Investing in Music Stocks

As a form of entertainment, music is timeless, but the music industry itself has been seriously disrupted over the past generation. Aspiring artists now seek to develop a following through social media platforms and streaming services, and the live music industry has continued to grow.

Power and influence in the music industry have been decentralized, which creates both opportunities and challenges for music industry companies. Manufacturers and sellers of equipment such as speakers and instruments, music streaming companies, record labels, event organizers, and terrestrial and satellite radio companies are all participants in the music industry.

Top music stocks

Top music stocks in 2025

These are some of the best music companies in 2025:

1. Spotify

1. Spotify

Spotify pioneered legal music streaming more than a decade ago. It has since expanded beyond music by acquiring several podcast franchises. The streaming giant now counts high-profile creators such as Joe Rogan and Bill Simmons among its podcasters.

Spotify's paid subscriber base is approaching 250 million, growing 12% as of the second quarter of 2024. It had more than 600 million monthly active users, which included ad-supported listeners. Along that growth path, the company beat back consistent threats from Apple (AAPL 1.36%) and others. It has now topped the iPhone maker in podcast listeners, making it the No. 1 podcast platform in the U.S., showing that the pure-play audio stock is beating the tech giant. The company's profits are starting to ramp higher after years of investment, and it should benefit from the subscription business model, which means that most incremental revenue flows directly to the bottom line.

The company has turned profitable on an International Financial Reporting Standards (IFRS) basis, and the future looks bright for Spotify as revenue growth is solid and margins continue to expand.

2. SiriusXM Radio

2. SiriusXM Radio

As the only satellite radio provider in the U.S., Sirius stands out for relying on satellites to transmit its music and other audio content. The company can provide reliable service in places where internet-based music platforms fall short, and SiriusXM is most often used inside vehicles.

The company provides a range of audio entertainment, including music, sports, news, talk, and traffic and weather updates. Its brand may be best associated with Howard Stern, the shock jock who attracted much attention in 2005 when he took his talk radio show to Sirius. However, Stern's contract expires in 2025, and the 70-year-old seems to be leaning toward retirement.

Sirius also acquired Pandora in 2019, increasing its exposure to music streaming, but the company lags well behind Spotify in that area.

The satellite radio company has historically increased its revenue at a modest pace because growth in the on-demand music business has favored streaming services, but revenue has been roughly flat since the start of 2023.

As of the second quarter of 2024, the company had 33 million subscribers on SiriusXM and 6 million on Pandora.

Improved internet connectivity and the expansion of 5G networks pose a longer-term threat to SiriusXM, as well as new technologies like Elon Musk's Starlink and Amazon's (AMZN -1.01%) Kuiper. At the same time, its relationships with automakers give it a unique advantage since its satellite radios are pre-installed in nearly every new vehicle in the U.S.

3. Sonos

3. Sonos

Wireless speaker maker Sonos calls itself the inventor of multiroom wireless audio products. With around 100 streaming partners, including Apple Music, Pandora, and Spotify, Sonos finished its fiscal year 2020 with 46.6 million products registered in 15.3 million households.  

After posting strong growth earlier in its history, revenue growth has faded, but the recent launch of its Ace headphones, its first entry in the headphone category, has helped return the business to growth.

A problematic app update earlier in 2024 also plagued the company, leading to frustrated customers and a reduction in guidance.

The company faces competitive threats from tech giants such as Amazon, Alphabet's (GOOG -1.44%)(GOOGL -1.44%) Google, and Apple, all of which are investing significant resources in their own smart speakers. Investors in Sonos should be aware of these competitive pressures.

4. Live Nation Entertainment

4. Live Nation Entertainment

Live Nation Entertainment, which owns Ticketmaster, has a near-monopoly in concert ticketing, with a more than 70% market share. Music artists are increasingly performing at live events to earn money since CD sales are essentially dead, and music festivals have become more popular in the era of social media.

Like most live entertainment businesses, Live Nation struggled in the early stages of the pandemic, but the stock hit an all-time high in early 2022 as investors bet on a recovery.

Revenue is now well above its pre-pandemic levels, but the stock hasn't eclipsed the earlier peak. Growth has slowed as well, but the business still has a bright future in front of it, considering the strong demand among millennials and Gen Z for spending on experiences.

5. IHeartMedia

5. IHeartMedia

Formerly known as Clear Channel, IHeartMedia is the biggest operator of broadcast radio stations in the U.S. It finished 2023 with 249 AM stations and 619 FM stations and, in the same year, had the most No. 1-ranked stations across the top markets, including 26 top-ranked stations in the 50 biggest markets. IHeartMedia also operates IHeartRadio, a digital audio streaming service that gives users access to both streaming music and the digital feeds of radio stations nationwide.

Broadcast advertising is the company's primary source of revenue, and 2023 was a weak year for advertising as businesses anticipated a recession that never came. As a result, revenue in 2023 fell 7% to $1.75 billion that year. Revenue has stabilized in 2024, and the company is likely to benefit from political advertising in the second half of the year. It's also taken impairment charges of almost $1 billion in each of 2023 and 2024, showing the declining value of terrestrial radio licenses and write-offs in its goodwill.

Historically, the company's advertising model has been highly profitable, and its reach gives it a competitive advantage since IHeartMedia can offer advertisers by far the most exposure in radio. 

Since the digital radio space is crowded with competition from Spotify, SiriusXM, and others, along with terrestrial radio, appear to be in long-term decline, the future could be challenging for iHeartMedia.

6. Warner Music Group

6. Warner Music Group

Legacy record labels such as Warner Records, Atlantic Records, Asylum, and Elektra, all of which are owned by Warner Music Group, still help high-profile musicians with marketing, management, and production. Ed Sheeran, Cardi B, and Bruno Mars all have contracts with labels owned by Warner Music Group.

The company earns most of its money from recorded music and also generates revenue from music publishing, which is the acquisition and licensing of musical compositions. Both of those categories are growing as the recorded music business enjoys a significant boost from the rapid growth in music streaming.

Through the first three quarters of 2024, revenue rose 8% to $4.8 billion, driving a surge in profits, and it expects to benefit from its exposure to music genres -- such as hip-hop and pop -- that are especially popular on streaming services.

Related investing topics

Should you invest?

Should you buy music stocks?

Even the best companies in the music industry are facing major competition from the giants in the tech sector. Music entertainment stocks can still be winners, but prospective music company investors should pay attention to how the industry is changing. The best music companies are well-positioned to compete aggressively and can stay ahead of the evolution of the music industry.