Could HYBE’s Weverse offer a template for Universal Music Group’s courting of ‘superfans’ in 2024?

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Get ready for the superfan goldrush.

As playlists become less influential, the music creator economy explodes, and consumers’ attention continues to be divided across multiple entertainment platforms, fostering closer relationships between artists and fans – and monetizing those connections – is high on the agenda for some of the industry’s key leaders.

One of those leaders, of course, is Universal Music Group Chairman and CEO, Sir Lucian Grainge.

Grainge issued a New Year note to UMG’s global workforce last month, in which he forecasted an ongoing shift in the wider streaming market towards an ‘artist-centric’ royalties model.

UMG’s Chairman and CEO then made an interesting announcement.

Following UMG’s focus over the past year on getting streaming platforms to adopt an ‘artist-centric’ approach, UMG’s strategy, he said, will now be centered on “strengthening the artist-fan relationship”, specifically through “superfan experiences and products”.

“The next focus of our strategy will be to grow the pie for all artists, by strengthening the artist-fan relationship through superfan experiences and products.”

Sir Lucian Grainge

Said Grainge: “The next focus of our strategy will be to grow the pie for all artists, by strengthening the artist-fan relationship through superfan experiences and products.”

He even revealed that UMG is “already in advanced discussions with [its] platform partners regarding this phase and will have more to announce in the coming months”.

Grainge’s comments follow significant recent moves by UMG to tap into the superfan market.

Over in Japan, for example, UMG recently launched a superstore dedicated to superfans.

And in Germany, five months ago Universal recently launched YOUniverse, a “virtual and interactive fan platform…where fans can meet and interact, and in future even meet their idols”.

Spotify: It’s already built the tech

The question now is, what will these new superfan experiences look like?

Think about Spotify. Would a Drake ‘superfan’, for example, subscribe to a ‘limited tier’ of the artist’s content (think: bonus tracks, commentary, artist Q&As etc.) via a platform like Spotify for an additional, say, $3 more per month?

Suppose Drake were to convert just 1% of his 83 million-plus monthly Spotify listeners to pay an additional $3 for exclusive content. In that case, he would generate over $2.4 million per month from this revenue source a month alone.

(As MBW has previously pointed out, Spotify actually already has a mechanic that could work with such an offering: Audiobooks. While 150,000-plus audiobooks have been available as part of Spotify Premium since October, many are still locked on the platform and require an additional purchase to unlock.)

The Weverse possibility

Outside of DSP partners, could we see the likes of Universal Music Group model new ‘superfan’ platforms on HYBE’s Weverse service?

MBW has previously suggested that Weverse is ahead of the curve in the superfan field.

The app brings together artist-related content such as music videos, teasers, movies and live streams. It also has a merch platform known as Weverse Shop, a music player called Weverse albums,  and a K-Pop-centric music publication called Weverse Magazine.

And it’s becoming increasingly popular with music fans.

HYBE reports that its user base grew to 10.5 million MAUs in Q3 2023, from 9.5 million MAUs in the previous quarter (see below).

And HYBE’s ‘Fan Club’ revenues, driven via Weverse, grew 21.3% YoY to 21.03 billion South Korea Won ($15.8m) in Q3.

According to Weverse’s 2023 Fandom trend report, those 10 million monthly active users are located across 245 countries and regions.

The platform says that it witnessed a “significant surge” in new users in 2023 in Asia including Korea, China, Indonesia, the Philippines, India and Japan along with United States “serving as focal points for new user acquisition”.

Additionally, Weverse says that it experienced “impressive growth rates” in Africa (+46.8%) and the Middle East (+25%) in 2023.

Weverse reported that in 2023, each user on its platform spent an average of 215 minutes per month (+46% YoY) and visited the platform for an average of 10.2 days per month (+10.4% YoY).

These fans aren’t just playing around on Weverse, either – they’re spending real money.

According to HYBE, the Weverse shop sold over 18.3 million items in 2023 alone – an average of 7.7 purchases per user (see below).

Speaking with Bloomberg in December, Weverse’s President Joon Choi suggested that he was optimistic that more e-commerce would naturally blossom on Weverse in future.

He commented: “Once we have more diverse genres and reach monthly active users of around 30 to 50 million, we can offer more profit–making models that’d satisfy both fans and artists.”

In addition to merch, Weverse has found particular success with live-streams of both concerts and other ‘candid’ content.

In February 2023 for example, Jung Kook drew 16 million real-time views for his “at-home live stream”, while Enhypen’s performance during their ‘Dark Blood Special Showcase’ in May garnered 2.4 million real time views.

Weverse says that it hosted a total of 4,310 live streams in 2023 quadrupling the number of live streams held in 2022.

In addition to growing its consumer user base, the Weverse app is also becoming increasingly popular with artists.

Weverse reported that in 2023, the number of artists on its app surged from 71 to 117. Eleven non-Korean artists joined its ranks in 2023.

One thing that Western Music executives might point out? Despite Weverse’s expanding artist roster, it’s HYBE-signed K-Pop acts in particular that continue to see the most success on the platform.

Weverse reported that BTS, Tomorrow x Together, and Enyhpen have amassed the largest followings on its service – with BTS alone accumulating 24 million followers.

Meanwhile, in Q4 2023, SM Entertainment artists including EXO, Red Velvet and aespa also joined Weverse.

Yet according to Weverse, 90% of the artists currently on its platform are signed to labels other than HYBE.

Notably, we’ve previously reported how the Weverse app has branched out beyond HYBE-signed acts, building fan communities for the likes of singer-songwriter Gracie Abrams (Interscope Records), Alexander 23 (Republic) and Jeremy Zucker (Interscope).

All three of those artists are signed to Universal labels, following an experimental deal inked between Weverse and UMG that dates back to 2020.

The big question, then: Could Weverse – using its existing verticals including merch, fan communities, and live streams – now find success with Western superstars like Taylor Swift, Drake, or Olivia Rodrigo?

And, having inked an ongoing global strategic partnership with HYBE in 2021, could we now see Universal Music Group – with ‘superfans’ at the top of Sir Lucian Grainge’s agenda – grow even closer to Weverse? Or at least use its learnings from experimenting on Weverse to better court ‘superfans’ in the months ahead?

Superfans: The numbers

Universal’s focus on the superfan category arrives alongside recent evidence of the impact this consumer segment is having on the music business.

US market monitor Luminate, in its Year End report for 2023 (published Wednesday, January 11), revealed that 18% of US music listeners are superfans. This is up from 15% reported by Luminate for the first half of last year.

Luminate also reports that those superfans spend 68% more money on music each month and 76% more on physical music per month than the average U.S. music listener.

They also spend 126% more on artist merch than the average music listener, and that Gen Z spends over 51% more money on artist merch than the average US music listener.

Luminate also reports that US D2C sales were up 38.6% in 2023 to 11.8 million total and that vinyl D2C sales are up 39.8% YoY.

Additionally, over 60% of all US D2C Sales were current titles.

The report also includes stats that are specific to fans of K-pop and J-pop. K-pop fans, for example, spend 140% more per month on artist merch than the average US listener.

J-Pop fans, meanwhile, spend 100% more per month on artist merch than the average US listener.

The record industry’s growing obsession with superfans also arrives against a backdrop of a slowdown in paid streaming account growth.

Price rises at DSPs are proving to be a successful way to boost music revenues, as witnessed by the 9.8% YoY jump in UK music subscription spending in 2023.

But price rises are just one way to extract more value from each subscriber on each platform. In the coming months, monetizing superfans will become a key focus for labels and their DSP partners.

“When you start to focus on the artist-fan relationship, these high-value relationships are driving the economic model of the platform, so you [can begin] segmenting around high-intent, high-integrity, artist-fan relationships.”

Michael Nash, speaking in April 2023

In Goldman Sachs’ latest Music In The Air report,  it claimed that if 20% of paid streaming subscribers today could be categorized as ‘superfans’ and, furthermore, if these ‘superfans’ were willing to spend double what a non-superfan spends on digital music each year, it implies a $4.2 billion (currently untapped) annual revenue opportunity for the record industry.

UMG’s EVP and Chief Digital Officer Michael Nash, speaking nearly a year ago on UMG’s Q1 earnings call in 2023,  explained how the revenue flow from superfans can be boosted under an artist-centric model.

Nash cited UMG’s own consumer research that shows “about 30% [of music subscribers] are superfans of one or more” of UMG’s artists.

He added: “How does that relate to artist-centric?

“When you start to focus on the artist-fan relationship, these high-value relationships are driving the economic model of the platform, so you [can begin] segmenting around high-intent, high-integrity, artist-fan relationships.”