Boring is back: Key takeaways from our January investment webinar
On January 30, 2025, nearly 200 Water & Music members gathered to explore an unexpected shift in music tech investment: The biggest checks of 2024 went to the industry's least glamorous problems.
Drawing from our analysis of 140+ investments across 38 countries, we examined how capital flows are revealing music tech's new priorities.
Below are the key insights from our discussion.
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Recording:
Slides:
To dive even deeper, you can:
- Read our comprehensive report "Back to basics: Where music tech money really flows,” which goes beyond our webinar content with more detailed startup profiles, investor insights, and analysis of emerging categories.
- Browse our complete music tech investment database, which has been tracking hundreds of startups and investors since 2020.
The big picture: “Boring” is back
2024 marked a decisive shift in music tech investment: While the COVID era championed experimental moonshots like metaverse concerts and blockchain platforms, this year's capital flowed decisively toward making music's core systems work better.
The top three ranking categories of the year tell the story:
- Rights management and royalties ($222M across ≥21 investments)
- Live operations technology ($194M across ≥25 investments)
- AI production & rights infrastructure ($172M across ≥21 investments)
This is almost a complete reversal from 2021, when areas like blockchain, virtual concerts, livestreaming, and social audio dominated the conversation.
Three defining narratives
1. Rights management: The infrastructure play
Private equity firms aren't just acquiring music assets — they're betting on modernizing the industry's fundamental plumbing.
Key moves like Hellman & Friedman's ~$3B acquisition of Global Music Rights and New Mountain Capital’s majority stake in BMI signal growing confidence that technology can finally solve music's persistent infrastructure challenges.
2. Live tech: From virtual dreams to real solutions
The contrast with 2021 couldn't be starker. Instead of funding more metaverse experiments, investors are increasingly backing companies solving concrete operational problems with live events.
The standout example is atVenu's $130M raise from Sixth Street Growth. While merch and F&B operations might sound mundane, the reality is that many artists still track their ticket sales manually in spreadsheets, even at the major level.
Other startups like Eventric, RealCount, and GigFinesse are working similarly to make sure live music’s backend systems can keep up with the sector’s economic boom.
3. AI: Precision over disruption
AI has reshaped the creative tools landscape entirely: 15 out of 17 funded creator-tool platforms in 2024 (representing $143M in investment) were fundamentally AI-native — i.e. designed from the outset with AI features at their core. This marks a dramatic shift from 2020, when AI was a fringe player in music tech portfolios and creation tools centered on traditional production approaches.
But beyond headline-grabbing raises like Suno's $125M, a more nuanced AI investment pattern emerged. The majority of funded AI companies in 2024 targeted specific industry friction points, rather than promising wholesale transformation. Examples include:
- AudioShake: Professional-grade stem separation
- RoEx: Streamlining mixing and mastering
- CRESQA: Automating marketing workflows
Key audience questions
Our Q&A surfaced several compelling threads:
On the Spotify-UMG Deal
One member raised an intriguing question about how this week's major Spotify-UMG partnership fits into our "boring is back" narrative.
While there are definitely some flashy elements in the announcement — like new subscription tiers — we think the deal's core actually reinforces our infrastructure theme. The key question isn't about new features but about fundamental value flow: Who benefits when fans pay more for premium access?
The fan platform challenge
Another member asked about fan community platforms and whether they're still worth betting on from an investment perspective.
This touches on one of the most fascinating tensions in music tech right now. While these platforms can create incredible engagement with dedicated fan bases, the data tells a more sobering story: MIDiA Research found that niche platforms typically only see about 10% weekly active usage, compared to 60% for mainstream social networks.
And the success stories we're seeing, like Weverse, aren't following a traditional venture-backed playbook. Instead of chasing aggressive growth metrics, they're operating as strategic infrastructure for companies like HYBE and UMG that already have strong artist rosters and established fan communities.
Hardware's strategic opening
One of our final audience questions was about the investment potential in audio hardware, which was one of the underdog categories for 2024.
While software dominates investment headlines, targeted hardware plays are finding success by solving specific industry problems, rather than chasing consumer markets. The Sphere's acquisition of HOLOPLOT demonstrates how precise technical innovation can unlock value in existing infrastructure.
Looking ahead: Critical questions for 2025
Three strategic tensions will likely shape this year's developments:
The revenue squeeze
We're seeing core revenue streams - both streaming and touring - facing increasing pressure; artists and their teams are feeling the squeeze from declining per-stream rates and escalating touring costs. The strategic question becomes: Where does sustainable growth come from? Do we double down on fixing these core streams' inefficiencies, or do we need to think more imaginatively about entirely new revenue channels?
Independence vs. integration
The consolidation wave we're seeing raises some existential questions for independent infrastructure providers. With deals like Universal's pending Downtown acquisition, there's a serious conversation to be had about whether independent tech providers can build sustainable businesses without eventually being absorbed by larger players.
Scale vs. focus
We're seeing success stories at both ends of the spectrum of niche vs. scale — from laser-focused solutions like atVenu's venue operations platform, to companies like Create Music Group that are building integrated stacks across multiple industry functions. The jury's still out on which approach will prove more sustainable in the long run.
These aren't just theoretical concerns; they're actively reshaping how value moves through the music industry, making 2025 a more pivotal year than ever for music tech's evolution.
What's next? Stay tuned for upcoming webinars and articles where we'll continue exploring the intersection of music, technology, and business.
You can catch up on our previous webinars on our Event Recaps page.
For any further questions or to share your thoughts, please reach out to our inbox at members@waterandmusic.com!