How Music Companies Approached Mergers and Acquisitions in 2018

The music industry in 2018 followed Charles Darwin’s theory of evolution: the fittest companies have evolved to survive in their ecosystems. Although there weren’t any blockbuster deals like Universal Music Group’s purchase of EMI Music in 2012, a handful of companies made wise, prescient acquisitions and investments.

Streaming services need to act creatively to survive dangerous economics. One survival tactic is to work directly with artists. The pitch is simple: sign directly, rather than through a label or distributor, and we’ll give you half of the royalties. It’s an enticing offer for an artist with enough contractual flexibility, but it’s not for everyone. A developing artist won’t have leverage. A DIY artist using any number of digital distributors already gets up to 100 percent of royalties. And, of course, labels are prone to protect their interests, so nothing is assured. But the state of streaming services’ financial statements suggest something’s got to give. Labels aren’t just going to give services « an additional pile of gross margin points, » as Spotify chief financial officer Barry McCarthy put it. Each point of gross margin will be worth $66 million to Spotify this year — ample incentive for a company struggling to post an operating profit. The main question is how long the current business model can survive extinction. http://bit.ly/2CJ081D



Catégories :Musique enregistrée

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