In an extraordinary week for music stock markets, both record labels and music publishers experienced significant gains following a pivotal new licensing agreement between Universal Music Group (UMG) and Spotify. Additionally, Amazon announced further price increases for its music streaming service, contributing to the positive sentiment in the sector. This dynamic shift highlights the growing importance of strategic partnerships in the music industry, showcasing how licensing agreements can not only enhance revenue streams but also bolster stock performance across various companies involved in music streaming and publishing.
Following the announcement, UMG’s stock surged by 11.2%, reaching 26.94 euros ($27.91). This remarkable increase came after the company disclosed the renewal of its licensing deal with Spotify, which encompasses both record labels and music publishing. The new agreement is set to introduce innovative paid subscription tiers, including Spotify’s anticipated high-priced superfan offering and potential bundling options for music and non-music content. Furthermore, UMG’s stock benefited from news regarding Amazon’s price hike for its Amazon Music Unlimited on-demand service in the U.S., U.K., and Canada, effectively reversing nearly all of the 24% decline that followed its second-quarter earnings report, which had indicated lower-than-expected streaming growth.
Analysts at Morgan Stanley deemed it ?an important and positive week? for investors involved in the music streaming industry. Concurrently, Warner Music Group (WMG) saw its stock rise by 6.7% to $31.80, as investors speculated that the company would soon engage in similar negotiations with Spotify, potentially leading to a mutually beneficial licensing agreement later this year. Other companies such as Believe and Reservoir Media also experienced positive momentum, with their stocks climbing by 2%. This collective growth in the sector underscores the optimistic outlook for music companies as they adapt to the evolving landscape of digital streaming and licensing.
Spotify’s stock continued to soar, increasing by 7.5% to reach a record closing price of $548.55. This surge followed multiple analysts raising their price targets after the streaming giant achieved a significant legal victory in a U.S. court case concerning tactics used to reduce its royalty obligations. During the week, Spotify’s stock peaked at $560.36, bringing its market capitalization to approximately $111 billion. Analysts remain optimistic ahead of Spotify’s earnings call scheduled for Tuesday (Feb. 4), with Deutsche Bank increasing its price target from $535 to $550, while Citi raised theirs from $500 to $540. This positive trajectory reflects the confidence in Spotify’s growth potential within the competitive streaming market.
The performance of music stocks has been notably strong just one month into the new year. The 20-company Billboard Global Music Index (BGMI) surged by 6.4%, achieving a record high of 2,447.97. Remarkably, only two of the index’s 20 stocks posted losses, while one remained unchanged, and 17 recorded gains. This marks the index’s third consecutive weekly gain, representing the best performance of the year and the highest single-week increase since the BGMI saw a 6.8% rise in the week ending July 21, 2023. With just 31 days into 2025, the index has climbed by 15.2%, outpacing major indexes such as the Nasdaq composite (up 1.6%), S&P 500 (up 2.7%), and FTSE 100 (up 6.1%).
Aside from Spotify, other streaming platforms also reported substantial gains this week. LiveOne, the biggest gainer, skyrocketed by 20.8% to $1.45 after CEO Robert Ellin announced from President Trump?s The Mar-a-Lago Club that the company had surpassed 700,000 Tesla users, with half of them being free, ad-supported users. Additionally, the Chinese music streaming company Cloud Music saw its stock rise by 8.4% to 112.20 HKD ($14.40) after revealing a ?preliminary? agreement with K-pop company SM Entertainment to retain the K-pop catalog on its platform. Other notable performers included Paris-based Deezer, which increased by 9.6% to 1.26 euros ($1.31), and Abu Dhabi-based Anghami, which improved by 4.2% to $0.75.
Following the release of its fourth-quarter earnings on Thursday (Jan. 30), SiriusXM experienced a stock increase of 9.3%, reaching $24.01. Despite reporting a decline in both revenue and subscribers, the company maintained gross margins and earnings before interest, taxes, depreciation, and amortization (EBITDA) that aligned with previous guidance. For the entire year of 2025, SiriusXM anticipates slight declines in revenue and adjusted EBITDA, while projecting an increase in free cash flow to $1.15 billion from $1.02 billion in 2024. In light of the earnings report, Deutsche Bank adjusted its price target for SiriusXM to $25, down from $28.
Shares of Sphere Entertainment Co. climbed by 8.5%, reaching $46.60, following Guggenheim’s decision to raise the company’s price target to $69 from $64 while maintaining a ?buy? rating. Conversely, its sister company MSG Entertainment, which is set to announce its earnings on Thursday (Feb. 6), saw a minimal rise of just 0.1% to $36.34. This mixed performance reflects the vibrant and fluctuating nature of the entertainment sector as companies navigate through varying market conditions.
However, not all companies in the sector thrived, as iHeartMedia faced the week?s largest decline, dropping 8.3% to $2.22 after enjoying gains in prior weeks. Despite this drop, iHeartMedia’s shares are still up 12.1% year-to-date, indicating that while fluctuations occur, the overall trend for the company remains positive. Investors will be closely monitoring iHeartMedia’s next moves as it seeks to regain momentum in this competitive landscape.
