Pricing replaces growth as music industry enters next phase

Investing.com -- The global music industry is moving into a new phase in which pricing, rather than subscriber growth, becomes the main driver of revenue.

Streaming penetration has largely peaked in developed markets after more than a decade of rapid adoption, drawing the subscriber growth chapter to a close.



With most consumers already on streaming platforms, future industry expansion will hinge on higher prices and improved monetization, according to analysts at MoffettNathanson.

For the second time in 18 months, the Spotify has raised prices in the U.S. and U.K.

During the buildout of streaming, Spotify benefited from accelerating revenue growth and expanding gross margins, while the major labels lagged.

That balance has now begun to reverse, with labels positioned to capture a larger share of industry monetization as wholesale rates reset. MoffettNathanson describes this shift as underappreciated by investors.

MoffettNathanson initiated Buy ratings on Universal Music Group and Warner Music Group, calling labels the clearest beneficiaries of the pricing-led phase.

For Warner Music, it cited explicit guidance on wholesale rate benefits in 2026, the absence of foreign exchange headwinds, and scope for near-term margin expansion.

Warner trades at a steep discount to Universal on an enterprise value to EBITDA basis.

Universal Music was also rated Buy, with MoffettNathanson expecting stronger-than-expected streaming revenue growth and a potential valuation uplift if the company executes a U.S. listing.

Spotify was rated Neutral. MoffettNathanson said margin expectations for 2026 to 2028 appear too optimistic given a new round of music rights deals. It also expressed skepticism about Spotify’s ability to scale advertising meaningfully without a pivot toward video, which could require higher investment and carry brand risk.

Sirius XM was also rated Neutral. MoffettNathanson said the stock reflects investor concern about subscriber trends and content costs. While the firm sees potential upside if subscriber losses stabilize, it said there is time for investors to wait for clearer evidence of a turnaround.

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