"Three-opoly" is our favorite made-up word... Perfect for an industry that loves making up words (supercalifragilisticexpialidocious, for example). The music biz is dominated by 3 labels: Universal Music, Sony Music, and Warner Music. The first two are owned by much bigger conglomerates (Vivendi and Sony), but the last one just filed to become a publicly traded stock. Here's what Warner Music does for a living:
- Sign artists: Kind of like VCs or European soccer clubs, music labels spot talent early, convince them to sign, then try to make them big stars.
- Pick winners: Besides Macklemore rap/bragging about doing it solo, there aren't many musicians who found fame without being signed by a record label.
- Negotiate with streamers: The labels ensure musicians get paid for each stream on Apple Music, Pandora, and Spotify.
- Market, monetize, manage: According to Warner's S-1, it makes 86% of its revenues by managing the careers of Lizzo, Metallica, Ed Sheeran, and Madonna and other stars. Warner just took a DNA test and it turns out: it just made its highest quarterly revenue in 16 years.
The music industry was dead. It's almost back... thanks to streaming. The industry was popping platinum bottles in the year 2000, aka "Peak CD."
- 2000 - Peak CD - $14.3B: When cars were racing to hold more CDs in their XX disc-changer stereo, musicians made $14.3B selling their music in the US.
- 2010 - Peak Free Music - $7B: Over 10 years, revenue halved thanks to Napster, Limewire, and other web apps that made musical theft insanely easy. Plus Youtube is/was free (less so now with ads).
- 2018 - Streaming Comeback - $9.8B: Thanks to easy monthly subscriptions to Spotify, Apple, and/or Pandora, people are used to paying for music again.
- But music industry revenues are still below 2000's Peak CD.
You can own a piece of your favorite music... Wondering why Taylor Swift can't do what she wants with her music? It's owned by her record label. As one of the top labels, Warner Music's stock (ticker symbol is TBD — we're hoping for "JAM") will let investors benefit from the continued rise of the streaming industry... or suffer if the revenue comeback dies.