TD COWEN: MUSIC BIZ SHOULD WEATHER ECONOMIC TUMULT

The U.S. economy may be more unpredictable than HITS at an open bar, but TD Cowen says the music industry is better positioned than most to weather the proverbial storm.

In an earnings-preview note, the investment bank/financial-services institution said it views the biz as "attractively defensive" given what it politely refers to as the current "overly dynamic political/economic situation."

It points out that digital goods are unaffected by tariffs and that the majority of revenue earned by such entities as Universal Music Group and Spotify comes from subscription streaming services, and that churn is unlikely to increase in a meaningful way even if a (shhhh!) recession may be looming.

The report goes on to say that the live sector has traditionally weathered tough economic times due to strong audience affinity towards the concert experience. As such, TD Cowen forecasts that Live Nation's fundamentals "generally have less risk than the average business that depends on discretionary spending."

Further insights include expectations that some DSPs will again raise prices this year, "in part because the multiyear growth targets of the record labels would be difficult to reach with extended periods between price hikes under current contracts."

TD Cowen is also "highly bullish" on music-content ownership thanks to "relative underpricing of music content versus other forms of entertainment," contributing to its "buy" rating for UMG, Warner Music Group and Sony Music Group. Due to caution surrounding the digital-music-aggregation sector, Spotify was rated a "hold."