The music industry is entering a new phase where pricing is becoming the primary driver of revenue, replacing subscriber growth. Streaming penetration has largely plateaued in developed markets, signaling the end of rapid expansion. Analysts at MoffettNathanson suggest future industry gains will depend on higher prices and improved monetization strategies. This shift is underappreciated by investors.

Following the trend, Spotify has already raised prices in the U.S. and U.K. Major labels are now positioned to capture a larger share of industry monetization as wholesale rates reset. MoffettNathanson initiated Buy ratings on Universal Music Group and Warner Music, deeming labels the primary beneficiaries of this pricing-led phase. Spotify received a Neutral rating.

Universal Music's potential valuation could increase if it executes a U.S. listing. Spotify's margin expectations for 2026-2028 appear overly optimistic given new music rights deals. The firm also expressed skepticism about Spotify's ability to scale advertising meaningfully without a pivot toward video, which could require higher investment.

This shift to pricing reflects the maturity of the streaming market. With most consumers already on streaming services, the focus is now on extracting more revenue from existing users. Investors should watch how labels and streaming services adapt their pricing models and content strategies. The success of these strategies will determine future profitability.