David Schulhof, Founder & CEO of MUSQ Global Music Industry ETF, joins TheStreet to discuss investing in music as an asset class.
Transcript:
Caroline Woods: Joining me now, David Schulhof, founder and CEO of MUSQ Global Industry ETF. David, Thanks so much for joining us.
David Schulhof: Hello, Caroline.
Caroline Woods: So music as an asset class might be kind of a new idea for some investors. So break it down for us. What do we need to know about investing in music?
David Schulhof: Well music has become simply too big to ignore. First of all, second of all, it’s doubling in size between now and 2035. If you look at the Goldman Sachs report, music is a very uncorrelated investment class. It’s not moving with the tides of the market. And paid streaming and content is growing at a double digit rate. And so we have designed a fund that captures all the growth and innovation for the global music industry.
Caroline Woods: And you have seen pretty impressive growth year to date, up about 25% for Musk. What is it that’s really driving that growth – and I think the big question then is can it continue?
David Schulhof: So paid streaming subscribers are doubling between now and 2035. You have 800 million paid streaming subscribers, that’s going to $1.6 billion. Some of the big names Spotify, Tencent music, obviously YouTube, Apple, Amazon. And so streaming is growing at 25% to 50% in the emerging markets where there’s very low cell phone penetration. And so and all the streaming companies are raising rates. And so you see the last several quarters companies like Spotify are because music’s undervalued. OK music is under-monetized. Music is very cheap compared to what you pay for other media services like Netflix and HBO Go and Hello. So at 11.99, they raise rates 10% There’s very little attrition, and that generates a lot of incremental growth from existing subscribers. And that’s why Spotify is one of our top holdings. The stock is up over 120% in the last 12 months. All the streaming companies are growing. And so music is simply undervalued. They’re going to continue to raise rates. And they’re going to generate new subscribers from all these emerging markets.
Caroline Woods: But you talk about these impressive returns that we’ve already seen from some of your biggest holdings. If I’m an investor and I’m thinking, Oh, shoot, I wanted to get in, but am I too late. You would say what?
David Schulhof: I would say. You have to look at the emerging markets. There’s certainly more growth today in emerging markets than in the developed markets. But if you look in company, if you look at the holdings in countries like Africa, South America, China, parts of Asia, those growth rates are 25% to 50% So, you know, 87% of all music consumption in this country is dominated by streaming. In the emerging markets, it’s like 5 or 6% So you have enormous opportunity to invest in the music industry globally. And we are a Global Fund. That’s why if you look at our holdings, 50% are all international holdings. We have 10 companies from South Korea. We have companies like him in Taiwan, companies like genie corp and Cat and GIP in South Korea. So we are giving global exposure to streaming and and there’s plenty of growth ahead for music. We have not hit a saturation point at all.
Caroline Woods: Beyond individual names, have you seen any broader trends emerge, especially as we have heard from some of your biggest holdings already in terms of earnings. That Spotify is the universal music’s the Live Nation’s, the Tencent music’s.
David Schulhof: So live music events and ticketing is growing at a double digit pace. That’s growing at about 25% in the US. It’s growing as high as 25% to 50% in the emerging markets. We have some of the biggest tours that we’ve seen last year. This year, the Eras Tour, the Cowboy Carter tour was the biggest country music tour in history, and now you have very immersive venues like the sphere in Las Vegas that are being developed. So fans and superfans are paying up for concert tickets and they’re paying up for experiences. And we know Gen Z nz audiences are willing to pay for experiences. So so we anticipate massive growth in the next several years from live music events and ticketing. And we have all these companies in our fund, domestic and foreign companies like Live Nation, obviously, and Vivid Seats and Madison Square Garden and the sphere, CTS eventim, big company in Germany. All these companies have reported really record earnings because of the growth of tours. And, you know, look, the cost of tickets keep going up, up, up and up. And, and, and consumers are willing to pay for it as much as they’re paying for Broadway, for they want to pay for these shows.
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