Universal Music Group’s Blockbuster IPO📈
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Happy Friday everyone!
This week marked a monumental one for the music industry, as the largest Record Label in the world- Universal Music Group, finally went public on the Euronext Amsterdam Stock Exchange 🇳🇱
Why is it such a big deal? Because of the size and nature of how the deal unfolded.
French media conglomerate Vivendi, who have been long term majority owners of the company for over 2 decades, completed their multi-year plan to divest their stake in the Record Label, and went through the last step of this process with the public listing this week.
So how did UMG fare in its market debut?
With the stock trading at a high of $30 on opening day, the company hit a valuation of around $53 Billion, which ironically valued it higher than Vivendi itself 📈
But if UMG is such a big deal, why did Vivendi want to sell their stake? 🤔
It’s got a lot to do with them wanting to restructure their conglomerate for better valuations, and clean up their cap table.
While I am no expert on the equity markets, you can read more on it in the Variety article link attached below 🔗
The run-up to UMG’s IPO was an event that had been followed closely by the market, with celebrity hedge-fund billionaire Bill Ackman failing to launch a bid to buy out 10% of UMG via a SPAC deal, something we covered in a previous edition of the newsletter👇🏻
What does this IPO mean for music in general?
Everyone’s really bullish on the Music Industry, dare I say, once again 👀
The public market support of UMG is yet another indicator of how far the industry has come, with the meteoric rise of streaming making the cash flows from music royalties, an asset class in their own right 💰
The impact of UMG’s IPO was even felt by rival Warner Music, with its shares jumping almost 10% and zooming its valuation by $1.9 Billion, to close at around $22 Billion in total ()
Variety breaks down the entire story really well, if you’re interested to dig deeper, do check out this piece 👇🏻
Our take on this?
Forget the Spotify, Apple Music and YouTube streaming wars, and let’s just zoom out for a moment.
Back in the 2000’s, at the height of the Napster era, all hope had been lost for music to ever be commercially viable again.
A&R departments at Record Labels ran a common joke that the rise of the Internet and piracy, meant the music industry was dying and that they ensured the violins were still playing, whilst the Titanic sank (ok, i made up the last bit, couldn’t resist)
Fast forward to today, music streaming- the very product that traditional Record Labels fought so many battles with over the years, has revived the glory days of the industry, and the latest blockbuster public listing by UMG is a testament to that.
However, it’s not all fun and games.
Yes, streaming has democratised the ability for artists to put out their music to millions of listeners, but the monetary upside is still restricted to the gatekeepers.
With paltry sums of $0.005 being paid to artists per streams, and music discovery algorithms being shadily tipped to favour selected artists, the fight is still alive and kicking, to put power back in the hands of the creators.
How does this play out?
I wish I could predict.
But something tells me that the solution will be built around Blockchain & the Web 3 ecosystem, and be assured that Incentify is very much throwing its hat in the ring 🎩
More on that soon 😉
Have a good weekend guys 🍺
And as always, when in search for some tasty tunes for the weekend, you know where to look 👀👇🏻
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Originally published at https://incentify.substack.com on September 24, 2021.