Spin me right round
This week Universal Music Group, the largest record company in the world, was officially spun out from its parent company — listing on the Euronext exchange in Amsterdam and finishing its first day of trading with more than a $54bn valuation.
Eight years ago SoftBank tried to buy Universal Music, offering a bid of $8.5bn to its then owner Vivendi. Vivendi hit skip, much to the confusion of many industry analysts who pegged Universal's value a little lower, at just $5-6bn. Rejecting that offer turned out to be a very good idea, as streaming has revived the industry and Universal's prospects within it.
Making waves
Few formats have lasted more than a decade in the modern music industry, according to data from the RIAA. In the early 80s 8-track tapes and vinyls were getting pushed out by cassettes. Then the CD arrived and the industry transformed. Paying $10, $15 or even $20 for a CD became normal and the industry flourished, hitting its peak revenue in 1999.
The good times didn't last forever though. File-sharing websites like Napster and others cropped up in the late 90s. Music was "set free", and industry revenues — which have to be shared between artists, songwriters, record labels, agents and publishers — collapsed. At one point ringtones were once worth 11% of the entire US recorded music industry. That's how bad it got.
Since then, streaming has helped push the industry back to growth, even if it's still a fraction of its former self.
Will streaming make way for something else, as has happened to every other format before it? Investors seem to think it's here to stay.
