This is all financial engineering.<\/p>\n
The best explanation I’ve read is in the “Wall Street Journal”:<\/p>\n
“Is Bill Ackman’s Deal for Universal Music Really Worth $63 Billion?”<\/p>\n
https:\/\/www.wsj.com\/livecoverage\/stock-market-today-dow-sp-500-nasdaq-04-07-2026\/card\/is-bill-ackman-s-deal-for-universal-music-really-worth-63-billion–WYWiZPspSu6UibG7trfl?mod=Searchresults&pos=1&page=1<\/p>\n
You don’t need an MBA to understand all this, yet it still might be above your pay grade.<\/p>\n
Ackman wants to sell Universal’s stake in Spotify, add debt to the company and list its stock in the U.S. All in the hope of raising the share price which has been languishing, he believes unfairly.<\/p>\n
What is depressing Universal stock?<\/p>\n
Primarily two things… AI and the fear that Spotify, et al, are running out of potential subscribers.<\/p>\n
Now somehow, Netflix keeps adding subscribers, even though the Street thought it couldn’t and the stock cratered before it rebounded, and if you look at the number of people in the world…then again, only the low-hanging fruit can pay western prices. And Universal doesn’t control the pricing, so…<\/p>\n
Analyze the numbers all you want, that’s not what I’m concerned with.<\/p>\n
What does Bill Ackman know about music?<\/p>\n
I won’t say absolutely nothing, but it’s far from his area of expertise.<\/p>\n
Isn’t this how we got into this mess?<\/p>\n
Edgar Bronfman, Jr. rolled up companies to form Universal, but then blew control to Vivendi and…<\/p>\n
Now the company is publicly traded, but…<\/p>\n
Kinda like Hipgnosis losing control of all those copyrights, them going to the bank.<\/p>\n
Ackman doesn’t care about Taylor Swift, nobody on the Universal roster, he cares about MONEY! He wouldn’t be proposing this deal unless he thought it was profitable. It’s not like he’s got a hit act in his back pocket…<\/p>\n
And then there was Guy Hands and EMI…<\/p>\n
Now the difference between tech and record companies is that in tech, the founders learned their lesson, they maintained control after their companies went public. You’ve got Zuckerberg at Facebook, and Larry Page and Sergey Brin at Google and…<\/p>\n
Zuckerberg might have been plain wrong about the metaverse, dropping nearly a hundred billion wasted dollars into the effort, but no Wall Street titan would approve such an investment. But one thing Zuckerberg knows about tech…you evolve, reinvent, disrupt or you die.<\/p>\n
It’s not quite the same thing in music, where what you’ve done in the past, the catalog, is an incredible driver of revenue, and oftentimes pure profit.<\/p>\n
Actually, one could make a good case that Universal should stop investing in new music and just become a catalog house. One can look at the numbers that way.<\/p>\n
But music is not about numbers, but feel.\u00a0<\/span><\/p>\n But everybody with ground floor experience, the founders are not in control at record labels. Oh, we’ve got a couple of post-indie people like John Janick, but he doesn’t call the big shots, he doesn’t steer the ocean liner.<\/p>\n Which is why innovation is all coming from the indie sphere. Which is why the majors woke up and invested in indie companies.<\/p>\n So is Ackman’s plan good for music?<\/p>\n Well, the film\/TV industry thought that Netflix’s proposed purchase of Warner Bros. Discovery was bad for production…<\/p>\n Then again, Netflix is a newbie. And nimble.<\/p>\n There are no nimble newbies in the recorded music landscape, because financially it doesn’t add up, because the majors all have their catalogs.<\/p>\n If this deal goes through is it terminal?<\/p>\n No, but it’s a step in the wrong direction.<\/p>\n Music is an entrepreneurial business. Not only can production be cheap, but distribution is now too. And this is good for music, but potentially bad for Universal… I mean where is the innovation at major labels? They don’t take any major risks anymore, signing unknown talent in various genres and breaking it, they sign that which is already broken…<\/p>\n If you sell out to the man too much, it ultimately bites you in the ass.<\/p>\n Take that record deal, sell your publishing, if you think you got the better of money, you think money can write a hit song. It can’t, but money knows finance, and it’s not going to let you get the better side of a deal.<\/p>\n And now these same financiers are in control.<\/p>\n Look at Kyncl over at Warner, it seems his plan for growth is to continue to purchase new, mainly tech companies. Note that it’s not about signing\/breaking new acts.<\/p>\n It’s a sad day for recorded music.<\/p>\n Then again, one can say the indies have already won. The hits are smaller than ever and the indie piece of the pie keeps growing and…<\/p>\n Financial engineering is never good for art. Remember that.<\/p>\n <\/p>","protected":false},"excerpt":{"rendered":" This is all financial engineering. The best explanation I’ve read is in the “Wall Street Journal”: “Is Bill Ackman’s Deal for Universal Music Really Worth $63 Billion?” https:\/\/www.wsj.com\/livecoverage\/stock-market-today-dow-sp-500-nasdaq-04-07-2026\/card\/is-bill-ackman-s-deal-for-universal-music-really-worth-63-billion–WYWiZPspSu6UibG7trfl?mod=Searchresults&pos=1&page=1 You don’t need an MBA to understand all this, yet it still might be above your pay grade. Ackman wants to sell Universal’s stake in Spotify, add […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[2],"tags":[],"class_list":["post-23111","post","type-post","status-publish","format-standard","hentry","category-music-business"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p96vPs-60L","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/23111","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/comments?post=23111"}],"version-history":[{"count":1,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/23111\/revisions"}],"predecessor-version":[{"id":23112,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/posts\/23111\/revisions\/23112"}],"wp:attachment":[{"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/media?parent=23111"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/categories?post=23111"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lefsetz.com\/wordpress\/wp-json\/wp\/v2\/tags?post=23111"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}