Mark today as a turning point in music business history. It marks the day when the largest major label in the world, Universal Music Group, publicly announced their intention to become a....music entertainment company. Essentially they're confirming their strategy of vertically dis-integrating and horiontally integrating, which I think is a good thing. I admit, getting signed to a music entertainment company doesn't quite roll off the tongue like getting signed to a label. But, notwithstanding Rafat's misgivings, I think it's the right move. Indeed it has to be done.
Other majors and indies have been experimenting more and more with this concept. But UMG's announcement is a comprehensive statement of strategy, which I don't think EMI has quite done, though I could be mistaken. It all comes down to slide 37 on their investor presentation. Titled "The Transformation is Underway"; sub-titled "We are changing from a 'record company' to a 'music entertainment' company". That says it all. It goes on to list their sources of revenue where it was solely CD Sales & Film & TV Licensing in 2001 vs. CD, Film/TV, Audio downloads, Subscriptions, Mobile, Video, Satellite/Interactive Radio, Ad-supported models, Expanded Artist Relationships.
Whether you blame p2p piracy or the decline of album sales, recordings are becoming a less important piece of the pie, and so it makes sense to expand to other horizontal areas. It's not to say that UMG will fully succeed at this. They face many obstacles such as cultural inertia and the traditional mistrust between labels and artists' management.. However, it is a sea change in the music business and I'm a staunch believer that the future of the music business lies in labels or music entertainment companies truly partnering with their artists and sharing in the upside across the board.
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