Over the past decade, on-demand streaming has led to incredible gains in recorded music revenue, rising from $6.7 billion in 2014 to $17.1 billion last year in the US alone. Now there is so much room for growth in the US and Europe and developing markets are not so predictable. But look, up in the sky, he's a nerd, who could help an artist buy a plane, he's SUPERFANS!
Basically, now that the music business is getting a modest amount of money from a huge number of people, it has to find ways to also get much larger amounts of money from smaller numbers of more dedicated fans. A Goldman Sachs report in July 2023 said there was $4.2 billion in “addressable market opportunity for superfan monetization” and Advertising sign just mentioned how that same excitement is sweeping through the labels — as well as some of the challenges they'll face. Of course, this is just MBA's way of saying what most fans already know: They want to buy more of their favorite songs than access their music on a streaming service. The question – except who qualifies as a superfan! — is how to find them and what they want.
To get a sense of what this business might look like, let's look at the iconic group that pioneered a kind of superfan model, as well as newer stars that have turned a very different model into something of a science: the Grateful Dead and K-pop groups. Both are very popular—seemingly so by some measures—but neither is exactly mainstream in the way that Taylor Swift or Beyoncé are. Their popularity is deeper than broad. Neither the Dead nor K-pop is for everyone – both tend to inspire either devotion or disdain – but fans who like them tend to go all-in.
These fans help these acts to overperform by different measures. The Dead only ever had one hit single, but the band had the highest-grossing tours in 1991 and 1993, thanks in part to die-hard Deadheads who saw multiple shows, and the 2023 Dead & Company tour grossed both (114, $7 million) as well as the last BTS Tour ($113.6 million), according to Billboard Boxscore. K-pop songs dominate the sales market. In 2023, K-pop songs had seven of the top 10 best-selling CDs in the US, three of the top 10 best-selling albums, and none of the top 10 albums in total consumption, after streaming is included. On a relative basis compared to other concerts, their fans buy more than they listen to—a great assumption, given that many of those buyers likely listen to those albums on streaming services as well. (K-pop is much more popular internationally.)
Both the Dead and K-pop groups basically doubled down on what they do well to cater to their super fans. The Dead built their reputation as a live improvisational act, the best in popular music, and never quite captured the same magic in the studio. So after the group broke up in 1995, more live recordings began to be released, and a 2006 deal with Rhino led to increasingly ambitious reissue projects – a 73-CD set of the 1972 European tour, a series of quarterly subscription reissues and an 80-CD set featuring one performance from each year of the band's 30-year career. Recently, the group broke a record for the most top 40 albums ever on the Billboard 200. However, that accounts for its business success, as some of Rhino's releases sell for more than $100.
K-pop songs tend to focus on selling merchandise, and given the declining number of CD players, many young fans probably see CDs more as a souvenir than a way to listen to music. K-pop is all about fandom — having it, showing it off, and in some cases fighting over it — so these acts tend to sell merchandise that appeals to a collector's mindset. (I find it weird that some fans buy CDs in different colors, but I probably have a dozen live versions of the Grateful Dead's “Dark Star,” and some people find that a little too much, too.) K-pop fans spend a lot of money. amount for merchandise — $24 per month, according to Luminate research, which is 140% more than the average US listener. Financially, K-pop acts are basically in the tchotchke business; BTS sells clothes, jewelry and even Uno cards. And while the Dead sell more than their share of merchandise, including “beverages” and “housewares,” they've always been a live band, both in terms of art and business.
The music industry tends to see these business models as exceptions, as it is dominated by record companies that are heavily involved in recorded music. But they may also offer inspiration on how to turn a star-level audience into a superstar career. (The Dead's business, still overseen by Warner Music's Rhino, also shows that many superfans aren't going away — I saw a few concerts in 1991 and plan to buy the next vinyl set, too.) Charts change much faster than the devotion.
What can the rest of the business learn from these successes? More importantly, it's both possible and potentially difficult to monetize superfans — they're willing to spend money, but only for the right items. BTS live recordings may not be as good as an expanded clothing line. And that requires expertise. President Rhino Mark Pincus works closely with the dead, as does the archivist Dave Lemieux. They pick the shows that fans want to hear and know which ones to sell as part of the Dave's Picks reissue series and that belong in box sets. K-pop fans are enthusiastic, but also demanding — they want to buy designer sweatshirts, but only if they're designed the right way.
Selling streaming subscriptions to a mass audience requires executives who could focus on the mainstream. Getting part of that audience to spend twice as much money on a single act is certainly possible — but it takes an entirely different skill.
