Universal Music Group goes public
The music industry is experiencing a renaissance and record companies are adapting to the digital age. Universal Music Group, the world’s largest music company, made a flying debut on the Amsterdam Stock Exchange on its first day of trading yesterday after being separated from Frenchman Vivendi.
Shares of the label, which represents mega-artists like Lady Gaga and Taylor Swift, jumped nearly 40% at the close to give the company a market value of $ 55 billion.
Not so long ago the industry was on its heels
In the decade leading up to 2009, when we all switched from copying CDs at Target to downloading Limewire files to our iPods, music sales fell 56%, according to the Recording Industry Association of America.
And the place of record companies in the digital age of music seemed uncertain. But instead of backing down, some like Universal have started changing their strategies to earn royalties on streaming services and social media platforms.
The CEO of Universal Music and, judging only by his name, part-time supervillain Lucian Grainge have taken all the necessary steps to prepare the company for success in the new ecosystem. Here’s a quick timeline from the NYT:
- In 2013, Universal Music struck a deal with Apple to bring its artists to Apple Music two years before the service began.
- In 2017, he worked out favorable license terms with Spotify.
- Also in 2017, it became the first major music company to strike a deal with Facebook, licensing it to Facebook, Instagram, Messenger and the virtual reality platform Oculus.
- Earlier this year, the label announced a global deal with TikTok.
Today, Universal Music makes 70% of its revenue from streaming and publishing. The label predicts that its revenues will increase by at least 10% this year.
And all the losses due to the pandemic of live concert closures have been offset by a giant increase in streaming usage. Global streaming revenues increased 20% in 2020, according to the International Federation of the Phonographic Industry.
Zoom out: The battle over who gets the biggest share of the music industry’s revenue, from artists and labels to streaming services, is intensifying.—JW