Music Majors in the Streaming Economy: Universal Music Group

Universal Music Group’s parent company Vivendi announced plans to spin-off the world’s largest music major company as a standalone entity on the stock market. It is no incident that the French media and telecommunication conglomerate Vivendi considers such a strategy. Spotify’s public listing early in April this year was a financial success and it seems that investors currently assess music as a good investment. The overall economic climate is positive and Universal Music Group (UMG) performed very well in the past few years – mainly because of significantly increasing revenues from music streaming. In the last annual report for the financial year 2017, UMG posted a total revenue of € 5.67bn (+ 25 percent compared to 2012) and an EBITA of € 761m (+ 45 percent compared to 2012). Music streaming is the main driver of revenue and profit growth. Thus, revenue from streaming increased by almost 33 percent from 2016 to 2017 to EUR 1.97bn contributing more than a third to UMG’s total revenue in 2017.[1]

The further analysis highlights how UMG had to reinvent itself as a comprehensive music service company with a focus on music streaming and providing a wide range of services far beyond the traditional recorded music business.

Advertisement

Book review: The Economics of Music by Peter Tschmuck

My new book “The Economics of Music” is now avaiable in the bookstores. “The Economics of the Music” is a concise, scientifically grounded textbook on the economic fundamentals of the music industry in particular and the music economy in general. It aims to highlight the economic principles that govern the music business by analysing music as an economic good that is protected by copyright law. The book therefore includes a chapter on the microeconomics of music as well as a chapter on the economics of music copyright that is mainly based on findings of institutional economics. The main parts of the book focus on the different sectors of the music industry – music publishing, sound recording, the live music market, and secondary markets such as media and advertising – in order to explain the network of actors in those sectors and how these markets are organised and linked. The music labour markets are treated in a separate chapter. It highlights different income streams for musicians, occupational careers in the music business, and music-related occupations in the wider music economy (education, advocacy, lobbying, etc.). Since digitization has a tremendous impact on the music business, a final chapter on the “Digital Music Business” highlights the new rules, structures, and processes that were established by the digital revolution in order to foreground the structural break the music economy underwent. The last chapter, therefore, refers back to the opening chapter on “A Short Economic History of the Music Business,” which provides an overview from music patronage  to the current digital music economy.

Peter Tschmuck, 2017, The Economics of Music. Newcastle-upon-Tyne: Agenda Publishing.

Hardback £55.00 | $70.00 ISBN 9781911116073

Paperback £16.00 | $23.00 ISBN 9781911116080

e-book £16.00 | $23.00 ISBN 9781911116097

Buy a book copy here: Agenda Publishing