Summary:
Major labels are pivoting from tech startups to traditional music companies.
In 2024, 11 acquisitions in emerging music markets have been made.
UMG plans to invest between €350 million to €400 million this year.
The focus on emerging markets includes launching Universal Music Group Greater Bay Area.
Warner Music is also expanding its footprint in India and other local markets.
The music business is getting back to basics. In recent years, major labels have shifted their focus from investing in speculative tech startups to acquiring and partnering with traditional music companies. This change comes as streaming growth slows in mature markets, leading labels to seek opportunities in emerging markets across Asia, Africa, and Latin America.
After a brief interest in NFTs and live-streaming, major labels now prioritize old-school music companies that own catalogs and develop artists. In 2024 alone, Universal Music Group (UMG), Sony Music Entertainment, and Warner Music Group have acquired or invested in 11 record labels and music catalogs in developing markets, enhancing their content supply and expanding their global reach.
For instance, UMG's acquisitions in 2024 include a stake in European indie label group PIAS, Thai music company RS Group, and Nigerian record label Mavin Global. UMG's CEO, Lucian Grainge, emphasized their strategy to tap into potentially lucrative markets during recent earnings calls, with planned investments of €350 million to €400 million ($380 million to $434 million) in the latter half of the year.
As the majors shift focus, UMG launched Universal Music Group Greater Bay Area, marking a significant presence in China's populous urban area. The establishment of GTS, a global talent services business, further signifies this shift, allowing UMG to cater to artists outside its label family.
Warner Music Group has also been active, investing in traditional music companies in India and expanding its local operations. The trend indicates that majors are not just buying catalogs but are building entire businesses with growth potential.
This strategic pivot highlights a defensive measure against rising independent labels and distributors, as the majors adapt to a changing market landscape. Instead of large acquisitions, they are making smaller, more calculated investments in traditional music businesses to maintain their competitive edge in the evolving music industry.
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