The Streaming Revolution has released a wave of disturbance across the global music industry. But shareholders can reap long-term gains by buying shares from four major players positioned to grow in size and reap rich profits. This will happen as the streaming market almost triples in size to $ 45 billion over the next two decades, according to a Goldman Sachs report. The big winners can include Vivendi with a market value of $ 31
Streaming takes off
Analysts' optimism stems from faster than expected adoption of paid streaming services such as Spotify Technology SA (SPOT) and Apple Inc. & # 39; s (AAPL) Apple Music. Goldman now expects the recorded music space to grow more than previous forecasts, about two and a half times the current size of $ 19 billion. Analysts attribute the optimum prospects to some positive positions for profit forecasts for industry leaders such as Universal Media Group, Warner Music and Spotify.
While competition in the music flow market is warming with new players, Goldman says a handful of companies will thrive.
Large labels and publishers
Vivendi and Sony, managing two of the world's largest record companies and music publishers, are the best placed. "In the medium term, we expect the major brands and publishers to continue to receive 60-70% of royalties for each content of money," Goldman says.
Goldman sees extraordinary growth potential in Tencent's still new music business, serving a Chinese market with a population of 1.3 billion. "We believe Tencent Music has a unique opportunity to capture the growing demand for online music in China and leverage the massive user base on its social media platforms to drive traffic to its music services," Goldman wrote.
Analysts expect Tencent's "significant opportunity to drive greater revenue from music content over time, with only 4% of the user base currently paying for music content."
Spotify as The Netflix of Music  Global market leader Spotify feels the warmth of tech giant Apple, but Goldman is convinced it can maintain its dominant position. Analysts attribute Spotifice's strength to its "scale, ecosystem, content and technology", with the ability to tap a massive global user base. It includes a $ 28 billion advertising market and a 32 billion concerts and events market.
Spotify, as some of them are called "Netflix of Music", is favored because of its "fast-growing, youth-focused, cloud-operated, subscription-based music streaming service", as shown by Barron's Plus, extends the company podcasting. A company is expected to see sales grow above 100% over the three-year period ending in 2020.
Two Be sure investors are facing short-term disturbances and short-term losses for some of these companies. The company's profit margins fall, and analysts have more than doubled their expected business losses in 2019. Over the long run, Spotify bullies are confident that it can restart margins through steps, including new services such as selling data to labels and artists.