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02 September 2022

What do Fleetwood Mac, Kate Bush, and Metallica have in common? Beyond the fact that they have all had numerous platinum albums, it is that they have all been part of the cultural zeitgeist recently due to a renaissance of catalogue music – that is music released more than 18 months ago (although in these cases, the music is decades out). The latter two re-entered the music charts after featuring in season four of Netflix’s Stranger Things, the most viewed English-language TV series of all time. Although the choice of music may have changed recently, this is not an entirely new phenomenon with TV and movies having used music to augment storylines for decades. The final scene of The Sopranos is iconic, not just for what viewers see, but also for what they hear – Journey’s “Don’t Stop Believing” adds a wistful booster shot to what is already a melancholic scene.

Martin Maloney

Martin Maloney

Senior Equity Analyst

Shutterstock 1773091049

However, even beyond traditional forms of media like television (albeit using new technology-enabled distribution formats), music has pervaded. Back in October 2020, Nathan Apodaca posted a TikTok video of himself sipping cranberry juice and lip synching to Fleetwood Mac’s “Dreams” as he skateboarded down the street after his vehicle broke down on the way to work. The clip went viral and resulted in “Dreams” generating 2.8 billion views on TikTok, 182 million streams on music platforms like Spotify, while also helping to sell an additional 86,000 Fleetwood Mac albums in the US.

“The advent of the digital age saw the market decimated by piracy in the noughties. The launch of Spotify and the era of streaming was enough to offset the decline and return the global industry to growth.”


After posting impressive growth in the 1980s and 1990s due to the introduction of new music formats (mainly cassettes and CDs), which prompted consumers to repurchase music they already owned, while also continuing to buy new releases, the advent of the digital age saw the market decimated by piracy in the noughties. Enter Spotify and the era of streaming, whose US launch in 2011 was enough to offset the decline and return the global industry to growth. However, it would be another ten years before the global recorded music industry once again generated enough revenues to surpass the previous peak in 1999. While the on-demand music streaming subscription model, pioneered and still led by Spotify, will continue to drive much of the future growth of the music industry, technology advancements across various media has increased the pervasiveness of music and created new monetisation opportunities. Just like it can lift a TV or movie scene, music also has the power to hold attention spans, inspire you to finish a workout, or bring video gameplay to life. According to Goldman Sachs Research, new licensing revenues from short-form videos, connected fitness, gaming, and podcasts have increased significantly in recent years and already contributed 5% of global recorded music revenues in 2021 on their estimates. By 2030, they expect emerging platforms to account for 12% of global recorded music revenues.

Short-form video is an especially interesting opportunity for the industry, with music now increasingly a core component of the user experience on social media apps such as TikTok, Instagram, and Snapchat. According to SensorTower, since its launch in 2017, TikTok has been downloaded more than 3.5 billion times (the only app not owned by Meta Platforms to surpass that milestone), while a 2021 report by the IFPI states that of the 5.6 hours per week spent on the platform on average, 3.9 hours are spent watching videos where music is a key part of the viewing. Additionally, whereas previous generations may have used the radio or MTV as a source of music discovery, Gen Zs and Gen Alphas will increasingly hear a song for the first time on social media (including tracks released decades earlier), before listening to the specific track on a streaming service.

“Universal Music Group, the largest recorded music company, is well positioned to benefit from the latest trends in the music world.”


In our view, the biggest beneficiaries of these trends will be the music labels and publishers. The top three labels, Universal Music Group (UMG), Warner Music Group, and Sony control c.70% of the recorded music market and 60% of the music publishing market. This dominance allows these companies to capture between 60%-70% of the global music revenue pool. We believe that UMG, as the largest recorded music company and home to many of the world’s most popular and influential recording artists, including Taylor Swift, Justin Bieber, and Kendrick Lamar as well as the owner of the rights to iconic catalogues including those from The Beatles, The Rolling Stones, and Bob Dylan, is particularly well positioned. The company’s superior scale enables it to drive a higher share of listening time than the rest of the industry on traditional streaming platforms as well as the emerging platforms. In addition, UMG has an unrivalled track record of breaking artists as well as a deep and broad music catalogue, which we believe will enable it to continue to take an outsized share of the revenue pool in the future.


This note has been produced by Killik & Co on the basis of publicly available information, and all sources are believed to be reliable, but we have not independently verified such information and we do not give any warranty as to its accuracy. Some of the stocks mentioned in this note are covered by Killik & Co’s Equity Research team and others are not. The mentioning of the stocks does not represent a recommendation to buy or sell any securities, and the note is intended as a marketing communication rather than research. This note does not purport to be a complete description of the securities, markets or developments referred to in the material. All expressions of opinion are subject to change without notice. Nothing in this note should be construed as investment advice or as comment on the suitability of any investment or investment service.  Prospective investors should take advice from a professional adviser before making any investment decisions. There are risks with almost every investment that you may not get back the original capital invested. The value of your investments may fall as well as rise and the past performance of investments is not a guide to future performance.