Making money from music
Finweek English|5 November 2021
Why investors are increasingly drawn to the music industry.
Seleho Tsatsi

The music industry is a fascinating subsector of the entertainment business for investors. The industry is unusually concentrated. Just a handful of companies dominate the distribution of recorded music. Similarly, one can count on one hand all the major labels on the content side of the business.

Given that the leaders in the industry are likely to have high returns on capital, low capital requirements and the ability to grow at decent rates, we believe the leading content and leading distribution music companies (UMG and Spotify) make for interesting investment cases for investors.

Universal Music Group (UMG), Sony Music Entertainment (SME) and Warner Music Group (WMG) are the three major music labels. Those three labels in addition to Merlin, which represents hundreds of independent labels, accounted for 78% of the music streams on Spotify in 2020. Public equity investors can invest in any of the three major labels. WMG’s shares listed publicly last year. Vivendi completed a spin-off of its stake in UMG in September 2021. SME isn’t available as a standalone entity but can be invested in via shares in the conglomerate, Sony.

Continue reading your story on the app

Continue reading your story in the magazine

MORE STORIES FROM FINWEEK ENGLISHView All

THE HEALTH OF SA'S MEDICAL SCHEMES

As the Covid-19 pandemic abates, finweek takes a look at the financial performance of some of the largest players.

7 mins read
Finweek English
5 November 2021

The effect of Gilbertson's departure

With Ntsimbintle Holdings now the major shareholder of Jupiter Mines, it could change SA’s manganese industry.

3 mins read
Finweek English
5 November 2021

Making money from music

Why investors are increasingly drawn to the music industry.

3 mins read
Finweek English
5 November 2021

Conviction is key

Sandy Rheeder plays a critical role in Mukuru’s mission to open up financial services to the emerging consumer market in Africa through tailor-made technology solutions and platforms.

5 mins read
Finweek English
5 November 2021

The post-pandemic toolkit

How CFOs can use technology to support growth.

4 mins read
Finweek English
5 November 2021

Big city living exodus

Mini cities like Waterfall City and Steyn City are redefining city-style apartment living.

3 mins read
Finweek English
5 November 2021

Big compact, big value

Handsome, with a hefty level of standard specification, the roomy Haval Jolion compact crossover is a great value proposition.

3 mins read
Finweek English
5 November 2021

On barriers to entry

There are various ways in which a company or sector can achieve competitive dominance. They usually make for good investments.

2 mins read
Finweek English
5 November 2021

Fear and greed in one index

To buck the trend, when markets are hot or cold, is a tough thing to do. However, it can deliver solid returns.

3 mins read
Finweek English
5 November 2021

Africa's largest data centre facility coming soon

Vantage Data Centers plans to invest over R15bn for its first African data centre facility in Attacq’s Waterfall City.

3 mins read
Finweek English
5 November 2021
RELATED STORIES

MUSIC: CLIMBING THE CHARTS TO BECOME NUMBER ONE

Though Apple Music may still be playing catchup to Spotify in terms of users, new data from the Mechanical Licensing Collective has revealed Apple is the industry leader when it comes to royalties, demonstrating the company’s commitment to paying talent. As Apple continues to expand its services, the future looks bright, with new Music innovations coming their way.

6 mins read
Techlife News
25, December 2021

The Culture Club

CAN OUR NUMBER ONE COMPANY MAINTAIN ITS EMPLOYEE-FRIENDLY WORKPLACE THROUGH THE PANDEMIC AND A GROWTH BOOM? WE THINK SO

8 mins read
Newsweek
October 29, 2021

In Defense of the Insufferable Music Fan

What we lose when we “like everything”

10+ mins read
The Atlantic
November 2021

How Miami Seduced Silicon Valley

Awash in coders, crypto, and capital, the city is loving— and beginning to shape—its newest industry.

10+ mins read
New York magazine
September 27 - October 10, 2021

Apple Eases App Store Rules Again, to Allow Outside Signups

Apple is relaxing rules to allow some app developers such as Spotify, Netflix and digital publishers to include an outside link so users can sign up for paid subscription accounts.

1 min read
Techlife News
Techlife News #514

He's Making Apple the Bad Guy

Horacio Gutierrez has spent five years molding the narrative of the iPhone maker as an abusive monopolist

6 mins read
Bloomberg Businessweek
July 19, 2021

MUSIC: CLIMBING THE CHARTS TO BECOME NUMBER ONE

Though Apple Music may still be playing catchup to Spotify in terms of users, new data from the Mechanical Licensing Collective has revealed Apple is the industry leader when it comes to royalties, demonstrating the company’s commitment to paying talent.

6 mins read
AppleMagazine
AppleMagazine #488

Noisy, Ugly, and Addictive

Hyper pop could become the countercultural sound of the 2020s.

8 mins read
The Atlantic
March 2021

SPOTIFY'S PODCAST POWER PLAY

The company is staking its future on converting music listeners to podcast fans and has become the favorite to own the industry—for better or worse

10+ mins read
Bloomberg Businessweek
January 18, 2021

CONTROL: WHY SHOULD BE KEPT LOCKED DOWN

Developers are quietly working on iOS 14 and its Mac and Watch counterparts, and many are wondering what the next-generation operating system will look like. A Bloomberg report has shed some light, and Apple looks set to loosen its grip on its privacy-focused ecosystem.

6 mins read
AppleMagazine
AppleMagazine #479 *Special Edition