Let me take you back to the 2000s when music CDs were a popular thing but then the internet came up and allowed people to download music tracks illegally, digital piracy increased dramatically that almost shattered music sales.
Between 2004-2009, the global music sales fell by 30% so that was the cost the industry had to pay.
Cut to the digital world
Needless to say, none of that is in existence anymore. There’s no need to download songs illegally when you have a paid subscription with either Spotify or Apple music. Long story short, digital streaming with its anti-piracy tech brought an end to the online piracy plaguing the space.
It was a win-win for everyone, the labels like Universal Music Group, artists, and streaming platforms.
Universal Music Group’s massive win!
Universal Music Group (UMG), a brand synonymous with world-class artists like Drake, Ariana Grande, Billie Eilish just debuted in Amsterdam’s stock market, the investor sentiment was so positive for the company that it propelled its value from $32.8 Bn in August to $52.8 Bn in September. The company touched the $55 Bn mark and became the largest listing in Europe this year and the most valuable music brand worldwide.
Day 0 for streaming
The fact that digital streaming of audio is really high but the management of UMG believes it’s nowhere near its peak potential. The digital streaming rate across the world is quite low, hence there’s a huge opportunity in that under penetration. Plus, newer avenues are emerging for brands like UMG to make money like the most common one is licensing revenue. Out of the total $22 Billion global music sales in 2020, 10% was accounted for by Licensing revenue or royalties that UMG earns through the music on social media, TV shows, gaming, etc.
Closing deals
A lot of credit goes to the top brass at UMG that’s been doing all things right!
1. To start with, it signed an early deal with Apple music.
2. Deal with Spotify in 2017
3. Deal with FB, IG, Messenger in 2017
4. Deal with TikTok in 2021
The deals help UMG to make royalties!
What does the future look like?
The truth is that we’re merely at the tip of the iceberg in terms of music consumption, and UMG is in the process of becoming the next-gen music company but the sour relations between the artists and streaming players are not uncommon, hence as the revenue pie and the industry enlarges, the fight between the stakeholders (artists & platforms) might intensify too.
What do you think, what does the future look like?