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Wondering how AI reshapes music creation? Explore a market of over 90 million potential users in the U.S.
If you are a music artificial intelligence (AI) generation business or company, you could think of it as something similar to chat GPT but specifically for music generation, then this analysis is for you.
A business that was born from a team’s shared passion for music, set out to empower individuals, regardless of musical expertise, to express themselves through unique musical experiences. The journey started with a simple goal—making it easy for everyone to joyfully craft their own musical narratives.
Defining Your Target Audience
Leverage AI to Revolutionize Music Generation: An In-Depth Analysis for Your Business
The target audience for the app is anyone who writes or creates music, produces music, or who has thought about doing so. For this initial stage, the company will focus on the US market target audience who are tech-savvy–younger generations from ages 16-24.
- Music Listeners: similar to streaming services like Spotify, the only difference is we generate music in real time, so listeners are hearing music that has never before been created.
- Content creators: for all influencers and content creators that want to add unique music to their videos, our technology allows them to seamlessly add music to their videos with a few clicks. The equivalent market would be database sound providers like epidemic sound, shutterstock, pond5, among many others.
- For music creators or producers: our technology allows music creators to manipulate and modify the music being generated in real time. They can change bpm, melody, drums, vocals, etc. The equivalent market would be the DAWs software.
Before we deep dive into the TAM, SAM and SOM analysis of the above market, we will first look at the current market trends, actual market size and projected value of the related broader market–the global music production software industry, AI in the music industry and bedroom or home-produced music production.
Global music production software market size, growth and trend
Overall, the global music production software amounted to $1.10 billion in annual revenue in 2022 and is growing annually by % and would reach about $ billion by 2030. Music production software, also known as a digital audio workshop (DAW), is a software that is used for digital recording, musical composition and creating electronic music and other musical applications. Meanwhile, the United States accounts for $ million revenue in 2022, or a % market share from the global market.
According to a report, the music production software market is gaining popularity due to technical advances in web usage that offer advanced teaching methodologies and software with user-friendly interfaces. The low cost and easily deployable software allow users to use it for a variety of purposes such as recording tracks and sound mixing.
[Year-by-year calculation of global music production software and the United States using a CAGR of 5%]
2022: $1.10 billion [$ million for the US]
2023: $ billion [$ million for the US]
…
2030: $ billion [$ million for the US]
Overview of the Bedroom Music Production Market
Today, anyone with a laptop, smartphone or tablet has the potential to become a successful music producer. In the current music market, some of the most successful artists are now bedroom producers, sporting a DIY mindset to their music. But why the recent change? The music industry is quickly developing, and a new generation of artists are utilizing it.
Over the last couple of decades, music production has undergone a seismic shift. Not only are the tools of the trade now more affordable, they are easier to operate, allowing a hobbyist to build an adequate music studio at home. All that is needed to produce a track is a laptop and your preferred DAW (Digital Audio Workstation) such as Logic X, by Apple, Pro Tools, Ableton or FL Studios. However, most bedroom producers also opt to install a MIDI controller, microphone, headphones and studio monitors to assist their productivity.
Bedroom producers reportedly generated a total revenue of $1 billion worldwide in 2017, of which about % or approximately $ million was coming from the United States. If the global music production has been growing annually by % from 2017 to 2021, then we can roughly estimate that the bedroom music production annual revenue value is at $ billion in 2023.
AI in the music industry
Per the McKinsey report, % of companies will adopt at least one of the AI technologies by 2030. The music industry is no exception. With the rise of TikTok and the growing sector of YouTubers that need music for their creativity, AI music-generative tools enter the picture.
Accordingly, the music industry has already been paving the way for technology to become deeply ingrained in many aspects of both music creation and listening, for example:
- Music license fees and complicated music clearance processes have made companies a lot more open to using automatically generated music, because it reduces both costs and legal problems.
- Music producers often use plugin-assisted and automated tools in their workflows, from chord generation to beat making.
- AI is used for automated music mixing and mastering.
- Spotify and other streaming services use big data to influence viewer’s listening habits a lot more than you might think. Their algorithms can analyze music releases before a human even listens to them.
[Year-by-year market size of AI-based music production market with a CAGR of %]
2023: $ billion
2024: $ billion
2025: $ billion
2026: $ billion
2027: $ billion
Target Market/Audience Statistics And Data For TAM, SAM and SOM
Total Addressable Market (TAM) and its potential revenue
We will consider the total addressable market as the total potential users at full market penetration, eg. the population that is into music, they are tech-savvy and belong to the younger generation. If we say population, they are consumers with reasonable income regardless of gender, status and age. For this research, we will only consider the consumers in the United States.
Music listeners (all relevant statistics are provided in the report)
Estimated number of people who have interest and/or want to know or learn more about the music industry
= Total number of consumers in the US * % of population that listens to music * % of those who are interested to know more about the music industry
= ______ million
Music and content creators (all relevant statistics are provided in the report)
Estimated number of music creators in the United States
= Total number of consumers in the US * % of population that says they create audio or music
= _______ million
Songwriters, music composers and music publishers (all relevant statistics are provided in the report)
From the above statistics and data, we have determined the total number of potential users as below.
| Potential users (TAM) | Total number of potential users in the United States |
| Music listeners | — million |
| Music and content creators | — million |
| Songwriters, music composers and music publishers (professionals) | — million |
| TOTAL | — million |
Possible revenue assuming full penetration of the TAM target audience
= Total number of potential users * Average spending per year
= $ billion
Serviceable Available Market (SAM) and the total possible revenue
- The serviceable available market considered here are the specific target users–they just don’t listen to music or consider themselves music fanatic but are also interested to learn more about music and also interested in making music. They are the target users who would likely look for websites, apps or software that will help them create music.
| Potential users (SAM) | Total number of potential users in the US (TAM users * %) |
| Music listeners, creators, and professional songwriters, composers and producers | — million |
Using the same assumptions as above for average spending per user;
Possible revenue assuming full penetration of the SAM target audience
= Total number of potential users * Average spending per year
= $ billion
Serviceable Obtainable Market (SOM) and the total possible revenue
- The serviceable obtainable market will be the population who belongs to the demographics in the TAM and SAM but this specific population are those who are already adopting the use of AI to help them create, produce, write or stream music they love.
| Potential users (SOM) | Total number of potential users in the US (SAM users * %) |
| Music listeners, creators, and professional songwriters, composers and producers | — million |
Using the same assumptions as above for average spending per user;
Possible revenue assuming full penetration of the SOM target audience
= Total number of potential users * Average spending per year
= $ million or about $ billion
TAM, SAM and SOM Summary
The above estimated values for TAM, SAM and SOM possible revenues are based on 100% market share at full market or full specific target audience penetration. It is important to note that there are competitors that will be offering the same products and services that will race for a higher market share. Using the market shares of relevant competitors, the average share will be %.
From the data analysis, we can say that the potential market is very huge even just by looking at the United States figure alone.
Assuming that your company will aim for just 5% market penetration of the SOM potential users, that translates to about $ million revenues.
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