Sep twenty fifth 2021
A ROCKSTAR’S WELCOME greeted Universal Music Group when it launched on Amsterdam’s Euronext change on September twenty first in Europe’s largest itemizing of the yr. Giddy traders all however threw their knickers on the newly public firm, whose share worth completed the day up by 36%, valuing the world’s greatest report label at €45bn ($53bn).
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Not way back Universal seemed like a flop. In 2013, as digital piracy ravaged the music trade, SoftBank, a Japanese group, bid €7bn for the label. Vivendi, Universal’s French proprietor, was thought mad for turning down the supply. In truth the choice was impressed. A streaming increase has since lifted worldwide recorded-music revenues by half. Two-thirds of final yr’s gross sales of $22bn went to the three “major” labels: Universal, Sony Music and Warner Music Group.
Investors’ rush owes partly to a dearth of other tickets to this scorching market. Sony Music is locked inside a conglomerate. Warner went public final June, since when its worth has risen by half (together with a bump of 12% on September twenty first, amid the Universal frenzy), however its catalogue is half the scale of Universal’s. The itemizing of Universal offers traders the possibility eventually to get their fingers on what JPMorgan Chase, a financial institution, dubbed a “must-own asset”.
Now, after their chart-topping run, the majors face the equal of a tough second album. Streaming is nearing saturation-point within the wealthy world. Three in 5 American houses subscribe to a service like Spotify, up from one in 5 in 2016. DIY audio instruments are serving to unsigned artists take a small however rising share of the enterprise. And regulators are asking whether or not labels are giving artists a justifiable share of streaming earnings. On September twenty second Britain’s authorities requested a contest probe into the music trade.
Keeping the hits coming will due to this fact depend on conquering rising markets, the place revenues are decrease (Spotify prices the equal of $4 monthly in South Africa, lower than half what Americans pay), and on licensing music to new types of media. This yr Universal has signed offers with TikTok and Snap, permitting the apps’ customers to pattern clips from Universal’s again catalogue of their movies. Future offers with gaming, streaming and different leisure platforms are probably. “Fortnite”, a web based recreation, and Roblox, which lets customers make their very own video games, have already change into common virtual-concert venues. Next yr ABBA, a troupe of septuagenarians on Universal’s books, will seem in a sequence of gigs in London as digital “ABBA-tars”. As the streaming increase slows, labels will want new methods of bringing in cash, cash, cash. ■
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This article appeared within the Business part of the print version beneath the headline “Gimme! Gimme! Gimme!”
