TAM:
How many people would want/need the product?
Estimations and Sources:
-
- https://www.catapultmymusic.com/article/indies-on-the-rise-how-independent-music-is-changing-the-industry-landscape
- 7+ Million artists globally, only ~5% signed to a label. Let’s assume around 90% of artists are actually indie, so we account for half-indie-half-signed or artists working for “indie labels”. That means there are ~6.3 million indie artists globally. Within these 6.3 million artists, let’s assume that all of them use some form of digital audio workstation (DAW) (to record, produce, mix / master, audio engineer, etc…) their music.
- https://www.catapultmymusic.com/article/indies-on-the-rise-how-independent-music-is-changing-the-industry-landscape
- Subscription revenue market size:
Of the 6.3 million artists on DAWs, If we assume everyone buys our software which costs 250$ yearly as an estimated average (an average between 10$ and 30$ monthly subscriptions), that would mean the market for Subscriptions to cloud-based music recording software is 250 * 6.3 = ~$1.575 Billion.
- Licensing fees vary by songs Range of sync licensing fees
- According to this article, the global sync license fee market was $632 million in 2023.
- premium educational content (videos, lessons, articles, etc)
- The price of a masterclass subscription is $10/month https://www.masterclass.com/
- If every indie artist used our platform for educational content then the revenue size would be 10 * 12 * 6.3M = ~$756 million.
How large is the market (in $) if they all bought
- Accounting for all revenue streams, the TAM is estimated to be ~$3 billion.
SAM:
How many independent musicians would we expect to purchase this product?
Of the 6.3 million artists that use D.A.Ws., many will not use paid-subscriptions for their music production & mixing softwares. SoundWave for instance only has 20% of the total recurring user base as paid subscribers. The market leader, Avid Pro Tools, has around 500,000 paid cloud-subscriptions (Pro Tools Data), and represents ~ 40% of the market DAW user survey, meaning they also have a conversion rate of roughly 20%. Assuming 20% is the industry standard, that means that ~1.26 million indie artists globally will use paid subscriptions for DAWs. Again, typical subscriptions range from $100-300$ yearly. If we take 250$ as an estimated average, that would mean the market for Subscriptions to cloud-based music recording software is 250 * 1.26 = ~$315 million.
Assuming that most of the licensing fee revenue comes from known artists signed to labels, let’s estimate that 20% of the total market represents indie artist licensing deals. This means that licensing fees for indie artists is ~$126.4 million.
A reasonable estimate is that 15% of all indie artists will purchase premium educational content(videos, articles, etc)
- The price of a masterclass subscription is $10/month https://www.masterclass.com/
- If the subscription price for educational content is $10/month, then the potential revenue is ~$113.4 million
This means that our SAM for all revenue streams is ~550 million.
SOM:
Though our product is growing and better than competitors’, we won’t reach 100% of the market share because there are significant competitors within the space. As it currently stands, in the Indie market we have reached 500,000 users, and have 150,000 current recurring users. Seeing as we primarily operate in the United States and Europe, and according to the US Census Bureau there are 711,510 independent artists (including performers, composers, and songwriters) in the US, let’s assume the total number of indie artists in those regions is double that number, so around 1.4 million indie artists. This means we are only currently retaining around 10-11% of the market.
Now assuming we have successful expansion into Asia and South America with our product, let’s assume an overall growing but similar rate of user retention, estimating that between 10-15% of the global indie artist market will use our product. This means we could reach between 630,000 and 950,000 total active users globally. Applying the same 20% paid user rule, and the 250$ average annual subscription, this would mean our attainable subscription revenue could be $32.5 million – 47.5$ million.
Applying the same estimates to our users buying education content, if 10-15% of users buy a 10$ monthly subscription for masterclass content, the attainable revenue potential is between $11 million – $17 million.
Finally if 10-15% of the indie artist market that we capture receives licensing deals on their music, then we could attainably reach $12.5 million – $19 million in synch licensing fees.
Overall this would make our total attainable market for global indie artists to be between $56 million – $83.5 million USD.
