Hi! Today we're talking music, hiking (not the fun kind) and whether you know how much you spend on monthly subscriptions:
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The music industry is continuing its comeback according to new data from the RIAA, with recorded music revenues in the US growing 9% in the first half of this year.
As it was
Driving much of that growth was streaming, which has given the music industry a much-needed revival after online piracy hastened the demise of mainstream physical formats like CDs.
That revival has struck a chord with a particular set of investors. In recent years powerhouse investment firms, designed solely to acquire music catalogs, have been paying millions to own the rights to songs from artists such as Bob Dylan, Bruce Springsteen and Shakira, anticipating that streaming is here to stay. Given the chart above, that is potentially quite a bold bet to make.
Even the most dominant listening mediums — vinyl, cassettes, CDs and downloads — have rarely lasted more than a decade. It's hard to imagine what might dethrone streaming, but if we were writing this in the late '80s we would likely have felt the same about the mighty CD.
It's interesting that many of the back catalog deals have been for the music publishing rights. That means the rights to the lyrics, melodies and musical composition of tracks, rather than just specific recordings of songs. Bob Dylan's work is a good example of why that's often been the case — Universal Music estimate his songs have been recorded some 6,000 times. Now every use, play, stream or sample of a Dylan song means a payment for Universal.
Back In Black
Although streaming is the headline act in music these days, it's actually not the fastest growing format. That honor falls to vinyl, which — according to RIAA data — grew 22% in the first half of the year, building on the $1bn+ in vinyl revenue recorded in the US last year. Nostalgia remains undefeated.
The Fed's 3x3
This week the Federal Reserve signed off on its third consecutive three-quarter point rate hike, lifting the benchmark federal funds rate to a range of 3-3.25%.
That's an unprecedented pace of rate-rises in modern history, signaling the Fed's strong resolve to get double-digit inflation under control. No other hiking cycle has started this steeply since the Fed started targeting the Effective Funds Rate in the 1980s.
For borrowers, this is obviously bad news. Although not always immediate, borrowing costs on mortgages, credit cards and car loans will rise. Indeed, the average 30-year fixed-rate mortgage hit 6.29% this week — the highest since 2008 (chart here). There is, of course, a silver lining for savers as rates on cash deposits should rise — although you may have to shop around to get the best deal.
Unlike when it first appeared on your lockdown dating profile, the Fed's new-found fondness for hiking looks here to stay. Officials project that rate rises will continue into 2023, with estimates that the target rate will hit around 4.6% by the end of next year. Equity investors were surprised again by this week's news, with US stocks down another 3% since Monday.
Oversubscribed
Subscription models are everywhere. Socks, streaming sites, your favorite coffee shop, razors — even toilet paper. You name it and these days there’s a pay-monthly option for you to opt into. The services often come with a hidden cost though, with 38% of Americans reporting that subscriptions actually add stress to their life, rather than making it easier.
It’s pretty easy to lose track of just how many active memberships you’re signed up to and exactly how much each one costs, and consumers frequently think they’re getting a much better deal than they actually are. According to a survey from May, some 54% of subscription users spend a staggering $100+ more than they thought on services each month, and a whopping 11% are routinely forking out over $300 more than they estimated.
The often-arduous process of unsubscribing from some of your lesser-used subscriptions has never seemed so appealing.
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