Generative AI Poised to Transform Music Industry: Top Stocks and Insights from Goldman Sachs

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A Symphony of Change: The Music Industry’s Future Sings a Tune of AI

I don’t know about you, but I certainly can’t keep up with Drake’s music release schedule. And now, with the introduction of generative AI to the music scene, we might even get “fake Drake” tracks that sound like the real deal, all thanks to some ones and zeros.

Goldman Sachs just pointed out that the music industry is on the edge of its seat, poised for a revolutionary shift. The catalyst? Generative AI. They’re throwing around phrases like “significant opportunities” like candy at a parade, stating it’s going to super-charge music creation capabilities and crank up productivity. But then, this is Goldman, it’s their job to be optimistic.

The “significant opportunities” they’re talking about aren’t just opportunities for creators, though. The investment giant is putting a spotlight on five hot stocks set to make a killing in this new wave: Live Nation, Warner Music Group, Believe (a French digital music company), NetEase from China, and Universal Music Group. All, as Goldman puts it, are part of their ‘conviction list’ of top stocks.

The AI Track Disrupting the Track

Investors might be worrying about things like AI-generated music – it’s not too hard to see why. That “fake Drake” track that surfaced in April caused quite a stir, but according to Goldman Sachs, those fears are a little inflated. Companies like Deezer and Believe are working on systems that can sniff out a track created by AI.

The music industry’s got some heavyweights that own the majority of artists’ catalogs, and it’s got its gloves on ready to protect its intellectual property. The industry, Goldman suggests, has a decent defensive stance already in place to deal with this AI-induced disruption.

Striking A New Chord: Revenue vs. Consumption

Streaming music has become the norm, and Goldman Sachs is shining a light on the imbalance between consumption and revenue. The unfortunate truth is, revenue has not been playing in tune with consumption. Goldman’s estimates suggest a 20% fall in revenue per audio stream in the past five years, and that Spotify’s revenue per hour streamed of music is 4x lower than Netflix’s.

Generative AI, The New Harmony in The Music Industry

Artificial Intelligence is not just an add-on or a fancy accessory in the music industry; it’s becoming the symphony conductor. Generative AI, with its ability to produce unique and meaningful compositions, is setting the stage for the next wave of change. And if Goldman Sachs is to be believed, it might just be music to the investors’ ears.

There’s plenty more to unpack here and plenty more changes on the horizon, but let’s not get ahead of ourselves. After all, the music’s only just starting to play.

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