Want to learn how the world’s biggest music company plans to leverage trends like AI and superfans to reach a milestone 1 billion subscribers?
Everything you need to know:
- UMG sees significant untapped potential in developing streaming markets and new devices
- AI will unlock creative opportunities for artists while protecting their rights
- Engaging superfans with premium content and experiences could unlock major new revenue
The opportunity ahead in streaming
As the streaming market leader with over 600 million subscribers worldwide, UMG’s Michael Nash remains optimistic about continued expansion. Two factors stand out.
First, large untapped markets like India, Southeast Asia and Latin America still have low average revenue per user. But Nash notes “these are also markets where we’re not monetising consumption of music: hardly at all” – hinting at major upside as adoption grows.
Second, the proliferation of new streaming devices from smartphones to smartwatches to home assistants means “we’re on a journey…towards a billion subscribers.”
Read more: Universal Music CEO Lucian Grainge on AI advancements & artist-centric models in New Year’s memo
A future shaped by AI and the Metaverse
Nash is optimistic about disruptive technologies like AI and the emerging metaverse driving continued growth. On AI, UMG focuses on “centering the conversation on artists” through initiatives ensuring their creative control and rights protections.
Major projects include the recent Beatles AI single allowing the band to collaborate beyond the grave, and K-Pop songs AI-translated into multiple languages. UMG actively works with tech partners like Endel, BandLab and YouTube to develop artist-led applications.
As for the metaverse, Nash sees it becoming “almost a billion subscribers” in immersive virtual worlds deeply intertwined with music. UMG is well-positioned to capture this opportunity.
Read more: Universal Music Group and BandLab join forces to advance ethical AI in music
Building innovative licensing partnerships
Beyond streaming deals, UMG’s vision involves experimenting with licensing music in adjacent sectors like virtual reality and the burgeoning “creator economy.”
Nash spoke of the company’s growing slate of over 40 partnerships licensing music for applications in health, wellness, and fitness tech. While not representing massive revenue currently, these nascent areas open doors to novel integrations boosting music discovery and spending.
As one example, Nash said wellness startups may license tailored playlists to validate their products’ scientific claims during clinical trials and market testing. It’s a differentiated licensing model versus standard full-catalogue agreements.
Leveraging data and algorithms to surface new music
A challenge Nash highlighted is the way algorithms currently used by streaming services are geared towards promoting back catalog over new releases. Nash estimates around 70% of music programmed comes from titles over three years old.
Through its artist-centric initiatives, UMG aims to address this “cold start” problem. The company is exploring ways to better leverage consumer data signals like live events attendance or social media engagement to surface new releases to listeners most likely to connect with them.
Getting new music in front of the right audiences upon release is vital for artists and labels. It also benefits listeners, ensuring streaming services showcase a constant pipeline of new musical discoveries rather than relying too heavily on familiar classics.
The superfan economy
Nash estimates the top 15-20% of most engaged music fans – termed “superfans” – could represent hundreds of millions of potential high-value subscribers. UMG aims to develop “super premium” streaming tiers through early access, exclusive content, collectibles, gamification and physical perks exclusively for superfans.
Testing has shown promise, and Sir Lucian signaled in his 2023 memo that UMG will focus on superfan experiences developed alongside streaming partners. If capturing just 20% of existing subscribers, that represents a major untapped revenue stream.
By steering streaming innovation responsibly through partners like YouTube, leaning into opportunities like the metaverse, and developing exciting premium offerings for superfans, UMG is charting an ambitious course to 1 billion subscribers by 2030. Their vision combines respect for artists with growth strategies ensuring the whole industry thrives in a balanced streaming ecosystem.