| If you own UMG you own a royalty on people listening to music. I can't think of an asset I'm more confident in being consumed over time... You need food and water to live but music comes next. | | | | |  | Labelle (l to r: Nona Hendryx, Patti LaBelle and Sarah Dash) in the 1970s.
(Gems/Redferns/Getty Images) | | | | | "If you own UMG you own a royalty on people listening to music. I can't think of an asset I'm more confident in being consumed over time... You need food and water to live but music comes next." | | | | Public Image, Unlimited
By the time you see this email, UNIVERSAL MUSIC GROUP, which went public this morning on Amsterdam's Euronext stock exchange with a healthy jolt, will be worth anywhere from $mind-boggling to $holy-s***.
What, one wonders, will the artists get?
It's been a dizzying few years for the world's biggest record company. VIVENDI, which was UMG's parent company from 2000 until today, rejected an $8.5 billion offer for it in 2013, when the music business was in the midst of a more-than-decade-long slide. By the time China's TENCENT began buying into UMG in 2019 (it now owns 20 percent), the industry was on the rebound and the company's valuation had ballooned to $30 billion. When BILL ACKMAN's special purpose acquisition company PERSHING SQUARE tried to buy a stake in June, it was up to $40 billion; that deal fell through, but Ackman eventually picked up 10 percent of UMG through his PERSHING SQUARE HOLDINGS hedge fund. On Monday, Vivendi set the reference price for today's stock listing at 18.5 euros per share, which would value the world's biggest record company at $39 billion. The stock opened today quite a bit higher than that.
The timing for the public listing appears to be phenomenal for the home of DRAKE, BILLIE EILISH, the WEEKND and (maybe more important, considering the off-the-chart value of the catalog market) the BEATLES and QUEEN. The streaming market, which has fueled the industry's comeback, continues to boom, and just a week ago the RIAA reported that the recorded music business in the US enjoyed a 27 percent growth in revenues in the first half of 2021. UMG has reported considerable growth in 2021 as well. And as the Wall Street Journal notes (paywall), if you want to invest in the recorded music market, there are few other major options: Less than 15 percent of WARNER MUSIC's stock is available for public trading, and the only way to invest in SONY MUSIC is to buy stock in its much bigger parent company.
On the other hand, publishing companies like ROUND HILL and HIPGNOSIS and the streaming companies themselves offer alternatives for investors, and the booming streaming market may be running up against a period in which much of its potential growth is in emerging markets where subscription prices will have to be lower than in Europe and North America. Not everyone agrees with the rosy assessments of analysts and banks—don't forget, Bill Ackman's initial SPAC deal fell through just a few months ago because his own investors balked. There are always caveats.
But mostly there's optimism around may be "the music business story of the year." At least on the business end.
UMG's well-liked CEO, LUCIAN GRAINGE, who has shepherded the company through its growth years, is getting a bonus for taking the company public that could easily exceed $150 million, depending on the company's market cap. Using current music-industry math, a UMG artist like Drake, Billie Eilish or the Weeknd—or any of the thousands of more modestly successful artists whose creative work is behind the rapid growth of the streaming companies whose existence is behind the rapid growth of UMG—would need their songs to be streamed 37.5 billion times in SPOTIFY to earn the equivalent of that bonus. Of course most artists (and songwriters and producers and everyone else involved in making music) aren't looking for that, and they aren't standing by their mailboxes waiting for stock options to show up either. What they generally want is fair and reasonable pay for their work. And they may find themselves wondering today how those millions and billions of dollars will trickle down into the day-to-day royalty flow. And asking what it means when their record company is worth 11 figures but streams are still paying out in fractions of fractions of a penny.
The strict business answers to those questions may be easy to answer. But the optics will rattle around in the days to come, along with Universal's stock price.
Rest in Peace
SARAH DASH, whose piercing soprano cut through several decades' worth of popular music. She was one-third of the '70s soul and funk powerhouse Labelle (and of that band's '60s predecessor, Patti LaBelle and the Blue Belles), and went on minor success with a disco- and dance-flavored solo career and major success as a backing and featured vocalist with the Rolling Stones, Keith Richards, Nile Rodgers and others.
| | | | Matty Karas (@troubledoll), curator |
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| | Hartwig Masuch thinks the music industry is putting too much of its money in the wrong places | | by Tim Ingham | | The BMG boss opens up on frontline vs catalog investment. | |  | | Reuters |
| | Universal Music valued around $39 billion ahead of stock market debut | | by Matthieu Protard and Gwénaëlle Barzic | | Universal Music Group, the business behind singers such as Lady Gaga, Taylor Swift and The Weeknd, is valued at around 33.5 billion euros ($39.30 billion) ahead of the record label's stock market debut in Amsterdam on Tuesday. | |  | | NY Daily News |
| | Sarah Dash, groundbreaking R&B singer of Labelle fame, dies at 76 | | by Karu F. Daniels | | Patti LaBelle called her "the one with the silver throat." | |  | | Please Kill Me |
| | Labelle: The Trio That Broke All the Molds | | by Fiona McQuarrie | | Labelle, the trio of Patti LaBelle, Nona Hendryx and Sarah Dash, turned the music world on its head, with their seamless vocalizing, wild 'Space Deco' costumes and extravagant stage shows. Their albums, and thematic concerns in the 1970s influenced generations of young women. | |  | | Water & Music |
| | Music livestreaming's total (un)addressable market | | by Cherie Hu | | Even as livestreaming platforms continue to raise more funds and announce marquee celebrity partnerships, demand for music livestreams has gone down significantly from its peak last year. | |  | | Billboard |
| | The Business of Being J Balvin | | by Leila Cobo and Dana Droppo | | J Balvin is one of music's biggest global superstars. But at age 36, the Colombian singer has an even more ambitious three-year plan. "I want to be the first Latino under 40 to become a billionaire," he tells Billboard. | |  | | Slate |
| | Did Drake Just Prove He's Bigger Than the Beatles? | | by Chris Molanphy | | With his latest Billboard Hot 100 record, he's one step closer to being bigger than the biggest band of all time. Or is he? | |  | | MEL Magazine |
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| | Biz Markie Had Exactly What Hip-Hop Needed | | by Drew Fortune | | Rap's pioneering "Clown Prince," as remembered by his friends, family, collaborators, and admirers. | | |  | | The Undefeated |
| | The resurrection of Ja Rule | | by David Dennis Jr. | | He was one of the most maligned rappers of the past decade, but that all changed in one Verzuz battle. | |  | | Synchblog |
| | OK Computer: Will the Next Phase of the Music Industry Take Place Inside the Metaverse? | | by Ben Gilbert | | The music industry is experimenting more and more with the metaverse. Is this the future or a marketing-led tech fantasy? | |  | | The New York Times |
| | The 18-Year Wait for New Wrens Music Is Over. Sort Of | | by Hugo Lindgren | | The New Jersey indie rockers promised a final album. Their day jobs and families have expanded, but the band's two creative forces kept writing - separately. | |  | | Streaming Machinery |
| | What exactly is the 'Artist' in pop music? | | by G.C. Stein | | The "artist" as usually defined in pop music is quite a peculiar concept. And it can mean several different things. | |  | | i-D Magazine |
| | The photographer capturing 70s bands before they were famous | | by Sarah Moroz | | Pierre René-Worms snapped candid portraits of the era's biggest acts, from Debbie Harry and Grace Jones to Joy Division. | | | | Vulture |
| | R. Kelly's Sex-Crimes Trial Nears Its Bitter End | | by Victoria Bekiempis | | The prosecution has rested, and the defense is starting its case. | |  | | JazzTimes |
| | Wadada Leo Smith on Eight Freedom Decades | | by Jackson Sinnenberg | | Trumpeter and composer Wadada Leo Smith looks back on the most productive period of his life-and forward to turning 80. | | | | Billboard |
| | Eco-Conscious, Safety-Centric, Tech-Savvy: 35 New & Renovated Venues to Watch in 2021 | | by Dave Brooks and Taylor Mims | | As live-music grosses vanished amid the COVID-19 pandemic, venue companies invested in health, safety and eco-friendly measures to entice fans back to shows. | | | | The New York Times |
| | 'The Composer at the Frontier of Movie Music' | | by Jamie Fisher and Julia Whelan | | Nicholas Britell's scores -- for "Succession," "Moonlight" and "The Underground Railroad," among others -- suggest new ways of writing for film and television. | |  | | NPR |
| | This French Pianist Has Been Playing For 102 Years And Just Released A New Album | | by Eleanor Beardsley | | Colette Maze, now 107, began playing the piano at age 5. She defied the social conventions of her era to embrace music as a profession rather than as a pastime. She has just released her sixth album. | | | | 1983 solo single for Megatone Records. |  | | | Video of the day | | "Live on 'Soul!'" | | Labelle | | 1972 performance on the public television show "Soul!" |  | | YouTube |
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1972 performance on the public television show "Soul!" | | | Music | Media | Sports | Fashion | Tech | | "REDEF is dedicated to my mother, who nurtured and encouraged my interest in
everything and slightly regrets the day she taught me to always ask 'why?'" | | |  | | | Jason Hirschhorn | | CEO & Chief Curator | | |  |
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