Welcome to Music Business Worldwide’s weekly round-up – where we make sure you caught the five biggest stories to hit headlines over the past seven days.
It’s been a pretty quiet summer so far, right? Not any more.
This week, a string of huge news stories hit the headlines. For those with an economically-attuned brain, there was the latest financial results from Sony Music and Universal Music Group – which both showed major growth in streaming revenues.
Elsewhere, Spotify’s Troy Carter announced his departure from the company, Apple Music confirmed that it has more subscribers than Spotify in North America and Warner Music Group secured a bold media acquisition.
Oh yes, and there was the small matter of Vivendi confirming its plan to sell up to 50% of the biggest music rights company on the planet.
See below for what you need to know…
The music industry was knocked sideways this week by the news that media empire Vivendi is set on the idea of selling up to 50% of Universal Music Group.
You should, however, always read the fine print: Vivendi is clearly attempting to cash in on music’s current financial buoyancy… while keeping its hands firmly on the steering wheel.
The Paris-based company says it will flog a minority stake in UMG to “one or more strategic partners” in order to “extract the highest value”. You can see why such restrictions are necessary: with Group revenues of €2.63bn ($3.18bn), Universal contributed 40.7% of Vivendi’s total sales in H1 2018.
So, who qualifies as a “strategic partner”? That’s the $40bn question. One obvious candidate is Tencent – a company which has previously told MBW it would “consider investing in a really important record label”. Tencent also owns stakes in Spotify, Indian streaming service Gaana and its own digital platforms, QQ Music, Kuwo and KuGou. Another Chinese suitor, Alibaba, could also be a good fit.
One dark horse might be Liberty Media. The US conglomerate has rocky legislative history with Vivendi, but that didn’t stop Liberty boss John Malone making a play for Universal in 2015 – offering, we hear, around $15bn for the whole caboodle. Talk about a full-stack: Liberty owns stakes in everyone from Live Nation (around 34%) to Sirius XM (71%) and even Pandora, via Sirius’s 16% shareholding in the streaming music platform.
Other old flames might also come into play: Japanese giant Softbank, for example, made an $8.5bn bid for UMG in 2013. (Considering that UMG is now being valued anywhere between $20bn and $40bn, this was a smart rebuff from Vivendi.)
Regulatory issues notwithstanding, it might make sense for Spotify or Apple to bid – if only to benefit from a slice of the billions they pay to UMG in royalties each year. Telcos (AT&T, Verizon, Sprint etc.), meanwhile, might see UMG as a shortcut to strong content play.
But what about the one that would get everyone really hot under the collar: Google. Not up Larry Page’s street? Don’t be so sure. You’re forgetting that, in 2016, MBW revealed that the big G officially enquired as to whether it could buy 50% of Sony/ATV…
Silence please, class. It’s time for your numeracy exam.
Sir Lucian Grainge goes for a long lunch in Los Angeles. It’s with an old friend, and time slips away; so much so, two hours pass from the moment he sits down to the point he leaves the restaurant.
Over in New York, Rob Stringer settles in for a morning meeting which lasts exactly the same duration. (It’s a taxing one, with Japanese translation, corporate forecasting – the lot.)
Question: how much money did Grainge and Stringer’s companies jointly turn over from streaming in this 120 minute window?
Shall we count the number of senior Spotify executives that MBW has told you are leaving the company in the past few months? Here goes:
(i) Kevin Brown; (ii) Angela Watts; (iii) Mark Williamson; (iv) Dave Rocco; (v) Tuma Basa; (vi) George Ergatoudis; (vii) Rob Harvey; (viii) Stefan Blom.
That’s so many, we just had to Google the symbols for Roman numerals over ‘v’. These folks were joined this week by Andrea Ingham (great last name) who quit as Spotify Oz/NZ sales boss to join Buzzfeed.
Then there was the small matter of Troy Carter announcing his official departure from Spotify, which will arrive in September. (His department, Creator Services, is now being merged with Shows & Editorial by SPOT.)
In total, then, that’s ten (!) senior Spotify executives marching out of the company in the past eight months. Coming the other way, Spotify has hired new Chief Content Officer Dawn Ostroff and, well, that’s about it. For now…
Well, this is very interesting. Warner Music Group has bought UPROXX, a youth-focused online media brand which currently reaches 40m people across its own platform and socials.
Why has WMG swooped? One reason is UPROXX’s state-of-the-art audio/visual production facilities and expertise which Warner will use to improve its non-music content output.
The other reason is simply this: it’s much easier to convince the public that your artists matter via a media platform when you actually own it.
Or as Warner recorded music boss, Max Lousada, puts it: “In the always-on, attention economy, it’s not enough to simply deliver amazing music to the world. We aim to tell engaging and original stories that influence culture.”
Media watchers will be keeping a keen eye out to see whether Warner’s promise to maintain UPROXX’s “journalistic and creative independence” holds water.
Either way, you can bet your bottom dollar that as soon as Dua Lipa, Cardi B or Lil Uzi Vert is featured on the site, certain Santa Monica-dwellers will be bellowing “fake news!” at their monitors…
It was almost the announcement the music biz has been waiting for.
Apple Music hasn’t quite confirmed that its subscriber base in the United States has overtaken Spotify’s (although insiders at the Cupertino company tell us that milestone has now been reached). But CEO Tim Cook did inform investors this week that Apple Music now has more subs than any rival service in North America (as in, the US plus Canada).
According to MBW’s calculations, based on data revealed by Spotify in its latest earnings report, both rivals now each have comfortably over 25m paying subs in North America. Or, to state the bleedin’ obvious, Spotify and Apple Music have over 50m paying subscribers between them across the US and Canada combined.
Some fun numbers: 50m represents around 14% of North America’s total population, although it’s bigger than Canada’s entire populous (36m).
Another one: according to the IFPI, at the halfway point of last year, there were just 30.4m premium music streaming subscribers in the States. By the end of last year, this had grown to 35.3m. Between them, we understand, Spotify and Apple Music now have more than 40m subs in the USA – and that’s not counting Amazon, YouTube Music, Pandora etc.
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