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In recent years, artificial intelligence has become a transformative force across numerous industries, including finance and entertainment. One area where AI is creating significant impact is music investments. By making the process more efficient, accessible, and data-driven, AI is opening new doors for both investors and musicians. The integration of AI has not only streamlined the discovery process for music investors but has also expanded the range of opportunities available, making music a more attractive asset class for a broader audience.
This shift is happening against the backdrop of a rapidly growing music industry. Global music revenues rose 10.2% in 2023, primarily due to streaming growth. Total revenue reached $28.6 billion, marking the 9th consecutive year of increase. Subscription streaming revenues alone grew by 11.2%, making up nearly half (48.9%) of the global market, with paid subscriptions surpassing 667 million users worldwide.
At the same time, funding for music startups exceeded $450 million in the third quarter of 2024. This confirms the fact that venture capital is there to back the development of technology in music, paving the way for a better future for both artists and fans over the next decade.
AI Enhances Music Discovery for Investors
One of the key ways AI is reshaping the music investment landscape is by enabling mass screening of thousands of tracks simultaneously. Traditionally, investors or music scouts had to sift through countless songs to find talent worth supporting. This process was labor-intensive, often leaving smaller, independent artists overlooked in favor of those already more established or connected to major labels.
Read also: 99% of Artists Struggle to Make It to Mid-Level, Let Alone Become Mainstream or Superstars, Study Reveals
AI algorithms can now quickly analyze vast music libraries and identify tracks with strong potential early in the yield curve, a stage often overlooked by investors. Typically, a track peaks in streams and popularity within its first year, followed by a sharp decline, leaving behind a small 'tail' of ongoing streams. Unlike most investors who focus on the 'tail' stage, AI allows for the acquisition of high-potential tracks while the curve is still at a high point.
For small but talented musicians, this means they have a greater chance of being discovered by investors who may otherwise not have come across their work. By removing some of the biases and inefficiencies of human decision-making, AI levels the playing field for rising talent.
Ripe Capital is one of the emerging platforms that set a new standard in real-time music asset valuation and royalty forecasting. Through advanced machine learning models, the platform provides accurate, data-driven predictions, empowering investors with actionable insights and elevating transparency in asset valuation across the music industry.
Ripe offers users the opportunity to invest in tokenized portfolios of top-performing tracks by talented artists, with a minimum investment starting at just $10. Since its launch in February 2024, the platform has secured over $1 million in deal flow and more than 3000 users worldwide, with over 1,000 new users joining us each month – all through entirely organic growth.
The Rise of Robo-Advisors in Music Investment
Another significant contribution of AI to the music industry is the rise of robo-advisors — AI-driven platforms that help investors make informed decisions with minimal effort. These services, originally popularized in stock and financial markets, are now making their way into music investment, helping people automatically select promising assets.
Music, with its unique combination of high profitability and relative stability as an asset class, is becoming a more prominent feature in investment portfolios. Robo-advisors can assess and recommend specific music-related investments, from music royalties to streaming revenues, offering a new and diversified way for people to grow their wealth. This makes music accessible not just to seasoned investors but also to those who are new to the field. AI-powered robo-advisors take into account market trends, revenue potential, and an artist’s growing popularity, making it easier for individuals to navigate the complex world of music investment.
A Win-Win for the Music Industry
The advent of AI in music investment is mutually beneficial for both investors and musicians. On one hand, AI lowers the barriers for investors, making music more accessible as an investment option. On the other, it provides musicians, particularly independent and lesser-known artists, with greater visibility and opportunities for monetization.
Thanks to AI, independent artists who might have previously struggled to break through the noise of the music industry now have a better chance to get their work in front of investors. Additionally, with more accessible investment opportunities, everyday individuals — not just industry insiders — can explore music as a viable financial asset, diversifying their portfolios in ways previously reserved for more specialized investors.
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