Universal Music Group 2020

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Since 1999, the internet tremendously changed how people were consuming music. This technological shift became the first challenge that put the leader record music company Universal Music Group to the test. The company which was ten years ago the most profitable of the entertainment industry was then seeing its physical sales dropping month after month. Under the management of the very successful executive Doug Morris, Universal denied the change at the beginning. It proved ineffective and led the company to financial difficulties. Meanwhile, the democratization of the internet and the MP3 kept accelerating until a point where Universal could not anymore fight against it. Morris, known as a technophobe, was expected to be laid off. Pressured by the ticking clock, he embraced the internet in his very last year. By developing innovative new streams of revenues for Universal, he ultimately changed the whole industry. Lucian Grainge stepped up to Morris’s position in 2011. He directly began by diversifying Universal business and by playing the ball with technology companies. Over the next years, the second technological shift occurred with the arrival of the digital. This new technology resulted in the sudden apparition of streaming services. Their development reached a turning point in 2015 by establishing five strong downstream players: Spotify, Apple Music, Amazon Music, Tencent and YouTube Music. Those new players took over the industry revenues by generating 80% of it in 2020. The streaming had been increasingly jeopardizing music majors by controlling the distribution of content to the music consumer. This situation detrimental for both Universal and its artist must be dealt with before history repeat itself. To cope with their growing power over the market, Grainge will have to present a new strategy for the music company in the beginning of the 2020s.

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