(Bloomberg) -- A Tencent Holdings Ltd.-led consortium will acquire an additional 10% of Universal Music Group, in a deal that values the world’s biggest music company at 30 billion euros ($36.8 billion).The purchase will bring Tencent’s holding in the music group to 20% following a deal last year for a stake at the same valuation. UMG’s connection to the Chinese internet giant will help boost its expansion in Asia, and Tencent will also take a minority holding in UMG’s Chinese subsidiary, the label’s parent company, Vivendi SA, said in a statement on Friday.Vivendi will also sell additional minority stakes in UMG ahead of its plans to list the unit by 2022. The company plans to use cash from the deals to reduce debt and to finance share buybacks and acquisitions. UMG’s entry onto the stock market could give the music group more financial clout to compete with rivals such as Warner Music Group and Sony Music Entertainment.Vivendi shares rose 1.2% to 26.29 euros at 9:44 a.m. in Paris on Friday. The company’s stock has gained 1.9% this year. Tencent declined 0.5% in Hong Kong.For Tencent, the increased stake will help it continue to diversify a business that’s heavily focused on gaming and the Chinese market. In other deals this year, Tencent helped orchestrate the combination of Huya Inc. and DouYu International Holdings Ltd., creating a Chinese game-streaming giant with a market value of more than $11 billion. It has also proposed taking private Chinese gaming firm Leyou Technologies Holdings Ltd.Universal Music has been boosted by a surge in streaming that has dragged the industry out of a decade-long slump, helping Vivendi through the pandemic lockdown.The deal will close during the first half of 2021, subject to regulatory approvals.(Updates with share price in fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- It can’t have been a difficult decision for Bob Dylan to sell his songwriting catalog to Universal Music Group. Perhaps the more interesting question is why the record label wanted to pony up several hundred million dollars to buy it.The logic for Dylan is straightforward. The copyright on his music will expire 70 years after his death, at which point his work will enter the public domain. The older he gets, the closer his catalog is to depreciating in value. Selling now lets the 79-year-old artist realize the portfolio’s worth, which has likely received a new lease of life as online streaming reignites growth in the recording industry. The value of music catalogs has increased accordingly, and just last week, the 72-year-old Fleetwood Mac star Stevie Nicks sold an 80% interest in her copyrights in a deal that valued her catalog at about $100 million.What’s in it for UMG? Parent company Vivendi SA is planning an initial public offering for the world’s biggest record label next year. The French media conglomerate is therefore in the process of gussying it up to make it as attractive as possible to new investors. Although streaming services such as Spotify Technology SA and Apple Music have reinvigorated the music industry, they’ve also highlighted some of its vulnerabilities.Digital distribution has made it easier for artists to reach audiences without a record label, which traditionally fronted the studio and marketing costs in return for a slice of future revenue. Cutting through is still a challenge, and a label’s massive marketing budget can help, but the internet has enabled artists such as “Old Town Road” singer Lil Nas X to build a significant following (and gain leverage) before signing to a label.The shifting power dynamics enabling some artists to negotiate more generous terms have led record labels to place greater emphasis on owning intellectual property — and the reliable income that comes with it.In this case, it’s Dylan’s compositions. When the time comes for UMG’s IPO roadshow, a deep back catalog of recording and publishing rights will let Chief Executive Officer Lucian Grainge paint a more resilient picture of the company’s earnings. The dependable returns promised by Dylan’s oeuvre will no doubt help with that. UMG can meanwhile extend the lifespan of each song better than Dylan or his estate could alone, for instance by encouraging its stable of artists to record cover versions.The strategy has already been deployed with some success by rival Warner Music Group Corp., which listed shares publicly for the first time in June. In its IPO filing, it was eager to point out that much of its revenue stemmed from “stable and recurring sources such as our music publishing library,” and that “less than 10% of our total revenues depend on artists without established track records.” Music publishing (the rights to the underlying composition and lyrics) is also more profitable than the rest of the business, with earnings that represent 23% of revenue, compared with the 15% profit margin from recorded music (the performed versions of songs or pieces). It’s the same reason that Spotify has been charging into podcasts: Owning more content outright means it doesn’t have to pay as much in royalties to other parties.The times may be a-changin’, but Dylan’s tunes will generate an annuity for many years yet.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- With concert venues closed, musical careers must be forged on streaming platforms instead.It’s been an awful year for the majority of artists who make most of their income from gigs and touring. Yet a small but growing number are harnessing the latest tech to break through on Spotify, YouTube and TikTok.Musicians like Jayda G and RAC have bounced back from canceled tours to secure Grammy nominations with the help of apps like Distrokid, Submithub.com and fortunes.io. The tools help artists to distribute and market their work, share out royalties, break into popular playlists and identify which songs resonate most with listeners.These capabilities were long the preserve of big companies such as Vivendi SA’s Universal Music Group, Sony Music Entertainment and Warner Music Group. Now technology is making it easier than ever to be a successful independent musician -- distributor AWAL said hundreds of them are now making more than $100,000 per year from streaming.Merlin, a not-for-profit that negotiates distribution rights and royalties on behalf of independent labels and rights-holders representing self-publishing musicians, accounts for around 15% of the market. The organization has seen its share of major digital music platforms grow by 3.5 percentage points during the pandemic, its Chief Executive Officer Jeremy Sirota told Bloomberg.Some 68% of independent artists have reported making more music during lockdowns, according to a survey by Midia Research. It said the number publishing their own music direct to fans grew 31% between 2019 and September this year to 4.7 million.“These artists, who tend to be earlier in their career, are playing by different rules to established artists by releasing directly themselves or doing label services deals with next-generation record labels,” said Midia analyst Mark Mulligan.Here are some independent artists who are getting by, even flourishing, in the shadow of coronavirus:RACThe Portland-based musician and producer (real name Andre Allen Anjos) was on the cusp of an album tour in March when the live scene went into deep-freeze. Now he’s livestreaming sessions to paying fans on Amazon.com Inc.’s Twitch and using crowd-funding platform Patreon to give listeners access and bonus perks for a monthly fee. His sessions have been averaging 600,000 views a week. “You cannot play enough festivals in a week to reach that number,” he said.In some ways, livestreaming has an edge over physical performance. Multiple cameras give RAC’s fans an insight into his playing technique that they’d never get in a live concert. “I can really bring it down and have some semblance of intimacy. It feels like a new medium.”Chris WebbyThe Connecticut rapper is having the biggest success of his career with almost 60 million streams on Apple Music and Spotify since early March. “I’m not saying I can pull the strings some labels can, but in theory I can operate similarly and I own my music and that is the biggest deal for me,” said Webby. The key to his success is volume and consistency: By uploading a new track every other Wednesday for nine months of the year, he’s managed to acquire 1.5 million monthly listeners.Webby is nostalgic for the traditional approach still loved by many musicians: the slow, careful crafting of an album that you take on tour. Now “it’s all about singles and algorithms,” says Webby. “You have to learn that and stay on the cutting edge of these platforms.”He has different agents to distribute his work via YouTube and Spotify and uses back-end apps that analyze which songs are clicking with listeners, which he uses to pick the songs for his next album. “There’s one for Apple Music, another for Amazon Music, so one day I’ll find a song is doing incredibly well and decide to shoot a video for it.” And Webby is always mixing up his references: “Two days ago I dropped a song with a new singing approach, something like Johnny Cash, that sounds like nothing I did before.”Ryan CelsiusCelsius’s laid-back brand of lo-fi vaporwave has caught on with stressed listeners during lockdowns. He self-releases his work and manages other musicians in the same genre including Speechless, whose monthly listens have roughly doubled since February to around 2 million, helped by the lockdown-themed song “Isolation.” “Speechless is constantly collaborating with different artists and labels and spreading himself out so there’s no single point of failure,” said Celsius.He said solo artists are also collaborating more, or starting their own labels using amuse.io, a distribution platform that manages accounting and complex royalty splits. Another, Submithub, lets musicians boost their streaming profiles by connecting with curators of the most popular playlists. Fortunes.io tells an artist when their track has been put on a Spotify or Apple playlist so they can drum up more noise for their work on social media.“Covid has created a situation where everyone is almost on the same playing field -- the impact of a large artist’s label on marketing is a lot smaller,” said Celsius.Jayda GWhen lockdowns canceled her sets in Tokyo, San Francisco and Glasgow, the Canadian-born, London-based DJ ran a series of livestreamed “Virtual Get Downs” with donation links to raise money for the venues and local charities. The resulting social media publicity helped Spotify listens for Jayda G’s latest EP surge eleven-fold, earning her second spot in the platform’s largest electronic editorial playlist, mint.She used the Apple Inc.-owned music discovery app Shazam’s “Unlock” feature, and offered exclusive behind-the-scenes video content to give fans an incentive to add her tracks to their playlists on the service.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.