Creator TAMs [Total Addressable Markets]: a new way to measure the creator economy (Mark Mulligan)

The exploding creator economy is powered by technology so decentralized and diverse that it’s difficult to measure this essential sector’s total market size… until now.

By Mark Mulligan of MIDiA and the Music Industry Blog

The music creator tools space is undergoing a change that is simultaneously renaissance and transformation. The creator culture boom has driven an unprecedented degree of investment and investor interest. However, because the music creator tools space is a collection of diverse products and services, an underlying challenge has been how to identify exactly what the total addressable market (TAM) is.

In this report, MIDiA presents the multiple TAMs, SAMs (Serviceable Addressable Market) and SOMs (Serviceable Obtainable Market) for music creator tools. MIDiA has created an industry first: we have created a series of creator tools TAM models that enable investors to precisely measure the market opportunity for the growth of different types of creator tools companies.

We spent a lot of months compiling data from industry sources, company financials, executive interviews and proprietary MIDiA survey data to build the model and accompanying report. The full report and dataset is available here. Here are some key themes explored in the report.

This surge in new musicians that started learning or playing during the pandemic represents the genesis of the second wave of opportunity for music creator tools, with the first wave being formed by the 7% of consumers that bought an instrument in the prior 12 months and the 5% that make music with software.

The rapid growth of new music creators comes alongside an unprecedented period of transformation in the creator tools space which complicates the task of assessing the market opportunity. Things are complicated further by the fact that this evolution represents the birth of a whole series of sub-markets which currently fall under the broad category of ‘creator tools’. This is why we define the market opportunity through three related total addressable markets (TAMs) rather than a single one (which the above graphic illustrates conceptually):

Core TAM: The core TAM is the number of people that play instruments, encompassing a wide variety of musicians, ranging from enthusiast guitar players through to members of classical ensembles. 

Meta TAM: This is the core TAM plus those consumers that intend to start learning instruments. The combination of the catalysing effect the pandemic had on musicianship and the surge of online learning tools – especially YouTube tutorials and tools like guitar tab apps – is increasing the number of people becoming musicians. 

Produce or record music: These people record or produce their own music through a combination of analogue and digital tools, though with a very strong shift towards digital. The cultural significance is that by using tools such digital audio workstations (DAWs), their creative workflows are being shaped by sound engineering rather than purely musicianship. 

As with all markets, the music creator tools space faces a combination of drivers and inhibitors. The key drivers are 1) a rapid growth in music creators, 2) streaming opening up global audiences, 3) computer production becoming more widespread across more genres. The key inhibitors are 1) complexity of learning skills, 2) artists struggling to cut through and earn income, 3) an increasingly competitive marketplace. With these tailwinds and headwinds considered, the outlook is strong for creator tools but its sub components will evolve at very different rates, largely defined by the scale of the addressable markets but also the degree to which players are willing to embrace new market shaping trends such as growing demand for ease of use, the rise of creator community platforms and the shift to subscriptions.

If you want to learn more about the report and the datasets included then please email stephen@midiaresearch.com