In a recent interview on the MBW Podcast, Lisa Yang, Managing Director of Media & Internet at Goldman Sachs’ Global Investment Research, noted that “the industry should [consider] how it can better leverage the entire artist-fan relationship”.
Yang added that this “could include access to pre-release songs, ticketing, merchandising, virtual concerts, etc., to really try to monetize every single touchpoint between an artist and their fans”.
One company that has arguably been well ahead of the curve when it comes to monetizing superfans is Korea-based entertainment giant HYBE, which runs Weverse – a fan platform that, since its launch in 2019, has attracted 10 million monthly active users (MAUs) as the end of Q2 2023.
Weverse brings together artist-related content such as music videos, teasers, movies and live streams. It also has a merch platform known as Weverse Shop.
This year, HYBE took Weverse to the next level, with the introduction of Weverse DM, a private messaging service that enables fans to communicate with artists; Fan Letter, which enables users to send personalized digital letters to artists; and Jelly, a payment system that allows fans to pay for on-demand videos.
As talk of monetizing superfans grows louder, Weverse’s growing commercial success is causing many in the industry to take notice. And some music companies are taking action.
At its Universal Inside conference in Berlin last week, Universal Music Germany announced the launch of YOUniverse, a “virtual and interactive fan platform…where fans can meet and interact, and in future even meet their idols”.
YOUniverse isn’t exactly like Weverse, and in some aspects, it goes beyond HYBE’s fan platform. Unlike Weverse, it’s a metaverse-based platform where users can build personalized avatars and walk through a Berlin-inspired virtual reality.
You can “walk outside along the Spree river, enter our lobby and event space, take a look into our studio and walk through a museum style ‘Hall of Fame’ with over 100 gold- and platinum awards of Universal Music artists from around the world,” the YOUniverse website explains.
“You can meet other music fans and voice chat with them about your favorite artists and passion for music. You can also attend exclusive virtual events like meet & greets, listening parties, album premieres, concerts, etc., with some of our Universal Music artists.”
So far, no artist events have been announced in the YOUniverse, but the platform holds out the promise of next-level digital interaction for superfans, with features such as voice and text chat, a YOUniverse Radio service and merchandise sales.
Speaking at Universal Inside, Frank Briegmann, Chairman and CEO of Universal Music Central Europe and Deutsche Grammophon, said there is a growing number of touchpoints where artists and fans can meet. That includes everything from physical music formats and streaming platforms to social media, podcasts, video content, smart home and car devices, as well as video games and physical fitness.
“We have gone from being labels to architects and builders of these integrated worlds. Together with our artists, we create experiences that go far beyond pure audio consumption,” Briegmann said.
Although YOUniverse is – at least for now – focused on the German music market, and specifically on Berlin, its success could easily lead to replication, with platforms for music fans in other major centers of music culture, such as London, New York and Los Angeles – and eventually everywhere.
The appeal of such a product can be seen when looking at HYBE’s rapid revenue growth in its “fan club” segment (including Weverse) which saw its revenue jump by 29.4% YoY in Q2, to KRW 21.82 billion (USD $16.5 million).
According to a recent report from market research firm Luminate, around 15% of the general population in the US can be classified as music superfans.
(Luminate defines a superfan as “a music listener aged 13+ who engages with an artist and their content in multiple ways, from streaming to social media to purchasing physical music or merch items to attending live shows”.)
The report estimated that superfans spend 80% more on music each month than the average US-based music listener. And it highlighted the windfall that the direct-to-consumer (D2C) segment of the music market has seen from artists’ stores.
Sales of music from artists’ stores were up over 20% in the US in H1, with D2C vinyl sales up 26% YoY in H1, to 3.6 million copies. Meanwhile, 1.7 million CDs were sold direct-to-consumer in the first half of the year, an increase of 15% YoY.
“We have gone from being labels to architects and builders of these integrated worlds. Together with our artists, we create experiences that go far beyond pure audio consumption.”
Frank Briegmann, Universal Music Central Europe
In its latest Music in the Air report, Goldman Sachs estimated that, if 20% of of current paid music subscribers could be categorized as superfans, and if they were willing to pay double what a non-superfan spends on digital music, this would represent a $4.2 billion untapped revenue opportunity for the music industry worldwide.
“Beyond headline price increases, we believe that there is an opportunity for the industry to improve monetization through a premium segmentation of their user base, which would better align monetization with the value created by an artist or a song for the platforms,” the Goldman Sachs report stated.
However, as HYBE and Universal have shown, it’s not just streaming services that have the potential (and desire) to monetize superfans.
Warner Music Group CEO Robert Kyncl seems to agree, telling analysts on the company’s most recent earnings call that “we will all collectively have to focus on much more innovation around audience segmentation and price optimization, and without negatively impacting… the users.
“And that is not a thing that happens overnight or [from] quarter to quarter. It’s carefully developed – an orchestrated change that we will undergo.”Music Business Worldwide