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Just when you thought record companies were groovy again, Warner Music Group put plans to list on the stock exchange on hold.

News agency Reuters reported on Monday that the planned flotation of the record label by its owner, Access Industries (a privately held holding company founded by Len Blatvanik) has been postponed because of the coronavirus.

(Pause button hit while journalist wonders whether he can squeeze in a Big Joe Turner “Corrinne, Corrinna” reference here).

Well, not so much because of the coronavirus but because of the collapse of the stock market, which was caused by fears about the spread of the virus.

The chances are that the initial public offering (IPO) will be back on again when markets recover because music labels are suddenly hot again, baby!


In the era of digital downloads, the music companies weren’t doing so well (Apple was doing very nicely, thank you, but that’s another story) but the explosive growth in streaming services has breathed new life into the industry.

According to the Recording Industry Association of America, the US record business – if you’ll forgive a term so antiquated (whatever they say about vinyl sales overtaking CD sales) – had been raking in a steady US$7bn or so each year between 2011 and 2015 before rising 11.4% in 2016, 16.5% in 2017 and 12% in 2018.

The first half of 2019 saw total revenues in the USA up 13.5% year-on-year and revenue from streaming services rise by 26% to US$4.3bn, accounting for around four-fifths of the industry’s total revenue.

Music streaming leader Spotify has more than 100 million subscribers, and Apple Music, with 56 million paid subscribers, has found another method by which it can milk its fanatically loyal clientele dry.

Artists, even very successful ones (often speaking on behalf of niche artists) complain that they are only paid an infinitesimal amount for each song that is streamed, but all of those gazillions of plays add up to a lot of bread (maaan) for the music companies.

“There is a structural fault in the market, a mismatch between what user-upload platforms are making from music and what they are returning to rights-holders. Until that is fixed there will always be a struggle to keep growth in the marketplace,” Frances Moore, the chief executive of the IFPI, the self-proclaimed “voice of the recording industry worldwide”, told The Guardian newspaper back in April 2018.

Not going down the (You)tube anymore

That may still be so and there is no denying that there is a ton of music on YouTube for which the music companies, publishers, songwriters and recording artists are not receiving a penny but things are definitely looking poptastic for record labels these days.

The financial community really started to sit up and take notice of the burgeoning value of music companies when a consortium led by Chinese leviathan Tencent agreed to buy 10% of Universal Music Group late last year at a price that valued the Vivendi-owned Universal at more than US$33bn.

Given that just two years earlier Universal was valued at just US$23.5bn, that sort of capital appreciation caught the attention of a hard-nosed businessman such as Access Industries’ Len Blatvanik.

Early in February, he announced that Access would float off part of Warner Music, while retaining overall control of the business.

The planned flotation would not see Warner Music receive any money but then the record label does not need it – this is no “jam tomorrow” (Johnny) cash-burning technology “unicorn”, it’s a money-making business with an enviable back-catalogue going back 60 years or so; its current hot acts include Ed Sheeran, Bruno Mars and Dua Lipa.

According to its IPO filing, in the year to the end of September 2019, Warner Music had net income of US$258mln on revenue of US$4.48bn.

The company paid a quarterly dividend of US$37.5mln – almost enough to pay Elton John’s annual “flowers” expenditure in the eighties – to its stockholders in January of this year, so it is probable that Access Industries does not need the money but it saw a chance to (Johnny) cash in quick [Enough with the Johnny Cash quips – Ed]; with reports indicating Access was seeking to trouser US$100mln through the flotation.

Since the coronavirus became more widespread than another Marvin Gaye copyright breach lawsuit, however, money has, in the words of the Valentine Brothers, become too tight to mention, hence the reported decision to put the IPO on pause.

In the meantime, Blatvanik can console himself by listening to Irma Thomas’s classic, “Time Is On My Side”.