles.
The report additionally consists of stats which might be particular to followers of Ok-pop and J-pop. Ok-pop followers, for instance, spend 140% extra per 30 days on artist merch than the common US listener.
J-Pop followers, in the meantime, spend 100% extra per 30 days on artist merch than the common US listener.
The file trade’s rising obsession with superfans additionally arrives towards a backdrop of a slowdown in paid streaming account development.
Value rises at DSPs are proving to be a profitable option to increase music revenues, as witnessed by the 9.8% YoY bounce in UK music subscription spending in 2023.
However worth rises are only one option to extract extra worth from every subscriber on every platform. Within the coming months, monetizing superfans will develop into a key focus for labels and their DSP companions.
“While you begin to concentrate on the artist-fan relationship, these high-value relationships are driving the financial mannequin of the platform, so that you [can begin] segmenting round high-intent, high-integrity, artist-fan relationships.”
In Goldman Sachs’ newest Music In The Air report, it claimed that if 20% of paid streaming subscribers at present could possibly be categorized as ‘superfans’ and, moreover, if these ‘superfans’ had been keen to spend double what a non-superfan spends on digital music every year, it implies a $4.2 billion (at present untapped) annual income alternative for the file trade.
UMG’s EVP and Chief Digital Officer Michael Nash, talking almost a yr in the past on UMG’s Q1 earnings name in 2023, defined how the income stream from superfans could be boosted below an artist-centric mannequin.
Nash cited UMG’s personal shopper analysis that exhibits “about 30% [of music subscribers] are superfans of a number of” of UMG’s artists.
He added: “How does that relate to artist-centric?
“While you begin to concentrate on the artist-fan relationship, these high-value relationships are driving the financial mannequin of the platform, so that you [can begin] segmenting round high-intent, high-integrity, artist-fan relationships.”
