Making money from music | Business

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The music industry is a fascinating subsector of the entertainment business for investors. Seleho Tsatsi believes that UMG and Spotify make for interesting investment cases.

The music industry is a fascinating subsector of the entertainment business for investors. The industry is unusually concentrated. Just a handful of companies dominate the distribution of recorded music. Similarly, one can count on one hand all the major labels on the content side of the business.

Universal Music Group , Sony Music Entertainment and Warner Music Group are the three major music labels. Those three labels in addition to Merlin, which represents hundreds of independent labels, accounted for 78% of the music streams on Spotify in 2020. Public equity investors can invest in any of the three major labels. WMG’s shares listed publicly last year. Vivendi completed a spin-off of its stake in UMG in September 2021.

Of the big three, the recently-listed UMG looks most interesting as an investment. UMG is recognised as the industry’s leading label, and for good reason. UMG has a 40% share of the recorded music market. Chances are that your favourite artist or band is signed to UMG. The company’s dominance of recorded music content can be illustrated in several ways.Get 14 days free to read all our investigative and in-depth journalism. Thereafter you will be billed R75 per month.

 

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