The companies setting the tempo

After years of sluggishness, the music industry has returned to growth. A turnaround that benefits many companies. Our selection.

By Bertrand Beauté

  • Foundation: 1994
  • Headquarter: Seattle (US)
  • Revenues: $386 BN (2020)
  • Effectives: 1.3 M
  • Stock Exchange:

Amazon is even good at music. In January 2020, the last time the e-commerce giant reported on its performance, its Amazon Music platform noted 55 million users, ranking the service third worldwide behind Spotify and Apple Music.

  • Foundation: 1976
  • Headquarter: Cupertino (US)
  • Revenues: $274.515 BN (2019)
  • Effectives: 147'000
  • Stock Exchange:

The tech superstar has not disclosed the number of Apple Music subscribers since 2019. At the time, it had 60 million. What about now? The number has most likely increased, especially since Apple has not sat around idle. In August 2021, the firm acquired Primephonic, a well-known classical music streaming service, to integrate new 
features into its own streaming platform.  

  • Foundation: 1957
  • Headquarter: Tokyo (JP)
  • Revenues: $2 BN (2021)
  • Effectives: 11'193

Formed in 1957 to introduce the world’s first electric calculator, Casio Computer now produces many other items such as watches, payment terminals and electronic musical instruments.

  • Foundation: 1989
  • Headquarter: Bremen (DE)
  • Revenues: € 256.840 M (2020)
  • Effectives: 2'049
  • Stock Exchange:

German group CTS Eventim specialises in live performances and ticketing. Its revenues were wiped out by the pandemic and successive lockdowns. In 2020, its revenue tanked by more than 80% to €256.84 million, down from €1.443 billion a year earlier.

  • Foundation: 1998
  • Headquarter: Mountain View (US)
  • Revenues: $182.5 BN (2020)
  • Effectives: 135'300
  • Stock Exchange:

Considered a bit of a vampire in the music industry, due to the hefty advertising revenue generated by YouTube which circumvents both labels and artists, Google is trying to re-glorify its image. In June, the giant from Mountain View announced that it had paid out $4 billion to the music industry in the previous 12 months. Will that be enough to convince artists that Google is now on their side?  Perhaps not. But Google’s tightening grip on music is causing unease among its rivals. With more than 50 million subscribers to its paid services as of last September, up from 30 million a year earlier, YouTube is showing dizzying growth and is amping up to compete more seriously with Spotify.

  • Foundation: 2018
  • Headquarter: London (UK)
  • Revenues: $138.389 M (2021)
  • Effectives: 35
  • Stock Exchange:

Royalties are generated every time a song is played legally, anywhere in the world. These revenues are basically divided into two parts: royalties for composers and lyricists, and recording rights. Until recently, record companies were mainly interested in the second part. As producers, they own these rights by definition. Plus, the rights represent a larger chunk of the pie (between 75% and 80% of the total, according to Spotify). But in the past three years, more and more players want in on the royalties. This phenomenon was initiated by one man, Merck Mercuriadis. 

A former manager of Elton John, Iron Maiden, Guns N’ Roses and Beyoncé, Mercuriadis launched Hipgnosis Songs Fund in 2018, which is listed on the London Stock Exchange. His firm buys back songwriter rights in exchange for royalties. Mercuriadis made a simple observation, "Hits never die". And more importantly, times have changed. In the days of CDs, songwriters made money through radio play and a percentage of record sales. That income dwindled over time. But that was then. With streaming, songs continue to generate lucrative royalties even years after their release. 

For example, "Wonderwall", the famous Oasis song released in 1995, is streamed an average of 750,000 times a week, generating $1 million a year on Spotify alone, according to Rolling Stone magazine. "These great, proven songs are very predictable and reliable in their income streams," Merck Mercuriadis told the BBC in October 2020. Since its creation, Hipgnosis has picked up tracks by Shakira, Neil Young, Blondie and the Red Hot Chili Peppers, who reportedly cashed in $140 million when they sold their catalogue to Hipgnosis in May 2021. For rock veterans, selling their rights is a way of building a comfortable nest egg, with their life’s work becoming readily profitable. In contrast, the pandemic stripped them of their main source of income – concerts – for many months. 

As of 31 March 2021, Hipgnosis owned 64,098 songs, most of them purchased during the pandemic. 
Out of these thousands of tracks, 36 have been listened to more than 
1 billion times on Spotify. This "Billions Club" had 156 tracks on the Swedish platform in March, which is an indicator of how far Hipgnosis has already come. Most analysts approve of the Hipgnosis business model and recommend buying shares. 

  • Foundation: 1927
  • Headquarter: Shizuoka (JP)
  • Revenues: $595 M (2020)
  • Effectives: 2'813
  • Stock Exchange:

With Yamaha, Japan is the land of the world’s leading musical instrument manufacturer. But the archipelago is also home to smaller manufacturers, such as Kawai Musical Instruments. Founded in 1927, the company has been making classical pianos for almost a century, and now more and more electric pianos and synthesizers.

  • Foundation: 2010 (Merger of live nation and ticketmaster)
  • Headquarter: Beverly Hills (US)
  • Revenues: $1.86 BN (2020)
  • Effectives: 8'200
  • Stock Exchange:

After several months at a virtual standstill, the global leader in concert and venue promotion is recovering with a promising future ahead. Driven by the return of concerts, particularly in the United States, Live Nation Entertainment’s revenue rose sharply in Q2 of this year, reaching $575.9 million, compared to $74.1 million over the same period the year before. When these results were published in early August, the group’s CEO Michael Rapino was optimistic: "Average ticket prices have been 10% higher than 2019 and most of our major festivals sold out in record time. Live music fans are eager to gather after more than a year in quarantine."

Live Nation Entertainment is an industry giant. Before the pandemic, it organised approximately 40,000 shows and more than 100 festivals per year, which adds up to 500 million tickets sold in total. As proof of its new-found confidence, the group reached an agreement in September to acquire Mexican event promoter Ocesa, another industry heavyweight, for $450 million. Live Nation Entertainment will take a 51% stake in Ocesa, which dominates the Latin American market for live concerts and streaming music. With this transaction, Live Nation Entertainment now has power over a very large market in which it was not previously present – having already successfully conquered Europe, Asia and Australia.

The company’s share price has increased sharply since a low point in March–April 2020, now hovering around $100. Most analysts recommend keeping shares, as they are already well valued. 

  • Foundation: 2020
  • Headquarter: New York (US)
  • Revenues: $180.4 M (2019)
  • Effectives: N/A
  • Stock Exchange:

As its name suggests, the US firm Madison Square Garden Entertainment manages Madison Square Garden, the iconic New York venue that has hosted myriad stars such as The Doors (1969), Elvis Presley (1972), Prince (1988), Guns N’ Roses (1991) and Ariana Grande (2017). The company controls other venues in the United States such as the Chicago Theatre and organises the Boston Calling Music Festival. Madison took a beating during the pandemic, seeing its revenues plummet 76% in the 2021 financial year ended June 30 compared to the previous year. 

  • Foundation: 1972
  • Headquarter: Hamamatsu (JP)
  • Revenues: Y64 BN ($563.7 M) (2020)
  • Effectives: 2'601
  • Stock Exchange:

"Be the best rather than the biggest." Roland’s motto appears to be a thinly veiled jab at its competitor Yamaha. The Japanese brand, which generates 85% of its revenue internationally, made a name for itself around the world with its electronic keyboards. Roland, which claims to be the only purely digital player in musical instrument design, has widely expanded its range since it was founded in the early 1970s. Keyboards still make up 28% of its revenue, but equipment for electric guitars and amplifiers bring in almost as much (26%), followed by electronic percussion instruments (23%). Remaining revenue is split between synthesizers and various audio products for making music. Pandemic-induced lockdowns around the world led to increased demand for electronic instruments that could be played at home. In fact, despite the closure of several brick-and-mortar shops, Roland’s revenue was not only stable in 2020, but even increased slightly ($563.7 million compared to $556.7 million a year earlier). For the current financial year, the company is doing well and after revising its growth forecasts upwards in early May, it expects revenue to increase by more than 20% and earnings to increase by nearly 80% in the financial year. The US and Europe represent more than 60% of sales, but China (12% of sales) is now leading the strong growth. Analysts expect this trend to continue and most recommend purchasing shares. 

  • Foundation: 2008
  • Headquarter: New York (US)
  • Revenues: $8.04 BN (2019)
  • Effectives: 4'500
  • Stock Exchange:

After acquiring the American streaming platform Pandora in 2019 for $3.5 billion, then buying a stake in the German platform SoundCloud in February 2020, the US satellite radio leader SiriusXM continues its shopping spree. In July 2020, the company secured itself the US podcast pioneer Stitcher for $325 million. 

  • Foundation: 2006
  • Headquarter: Stockholm (SE)
  • Revenues: € 7.88 BN (2020)
  • Effectives: 6'550
  • Stock Exchange:

Published in July 2021, Spotify’s quarterly results were disappointing. Founded in Stockholm in 2006, the Swedish company is showing signs of slowing growth. Over the first six months of 2021, the number of paid subscribers increased by only 6.5% to 165 million, compared to 155 million at the end of 2020. The thing is, the company had accustomed analysts to double-digit growth. And now music streaming’s historical leader faces increasingly fierce competition in a market where it is becoming complicated to stand out. "Music services are not like video streaming platforms, such as Netflix and Disney, because their content is not distinctive. They all have the same catalogues, which mainly come from the three major record companies: Universal, Sony and Warner," says Richard Speetjens, portfolio manager at Robeco. Offering more than 70 million tracks available at the click of a button – the equivalent of 400 years of uninterrupted listening – Spotify says it has exactly the same number of tracks as its competitors Apple Music and Amazon Music.  But unlike these giants, the Swedish firm does not have the luxury of offsetting losses with other activities. 

Despite that, Spotify is trying to set itself apart by expanding its offer, for example by investing in more podcasts. It now has over 2.9 million podcasts, compared to 500,000 at the beginning of 2020. The company has also announced that it will launch a high-resolution music catalogue (CD and studio quality) by the end of the year, following the example of platforms like Tidal and Qobuz.  

Despite operating in 178 countries, Spotify has yet to make a profit, posting a loss of €581 million in 2020. Although Spotify has not predicted when it will be profitable, the analysts we consulted are betting on 2023. Most of them recommend buying shares, which, after peaking at nearly $365 in February 2021, have since tumbled back below $250.

  • Foundation: 1998
  • Headquarter: Shenzhen (CN)
  • Revenues: $74.8 BN (2020)
  • Effectives: 85'858
  • Stock Exchange:

Asia’s online behemoth bought 10% of the Universal Music Group label in December 2020, increasing its stake to 20% of the share capital. Midia Research ranks Tencent Music as the fourth-largest streaming platform in the world, holding 13% market share. 

  • Foundation: 1998
  • Headquarter: Hilversum (NL)
  • Revenues: €7.4 BN (2020)
  • Effectives: 5'000
  • Stock Exchange:

Asked in 2017 about the ideal timing for Universal Music’s IPO, Vincent Bolloré replied, "IPOs are like cheese soufflés. You have to take them out at just the right time." In other words, when the dough has risen as far as it will go before it collapses. Today, no one has any doubt that the French billionaire, majority shareholder of Universal Music’s owner Vivendi, got his recipe right. Universal was listed on the Amsterdam stock exchange this September with a valuation of €33 billion, i.e. four times its value in 2013, when the Japanese company Softbank offered Vivendi €8.5 billion to buy it. 

In the 2010s, UMG nearly died out. Today, with its star-studded catalogue featuring Elton John, Paul McCartney, the Rolling Stones, The Weeknd and Eminem, the company is back, centre stage, as consumers have moved over the past decade from illegal downloads to streaming. In 2020, Universal Music generated €3.8 billion in revenue from streaming platforms, up from €3.3 billion in 2019. This segment now accounts for more than half of its total revenue of €7.4 billion. However, the music industry giant remains cautious. "There can be no assurance that this growth pattern will persist or that digital revenues will continue to grow at a rate sufficient to offset and exceed declines in downloads and physical sales," the group articulated in its lengthy listing prospectus for the Amsterdam stock exchange. In fact, Universal and other labels find themselves increasingly dependent on the algorithms of Spotify, Amazon and Apple, which can make or break a track. 

Today’s recorded music leader, ahead of Sony and Warner with market share of more than 30%, Universal Music believes that its financial success "depends and will depend on its ability to sign new artists". Currently, 54% of the label’s revenue is generated by its back catalogue of music (more than three years old). "One of the risks is that in the future artists will end up reaching consumers directly, without going through labels," says Richard Speetjens, a portfolio manager at Robeco. That could happen via current streaming platforms or via emerging technologies such as NFTs. "Technological advancements are rapidly changing the marketplace in which UMG competes and the nature of UMG’s competition," states Universal’s IPO document. Despite these challenges, most analysts recommend buying shares, which has already jumped 35% from its IPO price. 

  • Foundation: 1958 (Warner Bros.)
  • Headquarter: New York (US)
  • Revenues: $4,46 BN (2020)
  • Effectives: 5'500
  • Stock Exchange:

The world’s third-largest music label behind Universal Music and Sony Music Entertainment, Warner Music Group has made quite a comeback. Like its rivals, the label is emerging from a decade on high alert, as plunging CD sales sent it reeling into the abyss. Since then, the firm has gone beyond rising from its ashes. After a triumphant IPO in June 2020, its growth is currently exploding (up 32.7% over a year, in the third quarter of 2021). This is because the US record company, which features dozens of superstars in its catalogue (Ed Sheeran, Madonna, David Guetta, The Doors, to name a few), has benefited handsomely from the growth of paid streaming, which generates royalties.  

But Warner Music is looking further ahead and now wants to capitalise on social networks. At the end of September, the group announced that it had signed a momentous partnership with Twitch, the Amazon-owned live video streaming service. Warner Music plans to launch channels dedicated to its artists, to give their fans new ways to interact. Twitch channel subscriptions cost $5 a month, and 50% to 70% of that amount goes to the channel owner, depending on the number of subscribers. Streamers can also earn money from viewer "tips", a feature that allows viewers to make their comments more visible. Plus, channel owners can run ads during live streams. 

Most analysts recommend buying or holding Warner Music shares.

  • Foundation: 1887
  • Headquarter: Hamamatsu (JP)
  • Revenues: $3.31 BN (2020)
  • Effectives: 20'200
  • Stock Exchange:

Behind the name Yamaha are two distinct companies. The first, Yamaha Motor, is famous for the roaring mechanics of its motorbikes, scooters and boat engines, while the second, Yamaha Corporation, specialises in making music, literally. Founded in 1887 by Torakusu Yamaha as Yamaha Fûkin Seizōsho (which translates as Yamaha organ factory), the small keyboard factory has grown over the past century into the world’s leading musical instrument manufacturer. In 2020, more than one in four instruments sold on the planet came from the Japanese firm. Allied Market Research estimates that Yamaha’s musical instrument division alone brought in $2.47 billion in 2020, in an overall market estimated at $9.8 billion. 

Its domination emerges most clearly in its traditional business. The company produces 39% of all classical pianos sold worldwide, 50% of the digital pianos and 52% of the synthesizers. But Yamaha wants to shine beyond the world of keyboards. In the late 1950s, the Hamamatsu group embarked on an industry-wide diversification strategy. Since then, it has introduced line-ups of guitars, flutes and trumpets. Today, it holds a 31% share of the market in wind instruments and 9% in guitars. Yamaha’s well-rounded positioning is what makes it an instrument powerhouse against famous specialists in guitars (Fender and Gibson) or pianos (Steinway). 

Yamaha Corporation makes 64% of its revenue from musical instrument sales, 28% from audio equipment (amplifiers, software, mixing consoles, etc.) and 8% from industrial machinery, electronic equipment and automotive components. Most analysts recommend holding Yamaha shares, whose revenue fell by 4.6% in 2020 due to the pandemic. Note: despite their separation in 2001, Yamaha Corporation remains one of the largest single shareholders in Yamaha Motors and still owns 4.47% of its shares.