The Big Three – Or The Big Five?



On March 20th, we’ll feature Concord Music COO Glen Barros on the Music Biz 101 & More radio show.  Kate Hyman, BMG Senior Vice President of Creative, visits campus this week.  Kate and Glen are representatives of the two single largest independent music groups (we’re talking recorded music, not live*).*Note – See HERE that Live Nation reported last week 2018 revenue was up 11% over 2017.If you looked at The Big Three in recorded music, here’s their order, based upon both revenues and market share:

1) Universal Music Group
2) Sony Music Entertainment
3) Warner Music Group

There used to be a Big Six.  Then it was Five.  Then Four.  We’ve had this Big Three structure for about 6 1/2 years, ever since UMG bought EMI in 2012.  Remember, 2012 was the height of the recorded music bust years.  There would be another couple years before revenues caught back up to losses and the ground stopped shaking.**

**Note – See HERE that the RIAA reported last week 2018 revenue was up 12% over 2017.

Since the rebound and the embrace of streaming by the masses, it’s important to look at the trends in recorded music.  Most important, the value of music companies is high (see THIS from a couple weeks ago where I discussed the valuation of Universal vs. Spotify and Live Nation).

Acquisitions are back.  Who’s going to buy Universal?  Maybe Liberty Media.  Maybe Tencent.  Maybe my mom (doubtful, she’s in sell mode at 80 years old).  Sony bought the portion of the EMI Music Publishing catalog it didn’t already own last year for $2.3 billion last year.  Primary Wave Music has been purchasing catalogs.

Concord Music has been in Buy Mode for several years now.  It owns publishing, like the Rogers & Hammerstein catalog.  “Who cares?” says the youngster.  They do!  Why?  What’s the hook of Ariana Grande’s “7 Rings”?  Yes, a song by Rogers & Hammerstein called “My Favorite Things,” from The Sound of Music.  So when Ariana sings the song on an Apple Music commercial or you hear it on your favorite radio station (do youngsters have favorite radio stations anymore?), Concord Music makes money from the publishing.

Meanwhile, Concord recently signed iconic guitarist/legend Carlos Santana.  They have a new record from Melissa Etheridge coming out.  The Tedeshi Trucks Band released some new music in February.  Now, this band is really a road band.  They sell out EVERY gig that is booked for them.  Do they stream?  Compared to the aforementioned Ariana Grande, not much.  Their most streamed song, “Midnight In Harlem,” is at 12.7 million streams, enough to generate six figures to the left of the decimal.  But that ain’t nothing compared to the hundreds of millions of streams the giant artists are getting.

Will Santana and Etheridge and Tedeshi Trucks be worth the investments?  Will Concord make their money back?  Good question.  We’ll ask Barros what the company strategy is there because, at least with Santana and Etheridge, these artists are past their prime.

Then there’s BMG.  Look HERE for some publishing successes.  On the November 18, 2018 Top Singles chart, BMG Publishing songwriters were involved in 4 of the top 5 songs, helping write hits for Ariana Grande (her again), Maroon 5/Cardi B, Travis Scott, and Juice WRLD.  That’s big revenue for years, because today’s hits become tomorrow’s synch deals.  One month later, BMG writers had a hand in 23 simultaneous #1 hits around the world.

What’s special about BMG?  Why would an artist, especially a recording artist, sign there instead of one of The Big Three?  See THIS:

Unlike the major label competitors and most independent labels, the BMG business model allows its artist to either own their masters and/or have control passed back to them after a certain period of time. This insures a higher payout to artists.

“This was based on strong performance in US and UK frontline and catalog recordings,” the company said, adding that its repertoire strategy centered on established artists resulted in its taking on the administration of publishing rights for Ringo Starr, Lenny Kravitz and Yusuf/Cat Stevens in the first half. Other signees with upcoming releases include Cypress Hill, Dido, Good Charlotte, Alice in Chains and Gabrielle.

In addition to focusing on established artists, BMG’s strategy also calls for having a global imprint so that its capabilities, reach and business model can offer an alternative to three major music companies.

How close are BMG and Concord?  THIS ARTICLE states that the expected 2018 revenues for Concord were $400 million and $500 million for BMG.  So let’s rank according to 2018 revenue:

UMG – $7.2 Billion
Warner – $4 Billion
Sony – $3.92 Billion
BMG – $500 Million (approximate)
Concord – $400 Million+ (approximate)

Judging by the differences in revenue between BMG, Concord, and The Big Three, the smaller two have some growing to do before catching up.

The big question about these big companies:  At what revenue level does one qualify for Big status?  $1 Billion?

Your turn to jump in.

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Meanwhile, did you know – Over 200 Music Biz 101 & More Podcasts Are Up?

Yeah.  We didn’t know it either.  We’re at 201.  We recently uploaded our interviews with Jake Posner (see the pic at the very top), Atlantic’s Michael Parker, Live Nation’s Harvey Leeds, music biz attorney George Gilbert, Columbia Records’ Kari Keller, Ultra Music’s Miles Franco, and Catalyst PR’s Jen Appel (leave the last L off for savings).  Go and listen to everything on SoundCloud, iTunes, and/or Spotify.  You’ll be glad you did.

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For full details about the Music & Entertainment Industries Program, including courses, the minor, and our MBA, click HERE.

 

For full details about the WPU Pop Music Studies Program, including courses and audition requirements, click HERE.

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Professor David Philp is Assistant Professor Music & Entertainment Industries and Popular Music Studies at William Paterson University. He is the co-host of the only FREE advice college radio-based music & entertainment industry talk show in America, Music Biz 101 & More, which airs live most Wednesday nights and is available as a podcast HERE every night (days too).  Your favorite professor is also co-author (with Dr. Steve Marcone) of Managing Your Band – 6th Edition.  Reach him at PhilpD@wpunj.edu or find him on LinkedIn HERE.

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