Investing in Entertainment: How Music and Streaming Are Thriving Amid Market Volatility

Well, chances are you may have friends or family who don't know much about the stock market, but they may know big names like Amazon or Starbucks.

And if you're into music or entertainment, you might spark their interest in investing by talking about stocks tied to the music industry.

Well, Live Nation and Spotify are some of the more well known entertainment plays, and there are even ETFs that track iconic performance venues such as Madison Square Garden and the Las Vegas sphere.

Favorite celebrities, music tours as well as your support of them could move the entertainment sector.

Well joining me to talk about a big summer for live music is David Schulhoff, CEO and founder of the ETF MUFQ.

So David, great to have you here.

Thank you so much for joining us.

Thank you, Remy.

Well, first and foremost, it's supposed to be a big summer for entertainment, for live music, and there has been a lot of focus on tariffs.

So is entertainment and music tariff proof?

So music is a very resilient theme.

If you read the Goldman Sachs report, music's very tariff resistant.

It's an uncorrelated asset class, so it's very unimpacted by tariffs, and I think that's why you see a lot of the music stocks performing so well streaming content, live music.

People just aren't impacted by that.

And certainly in the area of live music, people will pay up for big shows whether it's the Taylor Swift heiress tour or the Cowboy Carter tour.

So music is a very resilient theme and it's become very popular with investors today.

Yeah, and when you think about a lot of the volatility in the markets, the uncertainty that American consumers are feeling, they want to go to live events.

They want entertainment.

And I was speaking to a friend of mine, and he actually told me that because tickets tend to be on the pricier side for the very good seats here in the US, that he actually goes overseas and gets really good seats, including hotel as well.

As airfare.

So what is the data actually telling you when it comes to what we're seeing here in the US?

Now, it's interesting.

I do know a lot of people that are flying to Paris to go see shows and so on.

Look, tickets have become very expensive in the US, but we know that millennials and Gen Z audiences will pay up for experiences.

There are new venues being built like the Sphere in Las Vegas which had Dead and Co and the Eagles.

This summer you have Kenny.

Chesney, so people don't mind paying up for experiences and for, you know, for live shows like that.

So the revenues are up 10 times from COVID.

Companies like Live Nation, CTS Aventum, Vivid Seats are all performing exceptionally well.

So there's no stopping live music.

People just want to go out and see their favorite artists, and this summer you have Billie Eilish and Kendrick Lamar and Beyonce.

And Ed Sheeran all on tour, so it's an exciting time for live music investors.

Yeah, a lot of key events that are coming up this summer as well as the rest of this year, but shifting our focus on over to music streaming services such as Spotify.

What are we seeing in the streaming space?

So streaming is is doubling.

If you read the Goldman Sachs report again, the industry is doubling to $200 billion between now and 2035.

Page streaming subscribers are doubling from current levels at a billion to 2 billion.

And in the emerging markets, streaming is growing.

You have cell phone penetration is growing, and so 75% of all new subscribers are coming from the emerging markets.

We also know in the existing markets and developed markets, music is very undervalued and under monetized and cheap.

That's why you see companies like Spotify raising rates every quarter, and that's why they keep on crushing. because music is like half of what you pay right at $11 or $12 you're paying double that, $25 for Netflix, paying $17 for HBO Go for, you know, for Hulu.

So I think all the streaming services Remy are going to continue to raise rates almost every quarter.

They're going to generate more revenue from their existing subscribers and new subscribers and That's why music streaming just continues to grow and all that money funnels down to the labels and the publishers.

So that's why the whole ecosystem is working together.

When streaming services generate more revenue, it passes down to the content owners as well.

And it's interesting that you bring this up because when we think about how much we pay on a monthly or annual basis for our streaming services, those incremental price hikes do add up for.

Subscribers.

So whether you're an investor on Wall Street or you're talking about a consumer on Main Street, there are a lot of investment plays here.

So break it down for us, OK.

So at $11 a month, which is what, or $12 a month today, you're getting access to 250 million songs.

When you raise that by 10%, right, that's just $1 right?

There's very little attrition.

You're not, there's no subscriber erosion with that, but that's meaningful because that's like a billion dollars.

You know, a month of incremental revenues with a billion page streaming subscribers, right, so that those numbers really add up.

So we know that music is undervalued.

We know music's, you know, cheap, and we are seeing that people simply aren't cutting off their Spotify service when they have to pay one more dollar.

They know they're getting a very great deal for 250 million free songs to pay, you know, $120 a year.

That's like really cheap.

And David, I do want to ask you about artificial intelligence as well, because this is something that we're all affected by whether we're talking about the labor market or how different industries actually do business and how it affects the labor market.

But when it comes to what Congress is working on in terms of AI legislation that would limit the harmful harmful side of the potential impact on.

Music.

What is actually going on here?

Yeah, so look right now before Congress you have the No Fakes Act, which is the nurture Originals, Foster Art Keep Entertainment Safe Act.

You have the Generative AI Disclosure Act.

Look, the issue is you have content owners that want to preserve their legacies and you have all these technology companies that are trying to drive innovation.

So there's like this clash between the two of them.

And Congress needs to act.

There's no federal copyright protection today in your voice.

The states are acting, so Tennessee has like the Elvis Act, which makes it a crime to lift an artist's voice and misappropriate that.

So we need legislation to protect artists and to protect copyright owners.

And so that's really what's happening right now.

We need Congress to act and you know, and you know I worry a little bit that if you, you know, with AI there could be a lot of market saturation, there could be a lot of piracy.

But again, I go back to the Goldman Sachs report.

If you read that AI is having very little impact on the music industry today.

There's a lot more bark than it is bite, but it is something we need to look at, and Congress does need to act.

Yeah, David, this is something that we will continue to keep our eyes on, so I look forward to having you back on, and we can focus on AI and the implications for artists as well as content.

Great, thank you so much, so much, David.