15% of the general population in the US are ‘superfans.’ Here’s what that means for the music business.

newsofmax07/20/2023

4 4 minutes read

15% of the general population in the US are ‘superfans.’ Here’s what that means for the music business.

MBW’s Stat Of The Week is a series in which we highlight a data point that deserves the attention of the global music industry. Stats for the week powered by Music group Cinqa technology-based record label, distribution and rights management company.

There has been a lot of debate around the power of fandom in the creative sphere over the years.

Back in 2008, Kevin Kelly, former editor of Wired, Written essay on 1,000 true fans, suggesting that an internet creator only needs 1,000 yen die-hard fans to make a living from their art.

In 2020, Li Jin, Co-Founder of Variation Fund, propose that creators just need 100 real fans to make a living from their work.

One thing is for sure, so-called ‘fans’, who are willing to spend more than the average fan on merchandise, music and other content, are a lucrative target audience for artists and their groups.

And as the dominant players in the music industry begin to push for alternative online payment models, such as Popular music grouprecommended model “artist-centered”, it’s the category of super fans that could rewrite the music industry’s revenue story in the years to come.

Speaking on UMG Q1 earnings callMichael Nash, EVP and Chief Digital Officer of UMG, pointed out that the “artist-centric” model will seek to increase revenue streams from “crazy fans” – in other words, individuals who are willing to pay more for subscriptions in exchange for additional content.

“Our consumer research says that out of [music streaming] subscribers, about 30% are die-hard fans of one or more of our artists,” Nash said.

He added: “How does that relate to being artist-centric? When you start focusing on artist-fan relationships, these high-value relationships are driving the platform’s economic model, so you [can begin] segment around artist-fan relationships with high purpose, high integrity.

Recent statistics released by US market monitoring company Luminate shed more light on the extent of such a ‘high value relationship’ between artists and fans in the US.

According to Luminate’s mid-year music report, you can Read it in full here, 15% of the general population in the United States are ‘crazy fans’.

Luminate analyzes what it means to be an avid fan, explaining that for its report, its methodology defines an avid fan as “a music listener 13 years of age or older who interacts with an artist and their content in a variety of ways, from streaming to social media to purchasing physical music or merchandise to attending live performances.”

‘Superfans’, as reported by Luminate, for 80% more music per month than the average music listener in the United States. Additionally, people who buy physical music in formats such as vinyl, CDs or cassettes, are more than twice as likely to (+128%) became music fans.

Meanwhile, millennials spend more 22% more and Gen Z listeners spend more 13% more about music than the average music player in the United States, Luminate reports.

Luminate also points to growth in Direct-to-Consumer (D2C) sales to highlight the purchasing power of the superman category.

According to Luminate, sales of D2C music from artists’ stores have increased by more than 20% in H1, with D2C vinyl sales increasing 26% Compared to the same period last year, reached 3.6 million copies. Meanwhile, 1.7 million CDs were sold directly to consumers in the first half of the year, up 15% YoY (see below).

A surprising stat emphasized by Luminate is 62.5% in total D2C product sales are ‘current’ releases.

As Luminate noted in the diagram below, this goes against the trend of online consumption.

According to Luminate’s mid-year report, among 538.9 million album sales equivalent (TAC) units recorded in the first half of 2023, 72.8% (392.1 million) has been registered as ‘Music Category’.

‘Current’ Music’s share of Total Album Consumption in the US for the first six months of 2023 is 27.2%or 146.8 million won TAC unit.

Luminate definition ‘Current’ like anything released in 18 months before it is streamed/downloaded/purchased. Anything older 18 months when it is streamed/downloaded/purchased is defined as ‘Table of contents’.

Breaking down superfan activity by genre, Luminate reports that Korean pop fans spend 75% more money for music per month than the average music player in the United States.

According to Luminate, K-Pop fans are gone too 69% more likely than fans of mainstream genres including pop, R&B, hip-hop and rock, to buy an album on vinyl in the next 12 months.

Meanwhile, Afropop and Afrobeats fans spend 121% spend more money on music categories each month than the average music player in the United States, according to Luminate.

EDM fans spend more 63% spend more money on music catalogs per month than the average music player in the United States.

The potential financial impact of the recent fan base has also been highlighted by Goldman book.

In the latest Goldman newsletter music in the air report it declare if 20% today’s paid streaming subscribers can be classified as ‘crazy fans’ and moreover, if these ‘crazy fans’ are willing to spend double what a person who is not a super fan has for digital music every year, it implies a 4.2 billion USD annual revenue opportunity (currently untapped) for the record industry.

As explained in our recent article Analysis Goldman’s report, that 4.2 billion USD Avatar for ‘Total Addressable Market’ (TAM).

Goldman Sachs also modeled a scenario where things start much more slowly, with only ten% of ‘crazy fans’ (ie 2% of total subscribers) paid double the price of their streaming service in the first year after the launch of a ‘fan-driven’ product.

However, if the percentage of ‘super fans’ with this address paying for more access could gradually increase 70% by 2030, Goldman says, it could eventually bring more more than 4 billion dollars for the music industry is recorded every year.