How Brands and the Music Industry Can Maximize Emerging Platforms

Goldman Sachs’ recent “Music In The Air” report (June 2023) shed some light on a fascinating trend regarding streaming music on emerging platforms. Streaming music on emerging platforms has revolutionized the industry by offering convenient, on-demand access to a vast catalog of songs, transforming the way people consume and discover music. The report estimates Peloton has 17% of the emerging platform revenue paid to the music companies in 2022 or $267M. Now compare that to Tik Tok (14%), Youtube Shorts (8%), Instagram Reels (5%). Record labels and music rights holders are now reaping greater financial rewards from Peloton streams compared to the once-dominant TikTok platform. 

This shift could be surprising. We’re breaking down some factors that have contributed to the change, and the future trajectory of streaming music income. Our four key takeaways on how brands and the music industry can maximize emerging platforms, through the lens of Peloton:

Boost user engagement through immersive experiences and contextual consumption.

While TikTok undeniably boasts a massive global user base of 1 billion+ and remarkable viral potential, Peloton offers a different proposition. Peloton's exercise-centric platform caters to users seeking immersive fitness experiences, making music an integral part of their workouts. This contextual consumption leads to increased engagement, with users often streaming music for extended amounts of time. Peloton successfully transforms music consumption into prolonged and purposeful activity.* 

Favorable licensing agreements will create strong partnerships with the music industry.

Peloton’s comprehensive music licensing agreements set the platform apart. These agreements ensure that music played during workouts is fully licensed, and provides a higher compensation structure for the artists and rights - reportedly better than Spotify, Apple Music and TikTok. This approach allows Peloton to create better relationships with the music industry, resulting in a more mutually beneficial financial landscape.

We believe the shifting revenue dynamics between Peloton and TikTok also offer some interesting insights into the future of streaming music income.

Embrace innovative revenue streams to create sustainability for rights holders.

As the industry continues to evolve, record labels and music rights holders are recognizing the importance of diversifying their revenue streams. While TikTok has played a significant role in promoting artists and generating viral hits, the Peloton phenomenon reminds us that alternative emerging platforms can emerge unexpectedly. Embracing innovation, exploring new licensing opportunities, and forging relationships with emerging platforms is crucial for rights holders to ensure more sustainable revenue streams.

Create a personalized bespoke user experience.

The success of Peloton's music streaming highlights the importance of contextual consumption and personalization of the consumer's experience. By integrating music into specific activities and providing bespoke experiences, artists and rights holders can deepen audience engagement and establish more meaningful connections. Technologies that enable personalized music recommendations and curated playlists are becoming more vital in attracting and retaining listeners in the streaming era.