In a surprising turn of events (or the opposite, depending on your outlook), the global music industry has seen a dramatic decline in investment this year. According to recent data from Digital Music News (DMN), funding for the first eight months of 2024 has plummeted by a staggering 74% compared to the same period last year. This sharp decline paints a stark picture of the current investment landscape in the music sector. But what’s behind this sudden cooldown?
Several factors might be contributing to this investment slump, including rising interest rates, a slowdown in Web3 and AI sectors, and the industry facing an adjustment period after the more successful 2023, which is being regarded as a banner year for music investment. The industry saw nearly $10 billion poured into music startups and companies, more than doubling the figures from 2022. This boom was largely attributed to the post-pandemic recovery and an abundance of eager investors looking to back music tech, royalty processing, live music, and creator tools.
Despite the overall downward trend, there have been some bright spots in 2024. The average raise size for August 2024 ($12.21 million) actually surpassed that of August 2023 (just over $10 million). This suggests that while there may be fewer deals, some are still packing a punch.
As we head into the final stretch of 2024, industry watchers are keeping their eyes peeled for potential game-changers. While 2024’s numbers may seem disappointing compared to the previous year’s stellar performance, it’s important to remember that 2023 set an incredibly high bar. The music industry is still evolving, and as new technologies emerge, we may see investment patterns shift in exciting and unexpected ways.
Rumours are swirling about Apple’s interest in OpenAI, the company behind ChatGPT and various AI music tools. If this deal materialises, it could significantly boost the year-end investment figures. Additionally, AI-focused funds like Daniel Ek’s Air Street Capital are making moves in the entertainment tech space. These investments might not directly fall under the “music industry” umbrella, but they could have far-reaching implications for how we create and consume music in the future.
