Against all predictions, music is making money again

Against all predictions, music is making money again

Anyone who predicted in 2009 that a record company would become one of the largest IPOs in Amsterdam would probably have been considered crazy. It was the eighth year in a row in which worldwide music revenues fell, partly due to the ability to copy CDs and illegally download music on a large scale. Store sales imploded; Free Record Shop divested the Northern European stores to focus on the Benelux; the beginning of the end of the CD case.

Twelve years later, the reality looks very different. The world’s largest record company Universal Music Group, which releases music by artists such as ABBA, The Beatles, Coldplay and Billie Eilish, will make its entrance on the Amsterdam stock exchange on Tuesday. Analysts overestimate each other in their expectations. While the estimated valuation in August was still at an average of 30 billion euros, that increased to 40 billion the day before the IPO.

The French media conglomerate Vivendi, currently 70 percent owner of Universal, will hold a 10 percent stake after the IPO. The rest is brought to the stock market. A consortium led by the Chinese Tencent – ​​owner of TikTok – retains 20 percent ownership. The remaining 10 percent belongs to Pershing Square, the investment company of American investor Bill Ackman. The latter definitely sees a growth market in the music industry, he said in a jubilant presentation to investors this summer: “You need food and water to survive, but then comes music.” His suggestive addition: you cannot charge royalties on food and water.

Reinvented

Whatever Ackman wanted to say: there is money to be made with music again. The industry has reinvented itself by turning its sales and distribution model upside down: no longer through the sale of cassettes, CDs and LPs, but through subscriptions to streaming platforms such as Spotify, Soundcloud and Deezer. Instead of a one-off 20 euros per album, consumers pay 10 euros each month for more music than they can imagine.

“For the industry, this turnaround has been contradictory, if not totally controversial,” Universal chief executive Sir Lucian Grainge said in a written response. “But by partnering with tech companies big and small, we contributed to a mass migration of consumers (…), giving us reach we had never seen before.”

Figures from the international music sector organization IFPI underline Grainge’s reading of how the industry has changed. The tipping point was in 2011, when global streaming revenues began to grow exponentially — from $0.6 billion to $4.6 billion in 2016. Last year, streaming revenue outstripped all other revenue sources combined, and total revenues are of the music industry ($21.6 billion) almost back to pre-piracy levels.

Also read: Why does the musician sell his music?

Universal Music Group (about 9,000 employees worldwide, turnover 7.4 billion euros) calls itself a media company that focuses on managing and promoting artists and their music. The scout young talent offers them the opportunity to further develop their music and eventually puts the hit-to-be on the market. In some cases, the label arranges producers, studio space and, nowadays indispensable, a manager for their social media.

A small amount at a time

In addition, the label also keeps track of the counter: every time a song by a Universal artist is played via Spotify, YouTube, TikTok or the radio, a small amount is charged. This, added to the income from streams, accounted for the lion’s share of the turnover (5 billion euros). Universal manages the rights of major artists such as The Rolling Stones, ABBA and Marco Borsato. The value of these became apparent when Bob Dylan sold the rights to his entire musical oeuvre to Universal at the end of last year. It is reported that about 300 million dollars (256 million euros) have been paid for it.

Despite the label’s services, there are regular criticisms from artists, who feel that the royalty amount they receive is very small compared to the streaming platforms and the record labels. In the United Kingdom, two organizations under the name ‘Keep Music Alive’ have been conducting a public campaign since last year to better pay musicians and songwriters. The problem for artists is that they often can’t get around Universal if they really want to break through, JP Morgan analysts note in their report: “Where the barrier to distribution has never been lower for artists, the barrier for success higher than ever. Their greatest chance of success is to work with UMG.”

Universal wants to develop new ways to generate revenue in the coming years. For example, in addition to rising streaming revenues, it expects to earn money from so-called ‘Topfans’ – music lovers who are willing to pay extra for exclusive music or special merchandise. In addition, the streaming platforms offer a growing wealth of marketing data about the popularity of artists by country.

Worldwide music

It offers the label great opportunities to market music worldwide, says CEO Sir Lucian Grainge. “High growth potential markets, especially Latin America, China, Africa, India and Southeast Asia, are increasingly contributing to revenues. As the industry grows, so does the rewards for successful artists, and as a company we believe we can massively increase the chances of artists achieving global success.”

Universal will be listed from Tuesday. The French owner Vivendi set the reference price on Monday after trading at 18.50 euros per share, which would put the total market value of the record label at 33.5 billion euros. It may be clear: video didn’t kill the radio star.

Against all predictions, music is making money again
Source link Against all predictions, music is making money again

Internet Explorer Channel Network
News Related

OTHER NEWS

UN: new climate plans fall seriously short

The revised climate plans made by more than a hundred countries in the run-up to the climate summit in Glasgow, which starts on Sunday, are seriously lacking. They are hardly ... Read more »

Toy maker Hasbro suffered from distribution problems

Photo: ANP US toy maker Hasbro, known for example for Monopoly, Transformers, Play-Doh and My Little Pony, suffered some problems in the worldwide distribution in the third quarter due to ... Read more »

$2.35 billion tidal lagoon project with underwater turbines planned for UK

Plans for a £1.7 billion ($2.35 billion) project in the U.K. incorporating technologies including underwater turbines, floating solar power and battery storage have been announced, with those behind the development ... Read more »

Harsh winter in Europe may lead to further gas price growth — Wintershall Dea

On Tuesday, gas prices in Europe hit $1,090 per 1,000 cubic meters Read more »

Smart World Developers to invest Rs 3,000 cr in two low-rise projects in Gurgaon

Real estate firm Smart World Developers plans to invest close to Rs 3,000 crore for two residential projects spread across 6 mn sq ft in Gurugram. In the long-term, the ... Read more »

Rakesh Jhunjhunwala-backed Akasa Air to finalise aircraft type by November

Ace investor Rakesh Jhunjhunwala-backed Akasa Air is likely to finalise its aircraft type by next month, CNBC-TV18 reported. It is in talks with lessors for Boeing Max Aircraft and with ... Read more »

Cipla Q2 Result | Profit comes in at Rs 711 crore, revenue at Rs 5,520 crore

Indian pharmaceutical major, Cipla Limited, has declared its results for the 2nd quarter ending September 30, 2021. It has reported a consolidated profit after tax of Rs 711 crore for the quarter, increasing from ... Read more »

DNB definitively loses GSFS pension fund case

On Tuesday, the Trade and Industry Appeals Tribunal (CBb) definitively canceled the fines that DNB had imposed on both the asset manager and the pension fund and the four directors ... Read more »

UOB, Fave team up to offer largest rewards programme in Singapore

SINGAPORE – UOB Bank is partnering smart payment fintech platform Fave to launch a new rewards programme, the bank’s first initiative under its new unified digital platform, UOB TMRW. The ... Read more »

Elon Musk attacks Biden's unrealized gains tax — as his wealth soars

Elon Musk, whose wealth is almost entirely based on his ownership of stock in his companies, would be particularly vulnerable to the tax plan. Win McNamee/Getty Images Tesla CEO Elon ... Read more »

Parent company DAF makes thousands less trucks due to chip shortage

Photo: ANP Truck manufacturer Paccar, the parent company of DAF, is feeling the worldwide chip shortages. As a result, the company delivered about 7,000 fewer trucks in the quarter than ... Read more »

Peloton or the gym? More people are choosing both. What that means for the fitness industry

Megan Thompson works out on her exercise bike at home in New York City.Michael Loccisano | Getty Images Julia Yuryev still hasn't caved and purchased a Peloton Bike, but the ... Read more »

NAM and is close to legal battle over account ‘Groningen'

The conflict between the Nederlandse Aardolie Maatschappij (NAM) and the government over the payment of the reinforcement operation in Groningen is increasing. The NAM does not want to pay more ... Read more »

Indian Hotels hopes to wipe out Rs 3,571 crore debt in 18 months

The Indian Hotels Company Ltd., the country’s second-largest hotel chain that’s promoted by the Tata Group, hopes to pay off all its debt by April 2023 as it emerges from ... Read more »

NTSB head criticizes Tesla's self-driving features, calls them 'misleading'

The head of the U.S. National Transportation Safety Board on Tuesday doubled down on criticisms of Tesla's driver-assist systems following several fatal crashes in recent years, calling the company's use ... Read more »

RBI imposes monetary penalty on two cooperative banks

The Reserve Bank of India on Friday kept key policy rates unchanged and also retained its accommodative stance. This means that existing and new borrowers will continue to enjoy benign ... Read more »

Simply Save | Opted for the new tax regime? Know the nitty-gritties of filing tax returns this year

The return-filing season is in full swing, with the extended due date – December 31 – just two months away. This year, the most important change in the income tax ... Read more »

Central Bank of India Q2 net profit jumps 55% to Rs 250 crore

Public sector Central Bank of India on Tuesday reported an over 55 percent jump in net profit at Rs 250 crore for the quarter ended September. The lender had posted ... Read more »

Bajaj Finance Q2 results | Profit jumps 53.5% to Rs 1,481 crore, assets under management grow 22%

Leading non-banking finance company Bajaj Finance has clocked a 53.5 percent year-on-year growth in consolidated profit at Rs 1,481 crore in September 2021 quarter following lower provisions and improvement in ... Read more »

Poultry farmers told to keep chickens indoors because of bird flu outbreak

All poultry farmers in the Netherlands have been ordered to keep their birds inside, following an outbreak of the highly contagious bird flu strain at an organic poultry farm in ... Read more »

Russia to introduce zero import duties on cocoa products on constant basis

A respective instruction was made by Russian PM Mikhail Mishustin Read more »

Dave Chappelle's documentary being pulled by distributors amid controversy

Comedian Dave Chappelle has been slammed for declaring in his special that “gender is a fact” and identified himself as a “TERF,” or “trans-exclusionary radical feminist.” ALEX EDELMAN/AFP via Getty ... Read more »

Top five Indian IT firms added 1.7 lakh employees between January and September 2021

Most of the IT firms have revised their fresher hiring targets for the year given the sustained demand. (Representative image) Top five IT services companies – TCS, Infosys, HCL Tech, ... Read more »

Saudi Aramco: More investment needed in oil production

Photo: ANP The CEO of the Saudi state oil group Saudi Aramco believes that more should be invested in oil production because the production capacity in the world is declining. ... Read more »

No agreement between EU energy ministers on new measures

Photo: ANP EU countries remain divided on how to tackle the energy crisis. The energy ministers failed to agree on new measures in the short term during a scheduled meeting ... Read more »

AI Code of Ethics will help eliminate risks linked with use of AI — Infowatch

The Code establishes general ethical principles and standards of conduct to guide those involved in activities using artificial intelligence Read more »

GE lifts 2021 earnings forecast, flags 'challenging operating environment'

The General Electric Co. logo is seen on the company's corporate headquarters building in Boston, Massachusetts, U.S. July 23, 2019Alwyn Scott | Reuters General Electric announced an upward revision to ... Read more »

Independent content creators ‘underpaid', ‘overworked' and close to burnout: Report

Independent content creators–those who have tens of thousands of subscribers on online channels–are stressed and under-compensated, going by the largest survey of creators ever done. This when social-media platforms seem ... Read more »

Why U.S. gasoline prices vary so much from state to state

As gas prices climb to seven-year highs in America, drivers in some states are hit much harder than those in others. The average gas price in the U.S. was $3.378 ... Read more »

Verizon partners with Amazon to use Project Kuiper satellite internet for rural broadband

INDIA – 2019/08/30: In this photo illustration a popular wireless communication application Verizon logo seen displayed on a smartphone. (Photo Illustration byAvishek Das | SOPA Images | LightRocket | Getty ... Read more »

Digitization continues, but SMEs lag behind

The digitization of companies in the Netherlands has accelerated since the corona crisis. According to figures from Statistics Netherlands, in 2019 we were already the fourth ‘most advanced digital economy’ ... Read more »

Promoter IDFC writes to IDFC First Bank on unlocking value for shareholders

IDFC Financial Holding Company, a subsidiary of IDFC Ltd, has triggered a conversation with IDFC First Bank on its eventual exit from the promoter position after the expiry of the ... Read more »

IRB Infra to raise Rs 5,347 crore from GIC & Spain's Cintra; deleveraging & growth capital deal drivers

Representative Image (Source: ShutterStock) IRB Infrastructure Developers Limited has struck two separate equity fundraises through preferential allotments to Cintra, an arm of Spanish infrastructure major Ferrovial and Singapore’s GIC, the ... Read more »

Subscribe to FSN E-Commerce Ventures: Prabhudas Lilladher

Prabhudas Lilladher IPO report on FSN E-Commerce Ventures We recommend Subscribe Rating to IPO of FSN E-Commerce Ventures which operates Nykaa, India’s largest Omni channel play across Beauty and Fashion ... Read more »

Raffles Education responds to RegCo queries on annual report, as Oei Hong Leong dumps his shares

SINGAPORE (THE BUSINESS TIMES) – Billionaire Oei Hong Leong has cut his stake in Raffles Education Corp (REC) to less than 1 per cent after dumping around 90 million shares ... Read more »

ABP stops investing in fossil fuel producers

”We are withdrawing from investments in fossil fuel producers (oil, gas and coal). The board of ABP has decided this after recently published climate reports. There is a lot of ... Read more »

Buying gas from third countries will cost Moldova more than from Russia, says Kremlin

According to Russian presidential spokesman Dmitry Peskov, work is underway to agree on the terms of the contract between Moldova and Gazprom Read more »

Subscribe to FSN E-Commerce Ventures: Hem Securities

Representative image Hem Securities IPO report on FSN E-Commerce Ventures FSN E-Commerce Ltd have a diverse portfolio of beauty, personal care and fashion products, including its owned brand products manufactured ... Read more »

IKEA buys former Topshop store in London's Oxford Circus

IKEA's strategy has recently shifted from occupying large warehouse-like outlets on town and city outskirts to using inner-city properties to cater to changing shopper behaviour and increasing urbanisation. Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic