Common Music Group hosted its 2024 Capital Markets Day in London on Tuesday (September 17) on the iconic Abbey Street Studios (which is owned by UMG).
The marathon four-hour occasion featured detailed shows by leaders from throughout the corporate’s world enterprise, highlighting UMG’s successes, present positioning, in addition to artistic and enterprise alternatives within the world music business.
The occasion was kicked off by UMG Chairman and CEO Sir Lucian Grainge, who opened his speech with a quick historical past of Abbey Street itself, which, as Grainge famous, has served as the situation of recordings from the Beatles to Fella Kuti, Amy Winehouse, and extra superstars.
“For those who go searching, these are the identical gentle fittings that Paul McCartney and John Lennon, Ringo [Starr], and George Harrison would have checked out,” Grainge informed the viewers.
Grainge additionally defined throughout his opening remarks what he mentioned are “basic info” that Common has discovered in regards to the music enterprise.
“Superfandom is a core part of music economics.”
Sir Lucian Grainge
“Reality primary”, in accordance with Grainge, is that “streaming has resulted in a quantum leap ahead in music entry and monetization and streaming will proceed to propel a few years of business development.”
Reality two, in accordance with Grainge, is “the deep and passionate connection between artists and their followers” or “superfandom”, which, he added, “is a core part of music economics”.
The third truth, Grainge informed the viewers, is that “music is prime to human expertise”. He added: “It’s the most loved and influential type of media on the earth and is driving the expansion of the huge array of companies that function music as their important ingredient.”
Elsewhere in his speech, Grainge famous that Common is approaching the three-year anniversary of its public itemizing on the Amsterdam Euronext in 2021, noting that the corporate’s “monitor report has solely grown stronger” since then.
He added: “Working with entrepreneurial companions, in addition to companions with tech corporations, will be advanced. It doesn’t all the time result in linear progress from one quarter to the following, however the course of journey is evident.
“We’ve achieved a constant monitor report of success, and we’ll proceed to construct a vibrant music ecosystem that creates extraordinary alternatives for artists and their followers and distinctive returns for our buyers.”
You’ll be able to learn Sir Lucian Grainge’s opening remarks in full under, full with a number of the slides he used to accompany his presentation…
I’m actually delighted to welcome you all to Abbey Street for our Capital Markets Day presentation.
We’ve chosen to carry our occasion at this exceptional location as a result of Abbey Street, like its guardian firm, Common Music Group, has a protracted and storied previous and continues to make historical past with each passing day.
Initially, this constructing was bought in 1929, virtually 100 years in the past, as a nine-bedroom home. Two years later, it turned the world’s first recording studio.
Since then, it’s develop into legendary because the birthplace of a number of the most iconic and enduring recordings in historical past. Recordings by The Beatles, Ella Fitzgerald, Girl Gaga, Fella Kuti, Amy Winehouse, Sam Smith, Adele and numerous others, all created proper right here in these rooms.
I’ve this phrase that whenever you’re in a landmark like this, together with our Capitol Studios in Hollywood. The music, the tradition, the brilliance, simply type of pours off the wall.
For those who go searching, these are the identical gentle fittings that Paul McCartney and John Lennon, Ringo and George Harrison would have checked out.
For those who go searching, is that this the place an organization like us would usually have an occasion like this? It’s a bit tatty… we’ve spent some huge cash retaining it like this!
So we’re thrilled to be right here. To suppose that simply earlier than we acquired EMI, its former house owners really wished to show this constructing to an condominium block. Due to our intervention, possession and funding, it’s right here, with future masterpieces ready to develop into immortal.
One other side of Abbey Street’s storied previous consists of groundbreaking advances in know-how that first noticed the sunshine of day in right here.
In 1939, binaural recordings, what we now know immediately as stereo, after which in 1959 the primary mixing consoles got here alongside, all designed and constructed, as soon as once more on this very constructing.
In recent times, Abbey Street Crimson, our incubator for music tech startups, have lived right here, working with teachers and entrepreneurs. Crimson’s R&D workforce is creating breakthrough purposes in AI, digital actuality, spatial audio and well being and wellness, which we actually do imagine in as a class for the longer term.
Because it approaches its centenary, Abbey Street stands as the proper microcosm of what we’re as UMG.
Abbey Street is a residing instance of our unwavering willpower to be on the vanguard of growing progressive and thrilling methods by which music will be skilled.
“Abbey Street is a residing instance of our unwavering willpower to be on the vanguard of growing progressive and thrilling methods by which music will be skilled.”
Sir Lucian Grainge
4 days from now, we’ll really be marking the three 12 months anniversary of our public itemizing, making this a becoming time for us to replace you on the alternatives we’re pursuing and to reintroduce you to our extraordinary administration workforce; a workforce of executives who collectively possess not solely many years of expertise, however many years of unparalleled success.
These professionals have the privilege of working with probably the most proficient artists and songwriters on the earth, they usually additionally share the glory of stewarding probably the most beloved catalog of music ever assembled.
A catalog that retains increasing with every new discovery that we make. One more reason UMG is probably the most profitable music firm in historical past is that we foster and promote an entrepreneurial spirit. You’ll hear rather more because the day unfolds.
I’ll say extra in regards to the significance of that, however let me simply say now that it’s a willingness to take dangers that retains our world group, with lots of of enterprise models in over 60 nations, nimble and daring and able to embrace and drive the change.
“Streaming has resulted in a quantum leap ahead in music, entry and monetization.”
Sir lucian Grainge
Over time, our business has grown and altered in extraordinary methods. Individuals are listening to extra music than ever earlier than and the expertise of listening to music is best than ever earlier than. At UMG, we imagine we’ve performed a central position in ushering in these adjustments and dealing with our artists and companions to convey these about.
We’ve been the important catalyst for a number of the business’s most vital durations of change and development. But even within the midst of change, we additionally imagine that there are info that form our enterprise. For the following jiffy, I’d prefer to briefly share these and describe how they information us and deepen our conviction within the extraordinary alternative we see forward.
It’s simple to be assured when you already know the place you’re going,
You’ll hear in better element from numerous our leaders in regards to the artistic, technological and funding methods we’ll be implementing to show these alternatives into realities.
And also you’ll get an inside take a look at the compelling imaginative and prescient of our label group, CEOs, and the Common Music Publishing Group world management workforce.
By the tip of the day, I imagine you’ll come to each perceive and share our pleasure across the potentialities of our future and why we capitalize on these alternatives and ship for our artists, their followers in addition to our buyers.
So what have we discovered in regards to the basic info of our enterprise?
Reality primary. Streaming has resulted in a quantum leap ahead in music, entry and monetization. And streaming will proceed to propel a few years of business development.
Reality two; the deep and passionate connection between artists and their followers: Superfandom, is a core part of music economics.
Reality three: Music is prime to human expertise. It’s the most loved and influential type of media on the earth and is driving the expansion of the huge array of companies that function music as their important ingredient.
Let’s dive into [fact one]. For customers, the worth proposition of streaming is extraordinary. Entry to all of the music on the earth within the palm of your hand, frictionless discovery, customized, shareable, and all the time with you in all places you go.
For the music business and the DSPS, the worth creation from streaming is equally extraordinary. After which the following part of streaming, what I prefer to name streaming 2.0 – and also you’ll hear extra about streaming 2.0 later – we imagine that the worth will develop enormously.
Contemplate that immediately, lots of and lots of of hundreds of thousands of customers have migrated from a one-time buy expertise to paid subscription with its excessive degree of persistent and recurring monetization.
Merely put, the monetization of listening profoundly will increase the ‘TAM’ – the addressable marketplace for our enterprise.
Not so way back, many pundits have been saying that 100 million subscribers would represent the market ceiling.
I keep in mind after we began offline within the Nordics and we had 7 million subscribers. We repeatedly and appropriately insisted that that view was mistaken, that the ceiling was 100 million.
Not solely have been they not contemplating the expansion we noticed coming from excessive potential markets, however they have been constantly underestimating the headroom within the established markets as effectively.
At the moment, we’re at effectively over 600 million subscribers, and we’re nowhere close to saturation. The addressable market in each established markets and fast-growing high-potential music markets is very large.
We anticipate greater than a billion subscribers by the tip of the last decade, and we consistently ask ourselves, how lengthy might it take us to get to 2 billion?
It could be a mistake to suppose that we’re in enterprise with solely a handful of know-how companions and DSPS, simply those that get the headlines. The fact is that we’re a enterprise on the middle of a rare ecosystem of know-how companions, retailers, DSPs, in addition to over 1,000 of our personal direct to client channels.
What started as a digital transformation with a half a dozen key companions has immediately grown right into a vibrant ecosystem of lots of of digital companions. In actual fact, a few of our quickest rising subscription companions, akin to YouTube, are additionally among the many most up-to-date to have launched.
And it might be an excellent greater mistake to suppose we’re passive beneficiaries of market development. If there’s one factor we’re not, that’s passive. After I say we’re working with our companions, I genuinely imply we’re working with them.
We work carefully, innovating with them on a number of fronts, fueling the expansion of the ecosystem and rising monetization for all of us, UMG, the business, the platforms, and particularly our artists, in addition to, alongside the best way, persevering with to ship and creating nice experiences to the followers.
You’ll hear extra later immediately, however we imagine we’re nowhere near reaching the total potential of our enterprise. Whereas streaming has delivered sturdy development to UMG for over a decade, streaming 2.0 will symbolize a brand new age of innovation.
Shopper segmentation, geographic growth and better worth by way of each subscriber and ARPU development. For instance, by way of our artist-centric technique, we’re already rising music monetization and seeing significant advantages.
We’re limiting the gaming of the system by defending in opposition to fraud and content material saturation. They’re two crucial issues to us. And we’re creating extra partaking and interesting client experiences, together with specifically designed new merchandise and premium tiers for the superfan.
I believe it’s in all probability a pleasant segue into Reality quantity two, the deep and passionate connection between artists and their followers. Tremendous fandom is a core part of music business economics.
Like many different client companies, our business has lengthy been powered by probably the most passionate followers, those that are most deeply engaged with their favourite artists.
From the Nineteen Sixties by way of to the Nineties that keenness was evident at midnight on what we used to name launch days.
As followers waited in lengthy strains exterior report shops for the fun of being among the many first to purchase and hearken to the newest music from their artists. All of us keep in mind strains and queues exterior a Michael Jackson or Shania Twain album [release]. Deep fandom.
Later on this journey, within the obtain period, when the iTunes Retailer accounted for overwhelmingly the vast majority of the business’s digital gross sales, 25% of customers who have been tremendous followers drove 75% of the spend on the retailer.
At the moment, within the streaming period, the fervour and engagement remains to be there. We’ve seen glimpses of it with the resurgence of vinyl and the expansion in music merchandise.
However critically, as priceless as streaming is, it has additionally leveled the taking part in area, by which I imply whether or not it’s 5 hours a day or 5 hours every week, the deeply passionate listener pays the identical worth for a similar entry as an informal one.
We’ve got the chance to innovate and develop merchandise and experiences that may faucet into and unlock the financial potential of their fandom. And as you’ll study, we’re doing simply that on our personal, in addition to with our companions.
We’re creating and monetizing new methods to satisfy the superfans’ pent up demand for merchandise, experiences and entry that brings them nearer to the music and to the artists that they love.
And now, the massive image, truth three.
Music is completely basic to the human expertise. It’s the most loved and influential type of media and leisure on the earth, and is driving the expansion of an unlimited array of companies that includes music as their important ingredient.
No different medium of artistic expression, no type of leisure, is extra basic to us, all of us as people, than music.
It permeates each side of our lives, at dwelling, on the go, whereas we work, whereas we research, and it accompanies all of us after we’re alone, and binds us collectively. Music strikes tradition.
It provides a voice to what we really feel and to what we really feel and what we imagine, and has helped catalyze actions and genres all through historical past.
Somebody mentioned to me years in the past that music has been round for 1,000 years, and music will probably be round for the following 5,000 years. You could find people who don’t like films or watch tv or learn books or learn newspapers.
However convey me somebody that doesn’t like music, some type of music, some type of music globally. All different types of media rise and fall with altering client tastes, whereas the centrality and monetization of music retains increasing.
Right here’s only one instance. Of the Prime 20 most adopted individuals globally on social media, 10 of them are recording artists, and 7 of these 10 are our artists signed to UMG.
The core of our success is our distinctive capacity to determine and signal nice artists and songwriters, no matter their nation or language or style by which they create.
As soon as signed, we amplify their attain. We love amplifying their attain and assist them to develop long-term careers in order that their artistry turns into a part of world tradition. Artists, together with Chapel Roan, Sabrina Carpenter. These two artists that have been taking part in earlier whenever you whenever you arrived. And even Olivia Rodrigo. Deep, deep, deep songwriting, creative expertise, creators, innovators.
Our monitor report in growing new artists after which turning them into world manufacturers is unmatched, not solely in music, however in every other type of leisure. For instance, for those who take a look at the final 5 years of the world’s best-selling artists, you’ll see that UMG has constantly been the supply of the overwhelming majority of world bestsellers, no matter the place they’re from, in what style they carry out, or in what language they sing.
I imply, that is unprecedented in any enterprise, any business, any sector, any product, any leisure.
We’re proud that UMG is dwelling to so lots of the world’s biggest artists. That’s been true this decade, and the constant efficiency of our groups, our technique and our distinctive tradition, underscores our perception that it’ll proceed to be true in a decade to come back and the one after that.
As I mentioned earlier, the entrepreneurial spirit at our core makes us risk-tolerant and opportunity-seeking. Entrepreneurship that’s investing threat capital in opposition to unproven expertise. Imagine me, it’s not for the faint-hearted or for the inexperienced.
Our workforce makes it look a lot simpler than it’s, however that’s precisely what this skilled workforce does, they usually do it extra efficiently than anybody else ever has. It’s in our DNA.
We’re, the truth is, a corporation constructed by entrepreneurial visionaries. Our companies and our youth and our enterprise models are supportive of one another, but, given our entrepreneurial tradition internally, they continue to be extraordinarily aggressive, and I like that.
We foster that, and also you’ll see that within the shows all through the remainder of the day, and that deep-seated spirit is the explanation why we’re in a position to associate with so many new entrepreneurs.
However we’re not resting on our laurels. Our community of entrepreneurs is bigger immediately than it’s ever been, and yearly, new platforms and experiences are coming to market. We associate with entrepreneurs in numerous areas round however we don’t make them adapt to us.
We attempt to study from them so have been consistently evolving and that’s the guiding ethos on the coronary heart of the high-potential markets and the Virgin Music Group technique, which you’ll hear much more about later, as effectively.
Over time, many forces have tried to disrupt our enterprise, however the innovation that arises from our inner competitors, our relentless need to interrupt new floor, not being afraid of change, embracing change, has saved us repeatedly forward of our established rivals in addition to the brand new entrants.
Our success isn’t formulaic, it’s natural. What we do and the way we do it’s unimaginable to duplicate. An enormous array of companies are depending on what solely we are able to present on the degree that we do. And what we offer, is solely nice music. However imagine me, it’s not that easy, as I mentioned.
Whereas we work with these companies to convey innovation to life, it’s the final word fact that whether or not anybody can distribute, channel, succeed, and the way you consider failure, it’s our music that may all the time be the driving power of any enterprise reliant on music. The social music class didn’t exist till we helped launch it in 2017. I give a nod to my pal and colleague, Michael Nash.
At the moment, it’s a key part of what the IFPI estimated in 2023 will probably be a $5.3 billion ad-supported sector. It didn’t exist earlier than.
And the monetary outcomes of these efforts are clear. Since our itemizing, our monitor report has solely grown stronger. Let me shut by saying that working with entrepreneurial companions, in addition to companions with tech corporations, it may be advanced. It doesn’t all the time result in linear progress from one quarter to the following, however the course of journey is evident.
We’ve achieved a constant monitor report of success, and we’ll proceed to construct a vibrant music ecosystem that creates extraordinary alternatives for artists and their followers and distinctive returns for our buyers.
I say this not with vanity, however with delight. Merely put, UMG shouldn’t be solely probably the most profitable firm in the whole historical past of music enterprise, but additionally the corporate that’s the most important in driving the business ahead.
On this one more historic day right here at Abbey Street, you’re going to study many thrilling developments at our firm. Let’s start with the presentation by citing Boyd Muir [Executive Vice President, Chief Financial Officer and President of Operations], Michael Nash [Michael Nash is Executive Vice President, Chief Digital Officer] and Gabby Lopes [SVP Global Insight], who will probably be strolling you thru our market outlook, digital technique and varied different facets of our enterprise.
Thanks.Music Enterprise Worldwide
