AI is reshaping the music creator economy, and that change will reshape the music business

MIDiA is pleased to announce the release of not one but two new music creator economy reports. These are our latest "State of the music creator economy" and "Music creator tools forecasts" reports. These annual deliverables have quickly become industry benchmarks, and if you operate in the music creator economy, they are must-reads. Not just if you are a software, hardware, or a skills sharing company but also if you operate in the traditional music business (label, publisher, distributor, DSP, social platform or talent / management agency). This market is not only rapidly evolving in its own right, but these changes are also rewriting the future of the wider music business. Here are some highlights.

Following a pandemic surge, 2023 and 2024 were less buoyant years for music creator tools companies. Both user and revenue growth slowed, with some sections of the market hit particularly hard. However, this is far from a bad news story:

• Both revenue and creators still grew, albeit it at more modest rates
• While some categories contracted, most registered solid growth
• Audio modification features pulled an entire new cohort of consumers into music creation
• Generative AI (gen AI) opened up a new growth front

While the slowdown has caused pain for some, especially companies that serve the ‘set up’ phase for creators (e.g., audio interfaces), companies that cater for creators’ longer-term needs have benefited from demand from both the lockdown cohort and subsequent, steadier creator base growth.

Despite the spotlight shone in the pandemic having shifted, the rise of the music creator economy is part of a long-term paradigm shift that is reshaping the music business. It started in the late 2010s with the rise of self-releasing artists, was super-charged by the creator economy’s pandemic boom, and is now manifesting with a bifurcation of the music business. There is now a new, social and creation focused music business parallel to the traditional, streaming-centred music industry. As with most paradigm shifts, it is all too easy to over-estimate the near-term impact while under-estimating the long-term change.

The players that dominate the music rights business (labels, publishers, DSPs) and those that define the creation business (hardware and software companies) may not be the ones that lead the new play business that is carving out a middle ground that fuses both of those sectors. Even though these players still have an opportunity to carve out roles for themselves, the momentum is currently with social-first platforms like TikTok, YouTube, and SoundCloud, along with newer entities such as BandLab and Moises.

Streaming and creator tools brought down the barriers, now social and gen AI are building a disruption highway.

Gen AI and audio modification are blurring the distinction between consumer and creator, while also massively expanding the creator economy’s funnel. In fact, modification is creation – with around a quarter of consumers are interested in these tools. Meanwhile, gen AI is accelerating the consumerisation of creation, with the number of active users of generative AI tools up by nearly a third in 2024, and the resulting content already carving out a significant share of music software revenues. These new tools and behaviours are going to transform the future of music creation, often taking a constructivist approach to composition and entirely bypassing the linear DAW approach.

AI, mobile, consumerisation, and the Global South will shape the future of the music creator economy and in turn, accelerate these trends in the wider music business. Rightsholders tackling rights issues around AI is a crucially important strategy, but in many ways, this is addressing the symptoms rather than the cause. AI has the potential to radically remake the creation side of the music business and may equally create an entirely new lane for the music business in terms of what consumers listen to, how they engage with that music, and what sort of companies serve those creators.

A year ago,we made the prediction that the music industry is going to bifurcate into two separate businesses. That future is now coming to pass.

If you are not yet a client and want to find out more about our two new music creator economy reports, please email businessdevelopment@midiaresearch.com