From Taylor Swift and Beyoncé to blockchain and AI: Music ETF CEO eyes the next big thing

By James Rogers

'AI and blockchain are simply revolutionizing this industry today,' says David Schulhof, founder and CEO of the MUSQ Global Music Industry ETF

2023 has been a big year for live music, driven by the phenomenal success of Taylor Swift's Eras tour, Beyoncé's Renaissance tour and, last week, U2's eagerly-anticipated opening of new Las Vegas venue Sphere.

This year also marked the culmination of Elton John's Farewell Yellow Brick Road tour. Fellow music icon Bruce Springsteen has also been on the road, although The Boss had to postpone his remaining 2023 tour dates until 2024 as he recovers from peptic ulcer disease.

David Schulhof, founder and chief executive of the MUSQ Global Music Industry ETF MUSQ, told MarketWatch that he's not at all surprised by the level of attention that these tours have garnered. "People really want live music," he said. "There's nothing that can replicate the live-music experience."

Related: Sphere Entertainment's stock climbs after Sphere venue opens with stunning U2 concert

The MUSQ ETF, which was launched in July, has about 50 holdings, spanning streaming, content and distribution, live music, satellite and broadcast, and equipment and technology. One of the fund's top holdings is Sphere Entertainment Co. (SPHR), owner of Sphere, the new 360-foot-tall immersive concert and entertainment venue in Las Vegas. Irish rock giants U2 kicked off a 25-show residency at Sphere on Friday with a stunning concert.

"It's just really exciting for live music -- anybody that really enjoys live music is really going to enjoy this venue," Schulhof told MarketWatch. Buoyed by Friday's opening, Sphere shares ended Monday's session up 11.11%, their biggest single-day percentage gain since Feb. 9, when they gained 11.68%.

Other holdings in the ETF include media technology company Avid Technology Inc. (AVID), Dolby Laboratories Inc. (DLB), Sonos Inc. (SONO), Live Nation Entertainment Inc. (LYV), Madison Square Garden Entertainment Corp. (MSGE), Sirius XM Holdings Inc. (SIRI) and European ticketing giant CTS Eventim AG & Co (XE:EVD). The fund currently has $11.7 million in assets under management.

Related: A $35,000 trip to see Taylor Swift? How the artist's fans boosted the Los Angeles economy by $320 million.

Schulhof, who is the former president of music publishing at digital media company LiveOne Inc. (LVO), sees AI and blockchain as the next big things in the music industry. "AI is revolutionizing creativity and productivity for artists today," he said. "All kinds of tools are available now to create new music for their fans."

Earlier this year, news that the Beatles are using AI to include John Lennon's voice on a new song divided fans of the iconic Liverpool band, and left musicians weighing the impact of the technology.

Schulhof noted that AI could be applied to the music "stems," or individual audio tracks, that are used to create complete songs. "By accessing these stems, they can create new works," he said.

As Beatles 'go AI,' musicians weigh impact: 'Lennon wouldn't be best pleased'

The MUSQ CEO acknowledged the challenges that AI can pose to the music industry, as evidenced by the controversy caused by an AI-generated song that used cloned voices of Drake and The Weeknd. The two biggest threats posed to the music industry by AI are piracy and market dilution, he added.

"I think that the benefits [of AI] are far more exciting than any of the risks." Schulhof said.

With regard to blockchain, Schulhof sees opportunities for artists to strengthen relationships with their fans through the likes of NFTs. Blockchain technology can also be used to speed up payments to artists, according to Schulhof, who notes that, at the moment, it's not unusual for an artist to wait nine months for payment after a song has appeared on the radio. "[Blockchain] takes out the middleman," he said.

Opinion: The Beatles are using AI to include John Lennon's voice on a new song: Why I don't want to hear it

Blockchain, which has grown in popularity in recent years, is a decentralized digital ledger of transactions. The technology is used to underpin cryptocurrencies such as bitcoin.

"AI and blockchain is really transforming the music industry," Schulhof said.

-James Rogers

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10-07-23 1512ET

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