Interview Synopsis

Warner Music Group – IPO & Business Outlook

  • Multi Asset
  • Consumer
  • North America

The music industry has overall proven resilient during COVID-19, but other trends are changing what it takes to stand out from the crowd, a former president at Warner Music Group Corp told Third Bridge Forum. 

Industry expert sounds notes of caution about changing record label landscape

The Interview started with an industry overview and summary of Warner Music Group’s operating environment, touching on the shifting dynamics between artists, labels and retailers. The specialist was also asked whether the notion of the “unhappy artist” is a meaningful trend in relation to the broader theme of bypassing labels.

How COVID-19 has impacted the industry was also discussed, with streaming having benefited. The pandemic “hasn’t been a disaster for recorded music in the way it has been for live music and, to an extent, it’s made some artists and managers reassess the value of their recorded music,” the expert said. He also shared his views on how Warner is faring compared with Sony and Universal Music Group, its main competitors. 

Another area of focus was whether consumption has trended meaningfully toward front-line music and away from catalogue in recent years. As more consumers turn to the world of streaming, the more diverse consumption becomes. In terms of YoY growth, off-roster is the fastest-growing segment, the Interview revealed. There is also “real upside” when younger listeners discover older songs.

The Interview also considered how moving into more local A&R (artists and repertoire) areas will be a boon for growth across the label landscape. Warner, Sony and Universal have all opened offices in new geographies, but whichever player gains the most ground in India or Africa, for example, will have a competitive advantage over the next five years. 

The specialist also noted that a big future threat to record companies would be a player like Apple or Spotify signing artists directly. Although there is currently no infrastructure in place to enable this, “that’s arguably the next step and a very frightening one, in the eyes of the record labels”. 

Overall, record companies are well placed to continue making money. However, “it’s going to be tougher every year for them, without a doubt”. 

To access all the human insights from Third Bridge Forum’s Warner Music Group – IPO & Business Outlook Interview, click here to view the full transcript.

The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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