As a form of entertainment, music is timeless, but the music industry itself has been seriously disrupted over the past generation. Aspiring artists are now looking to build a following through social media platforms and streaming services, and the live music industry has continued to grow.

Power and influence in the music industry has been decentralized, which creates both opportunities and challenges for businesses in the music industry. Manufacturers and sellers of equipment such as speakers and instruments, music streaming companies, record labels, event organizers, and terrestrial and satellite radio companies are all players in the music industry.

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The best musical actions

If you want to know the best music stocks to buy, keep reading. Here are some of the best music companies in 2021:

Company Market capitalization The description
Spotify (NYSE: SPOT) $56.2 billion Music and podcast distribution company.
SiriusXM Radio (NASDAQ:SIRI) $25.6 billion Satellite radio provider.
His bone (NASDAQ:SONO) $4.3 billion Manufacturer of audio products, including wireless speakers.
National Live Entertainment (NYSE: LYV) $24.5 billion Concert promoter and organizer and owner of Ticketmaster.
IHeartMedia (NASDAQ: IHRT) $3.2 billion Owner of radio stations broadcast across the United States
Warner Music Group (NASDAQ: WMG) $25.1 billion

Owns Warner Records, Atlantic Records, Asylum and Elektra.

Source: Yahoo! Finance. Data current as of July 22, 2021.

1.Spotify

Spotify pioneered music streaming over a decade ago. It has since expanded beyond music by acquiring several podcast franchises. The streaming giant now counts big-name creators such as Joe Rogan and Bill Simmons among its podcasters.

Spotify’s paid subscriber base is approaching 200 million, growing 24% in 2020. It has nearly 400 million monthly active users, including ad-supported listeners. Throughout this growth trajectory, the company is constantly threatened by Apple (NASDAQ: AAPL) and others and is poised to dominate the iPhone maker in podcast listeners, showing that pure-play stock audio is beating the tech giant. The company’s profits are beginning to rise after years of investment, and it should benefit from the subscription business model, which means most of the additional revenue goes directly to the bottom line.

2.SiriusXM Radio

As the only satellite radio provider in the United States, Sirius stands out for its use of satellites to transmit its music and other audio content. The company can provide reliable service in places where internet music platforms are lacking, and SiriusXM is most often used inside vehicles.

The company offers a range of audio entertainment, including music, sports, news, talk, and traffic and weather updates. His brand is perhaps best associated with Howard Stern, the shock athlete who grabbed a lot of attention in 2005 when he introduced his radio show to Sirius. The company acquired Pandora in 2019, increasing its exposure to music streaming.

SiriusXM has historically grown its revenue at a modest rate as the growth of the on-demand music business has favored streaming services. But the business has always been profitable despite the challenges caused by the pandemic. By the third quarter of 2021, the company had reached 32 million subscribers on SiriusXM and 6.4 million on Pandora.

Improving internet connectivity and the expansion of 5G pose a longer-term threat to SiriusXM. At the same time, its relationships with automakers give it a unique advantage as its satellite radios come pre-installed in nearly every new vehicle in the United States.

3. Sound system

Wireless speaker maker Sonos calls itself the inventor of multi-room wireless audio products. With around 100 streaming partners, including Apple Music, Pandora and Spotify, Sonos ended its fiscal year 2020 with 31.6 million registered products in 10.9 million homes.

Sonos saw strong growth in the first three quarters of 2021. Revenue grew 38% as it weathered a weak pandemic year, which saw only 5.3% growth , and profits also rebounded rapidly.

The company also faces competitive threats from tech giants such as Amazon (NASDAQ: AMZN), Alphabetit’s (NASDAQ:GOOG)(NASDAQ:GOOGL) Google and Apple, all of which are investing significant resources in their own smart speakers. Sonos investors should be aware of these competitive pressures.

4. Live Entertainment

Live Nation Entertainment, owner of Ticketmaster, has a virtual monopoly on concert ticketing, with a market share of more than 70%. Music artists are increasingly performing at live events to earn money, and music festivals have become popular in the age of social media.

Like most live entertainment companies, Live Nation has suffered greatly during the pandemic, with the title losing more than 50% of its value. However, management reports that its gig pipeline for 2022 is larger by double-digit percentages compared to 2019, and that it had recovered most of its lost revenue by the third quarter of 2021. The company is also reporting signs of pent-up demand as events are selling out faster than ever.

When live music events can occur without restriction, Live Nation should see a huge increase in revenue.

5. iHeartMedia

Formerly known as Clear Channel, iHeartMedia is the largest operator of broadcast radio stations in the United States. It ended 2020 with 244 AM stations and 614 FM stations and, in the same year, had the most #1 ranked stations in major markets. , including 28 top-ranked stations in the 50 largest markets. iHeartMedia also operates iHeartRadio, a digital audio streaming service that allows users to access both streaming music and digital feeds from radio stations nationwide.

Broadcast advertising is the main source of revenue for the company. As a business dependent on car commuters, the company’s advertising revenue declined sharply during the pandemic, but the business is nearly back to pre-pandemic levels. Historically, the company’s advertising model has been very profitable and its reach gives it a competitive edge as iHeartMedia can provide advertisers by far the most radio exposure.

While the recent recovery bodes well, the company faces significant long-term competitive threats from digital competitors and even remote working, which reduces commuting time.

6. Warner Music Group

Former record labels such as Warner Records, Atlantic Records, Asylum and Elektra, all of which are owned by Warner Music Group, still help top musicians with marketing, management and production. Ed Sheeran, Cardi B and Bruno Mars all have contracts with labels owned by Warner Music Group.

The company makes most of its money from recorded music and also generates revenue from music publishing, which is the acquisition and licensing of musical compositions. Both of these categories are growing as the recorded music industry gets a significant boost from the rapid growth of music streaming.

Warner Music reported solid revenue growth in the first three quarters of 2021, up 18% to $3.9 billion, and it expects to benefit from its exposure to music genres – such as the hip-hop and pop – which are especially popular on streaming services. .

Should you buy music stocks?

Even the best companies in the music industry face major competition from giants in the tech industry. Music entertainment stocks can still be winners, but potential investors in music companies should pay attention to industry developments. The best music companies are well placed to face aggressive competition and can stay ahead of the changing music industry.