The dominance of major labels is not a new dynamic for record industry observers. However, the recent increase in revenue signaled to investors that the record industry is ready for primetime, so here’s a quick rundown of some high profile moves. Warner Music Group, owned by Access Industries, went public last summer
and is currently valued at a little over 10% higher than its IPO price. Universal Music Group, owned by media conglomerate Vivendi, continues its slow march to an IPO. After selling 20% of the company to Tencent, the Chinese media giant; another 10% will go to Pershing Square Tontine Holdings
(PSTH), a special-purpose acquisition company; and 60% of the company will go on the Amsterdam stock exchange
later this year (Vivendi will hold onto the remaining 10%). Finally, Sony Music just bought AWAL for over $400 million
, while its parent corporation invests hundreds of millions into Epic Games, the creator of Fortnite.
The highly financialized state of the major labels even includes french independent label Believe
, which just IPO’d on the Paris Euronext. This is an almost unprecedented boom time for the global
The highly concentrated nature of the industry might be easy to take as the norm, but forty years ago, there weren’t just three major labels. Entire parts of the industry could be self-sustaining without engaging much with a Polygram or EMI Records. In 2021, however, when over 80% of record industry revenue is derived from streaming and the terms of those deals are decided by three major labels, it’s hard to find space for true independence.
This report is part of a growing wave of governments taking a closer look at the concentration of power within private industry and trying to negotiate what to do to address artists’ concerns. While we’re still waiting to get the final recommendation from the UK Parliament hearings on digital music, Kevin Brennan, a Labour MP, is proposed a bill
that would require companies like Spotify to make additional payouts to artists. In Canada, there is a bill
to redirect some industry profits back into Canadian industries and require company promotional channels to include a certain amount of Canadian content. (There are concerns with this proposal
around implement of such regulations and the possibility to favor already established Canadian acts.) Then, in the United States, the appointment of antitrust scholar Lina Khan to the Federal Trade Commission and the introduction of several anti-monopoly bills
suggest that music’s biggest players may want to keep an eye over their shoulder. Though these reforms are still in the pipeline, this offers a glimpse into what governments may pursue in the coming years.
This report initially caught my attention because it wasn’t making any sweeping proclamations about the record industry; it was simply trying to understand where the money is going. The answer suggested by the findings is that a majority of the money is going to record labels (mainly Sony, Warner, and Universal). Though I’m certainly critical of streaming platforms, it’s record labels, not Spotify or any other tech company, that set the primary economic terms of streaming. Hopefully this report can provide assistance and guidance for groups across the globe trying to address the many, many issues facing musicians.