Universal Music Group: Remixing the Future of Artist Autonomy
By: Carlo Rescigno
The Ivey Business Review is a student publication conceived, designed and managed by Honors Business Administration students at the Ivey Business School.
Universal Music Group (“UMG”) stands at a paradoxical juncture. As the world’s largest recorded music company, generating €11.83 billion in revenue in 2024, representing 6.5 percent year-over-year growth, its dominance within the global recorded music industry is indisputable. Yet this dominance conceals a structural dependency: in 2023, UMG’s streaming and subscription revenues grew by 10.4 percent in constant currency and accounted for the core of its earnings, a model that entrenches inequality and limits artists’ creative control.
UMG’s business spans recorded music, publishing, and merchandising, encompassing hundreds of subsidiaries, labels, and distribution networks.UMG maintains an extensive global presence across more than sixty countries , with some of the most influential artists in contemporary music—Taylor Swift, Stevie Wonder, and Justin Bieber to name a few. Yet despite this diversification, UMG’s earnings remain heavily concentrated in digital streaming, which accounted for approximately 64 percent of its total revenues in 2020.
Streaming is, in essence, a licensing system: record labels grant platforms access to their catalogues in return for per-stream royalties. Under prevailing agreements, streaming services retain roughly 30 percent of total revenue, while labels such as UMG secure about 55 percent, displaying inequality by privileging scale and corporate leverage over creative equity. This renders the pursuit of a sustainable career increasingly unattainable for new and emerging artists.
This dependency exposes another underlying weakness within UMG’s model, one that challenges its historical role as an intermediary in the value chain of the recorded music industry. While streaming has democratized access to mainstream media, it has also commodified creativity and transformed artistic expression into a function of algorithmic visibility and engagement metrics; by privileging signals such as track-completion rates, playlist inclusions, skip and repeat behaviour, and listener retention, streaming platforms reconfigure creative work into data-optimised performance rather than purely artistic endeavour. In response, direct-to-fan (“D2F”) models have begun to accelerate as credible alternatives: in 2024, independent artists who rely heavily on these platforms for monetization accounted for 46.7 per cent of the global music market, generating US $14.3 billion in revenue. Within this landscape, D2F models emerge as the next disruptive frontier—an infrastructure through which artists can reclaim ownership of their audiences, revenues, and data, and reassert creative autonomy in an industry increasingly governed by platform governance.
The Traditional Value Chain: Playing Loud on Borrowed Sound
Historically, record labels derived their dominance from controlling costly production and distribution channels, through high capital expenditure, rendering labels as necessary conduits between artists and audiences. The digital era dismantled these barriers. Today, music “can be produced in an artist’s bedroom at a level of fidelity that was once achievable only in professional studios,” and “virtually anyone [can] upload a recording to a streaming service or digital download vendor at very low cost”. Consider Chance the Rapper, an independent musician who, without the backing of a traditional label, released his mixtape Coloring Book in 2016 exclusively through streaming services and digital platforms. The project became the first streaming-only release to appear on the Billboard 200 and earned a Grammy Award.
The democratization of production redefined how music is made, but streaming fundamentally restructured how it is distributed. By centralizing music consumption within a handful of licensed platforms whose survival depended on access to the labels’ digital catalogues, streaming services temporarily restored the dominance of record companies. Yet this mutual dependency carried structural consequences. The major record labels’ (majors) bargaining power stemmed less from innovation or talent discovery than from their control over catalogues indispensable to any streaming platform’s viability.
Spotify, recognizing this imbalance, began promoting independent music through curated playlists, gradually loosening the majors’ grip on algorithmic visibility. Between 2017 and 2020, the share of independent tracks on Spotify’s new-music playlists increased from 38 percent to 55 percent, cutting into the majors’ share of streaming-driven revenues. Catalogue ownership—the traditional basis of label leverage—has been replaced by algorithmic discovery and large-scale curation, where influence is determined by engagement data rather than institutional power.
The Direct-to-Fan Model Explained
The rise of D2F platforms represents the next stage of this disruption. A D2F platform is a digital infrastructure that allows artists to sell music, merchandise, and experiences directly to their audiences, bypassing reliance on labels or streaming services. As such, the D2F model offers higher profit margins for artists and gives fans the assurance that the product they purchase comes directly from the artist. This model is a framework for cultivating stronger artist–fan relationships, diminishing the separation between creator and consumer while translating loyalty into a sustainable and recurring source of income.
A prominent example of this sustainability in practice is Bandzoogle, a website-building platform for musicians that integrates music sales, e-commerce, and analytics tools into a single artist-controlled hub. In 2023 alone, Bandzoogle facilitated US$16.45 million in commission-free sales for artists, marking a 21 percent year-over-year increase. Bandzoogle demonstrates the viability of artist-led commerce: where labels once controlled capital and audiences, D2F models reroute both through artist-owned marketplaces that privilege transparency and community over scale. For UMG, the threat lies in the gradual erosion of its historical role as a cultural gatekeeper in an industry where the independent sector has grown to account for 29.7 per cent of global recorded-music revenues.
Yet, D2F ecosystems are not without challenges. Independent artists often lack the marketing infrastructure, legal expertise, and data analytics that labels provide. D2F success requires sustained fan engagement, logistical support, and capital—resources that individual artists rarely possess. This explains why, despite its democratizing potential, the label system persists. UMG’s comparative advantage lies in its ability to combine creative infrastructure with strategic data utilization—capabilities that independent D2F platforms cannot match. The opportunity, therefore, is not to dismantle the label but to modernize its role: from a gatekeeper of distribution to a facilitator of artist autonomy.
A New Rhythm in Recorded Music Industry
Technological transformations have coincided with a shift in the moral economy of music, the values governing fairness, legitimacy and creative ownership. Today’s artists conceive of their careers entrepreneurially, demanding transparency, data access, and revenue participation. This changing ethos not only challenges the legitimacy of major labels but also creates space for alternative models such as D2F.
Consequently, the legitimacy of the major-label paradigm has come under sustained scrutiny. Streaming has entrenched what commentators describe as “a hierarchy of winners and losers”, in which artists earn only fractions of a cent per stream while labels and platforms retain the vast majority of revenue. This imbalance has intensified discontent among musicians who regard the streaming economy as incompatible with both creative autonomy and fair labour practices, exposing UMG to mounting reputational and structural risk. Many emerging musicians now regard record deals as instruments of constraint rather than opportunity, seeking instead to retain independence and direct control over their creative output. UMG’s challenge, then, is not merely financial but strategic: In an era that equates artistic independence with credibility, how can a global label preserve its authority without undermining the very creativity it depends on?
A New Track: Direct-to-Fan
In its 2024 Annual Report, UMG itself admitted that future growth must come not only from existing partners but also from “[its] own direct-to-consumer channels”. A D2F incubator would give practical effect to this mandate by enabling early-stage creators to monetize independently, cultivate audiences, and establish market credibility without immediate corporate oversight. Rather than absorbing these artists prematurely into UMG’s conventional structure, the incubator would operate as a transitional framework that preserves creative autonomy while positioning UMG as a facilitator rather than a gatekeeper. Integration into the company’s broader distribution network would occur only once an artist’s commercial trajectory aligns with UMG’s scale, ensuring that participation in its system reflects strategic choice rather than dependency.
Mid-Emergent Eligibility
Eligibility would target “mid-emergent artists”—a cohort positioned between nascent independents and commercially established acts. These are artists who have surpassed the earliest stages of audience discovery but have not yet attained the stability or bargaining power associated with label-backed mainstream performers. Mid-emergent artists would be defined as those maintaining approximately 50,000 to 250,000 monthly listeners across major streaming platforms or demonstrating equivalent traction through social media engagement metrics (e.g., sustained followership, active fan-to-artist interaction rates) and sales performance via merchandise or ticketing, where applicable. A ceiling of 300,000 monthly streams would mark the upper boundary of participation, ensuring equitable allocation of resources while excluding acts that have reached commercial maturity.
Positioning eligibility within this intermediate bracket acknowledges a persistent structural imbalance in streaming economics. The so-called “squeezed middle”—those neither obscure nor mainstream—exists in a paradox: too visible to be dismissed, yet too small to benefit from algorithmic favor, high-volume royalties, or major-label investment. The current ecosystem rewards virality rather than viability, leaving artists who fall between 50,000 and 300,000 monthly listeners to navigate an unsustainable gap between exposure and income. Their path to sustainability instead lies in cultivating niche durability by developing devoted, high-engagement audiences who convert attention into direct financial support through fan memberships, merchandise, and exclusive content. Accordingly, the mid-emergent eligibility threshold is strategically positioned above leading streaming platforms’ 1,000-stream floor—where nearly 87 percent of tracks fail to generate any revenue—and below the 200,000 to 330,000 stream range often cited as the minimum for subsistence income. This process could be strengthened through Universal Music Group’s digital infrastructure and audience network. The company reports an “owned audience” of more than 200 million registered fans, giving creators access to one of the most extensive music communities worldwide. Restricting eligibility to independent and emerging talent protects UMG’s established roster from revenue and platform pressures while creating a controlled, low-exposure setting in which the company can credibly pilot D2F strategies with artists whose growth capacity offers measurable engagement and scalable brand value.
Strategic Alignment and Managerial Responsiveness
At its September 2024 Capital Markets Day in Paris, UMG presented investors with a cohesive vision on sustaining their growth through a platform model centered on owned audiences, superfan monetization, and D2C integration. These initiatives are primary levers of long-term value creation and core components of UMG’s next phase of corporate evolution.
Evidence of this strategic realignment is already tangible. UMG reported operating over 1,300 artist and brand stores across 30 countries, reaching approximately 100 million fans and achieving a 33 percent compound annual growth rate in D2C revenue between 2021 and 2023. This scale positions UMG’s D2F capacity as fundamentally distinct from independent platforms. Beyond facilitating direct sales, it embeds artists within a global audience network that smaller intermediaries cannot replicate. The company’s integrated production ecosystem, which includes recording studios, merchandising infrastructure, and digital marketing capabilities, further reduces barriers to entry and accelerates the commercialization of creative output. In this configuration, direct-to-consumer engagement evolves from a supplementary revenue stream into a strategic channel for enhancing artist equity, cultivating durable fan relationships, and driving sustainable, higher-margin growth.
The ABBA Voyage project provides a striking example of this strategy in action. Developed in partnership with ABBA’s management, the project reimagined the band as “digital avatars” performing in a purpose-built London venue, merging cutting-edge production technology with immersive audience engagement. The result was a 500 percent increase in streams and a 566 percent rise in superfan revenue since 2018, with over 60 percent of the audience under the age of 34. Equally significant were the project’s production economics Although the virtual residency cost around £140 million to create, one of the most expensive concert productions ever, it avoided the recurring touring, logistics, and personnel expenses that typically erode profitability in large-scale live performance. Its fixed digital format means a massive upfront investment, but far fewer ongoing expenses. By capturing sustained ticketing and merchandise revenue without the overhead of continuous touring, Voyage demonstrated how Universal Music Group can convert legacy catalogues into scalable digital assets that extend fan engagement, reduce cost exposure, and prove the commercial sustainability of immersive, data-driven experiences.
Complementing this, UMG’s continued investment in CRM integration, first-party fan data, and owned playlist ecosystems has driven roughly 50 percent year-over-year growth in superfan customers, further embedding D2C into its operational fabric. Across these initiatives, the company’s posture is unmistakable: UMG is systematically repositioning itself from a passive distributor of content to an active orchestrator of artist–fan relationships, embedding D2C logic at the core of its business design.
Structural Capacity and Integration
The proposed D2F incubator fits strategic priorities of UMG’s leadership and consolidates existing competencies (particularly those established through the acquisitions of Fame House and mtheory LLC’s label-services division) into a unified framework designed to serve emerging artists.
UMG’s existing infrastructure already provides a strong foundation for implementing a D2F incubator, having been deliberately built through strategic acquisitions that enhanced its artist-facing and digital capabilities. In 2016, UMG acquired Fame House LLC, a digital marketing and e-commerce agency specifically to strengthen its internal capacity for artist-focused marketing and online retail operations. The transaction allowed UMG to bring its digital merchandising, analytics, and consumer-engagement functions in-house—an early recognition that the future of music commerce would depend on direct fan relationships rather than third-party distribution channels. A similar logic guided UMG’s 2022 acquisition of the label-services division of mtheory LLC, whose co-founders were appointed to lead the company’s newly created Virgin Music Group, a global artist-services enterprise. This transaction expanded UMG’s infrastructure beyond traditional label functions, integrating global distribution, marketing strategy, and business management into a service-oriented platform designed to empower artists as independent entrepreneurs. By internalizing these service capabilities, UMG positions itself not as an owner of creative output but as an enabler of it, offering artists the tools, data, and operational resources to scale their careers on their own terms. In this model, independence is not defined by separation from major labels but by the ability to exercise creative and commercial control within a supportive institutional framework.
Operationalizing the Incubator
UMG is fit with the operational architecture to embed the D2F model within its existing structure. Fame House’s e-commerce and digital-marketing expertise would anchor the D2F incubator's technological base, while Virgin Music Group’s service-oriented framework would provide operational breadth and global reach. By integrating these divisions under a unified incubator, UMG could transform its D2C capability from a reactive service function into a pipeline that identifies and develops emerging artists, captures granular fan data, and converts early engagement into commercial momentum. In doing so, the company would advance the same economic and cultural logic underpinning its Streaming 2.0 strategy: low-risk, data-rich innovation that reinforces UMG’s evolution from a rights owner to a partner in creative entrepreneurship.
Implementation would most practically begin with a phased pilot program within Virgin Music Group, enrolling a select cohort of mid-emergent artists. Each artist would gain access to UMG’s D2C infrastructure through Fame House LLC—digital storefront design, CRM integration, and global fulfillment—while maintaining ownership of their creative assets. Performance analytics from the pilot stage would feed directly into artist and repertoire (“A&R”) and marketing teams, establishing benchmarks for audience conversion, merchandise sales, and retention. Once optimized, the D2F incubator could scale through regional hubs, adapting campaigns to local markets in North America and continuously aggregating insights into a centralized data system. This deliberate, data-driven rollout embeds D2F engagement as a permanent layer of UMG’s artist-development ecosystem, ensuring the company captures both creative and financial value at the earliest stages of growth.
Ending on a High Note?
The crossroads facing Universal Music Group is larger than any one initiative. It is a question of what kind of power survives in a world where artists can reach their audiences without permission. For a century, labels defined the structure of musical legitimacy; now, legitimacy is migrating toward transparency, authenticity, and direct connection. Whether UMG adopts a D2F incubator or another form of reorientation, its task is no longer to defend its dominance but to reimagine the basis of it.
The organizations that will withstand the next decade of cultural transformation will be those that understand that data, infrastructure, and capital produce their highest returns only when they empower the systems and stakeholders that sustain them. UMG’s defining advantage has long been its ability to perceive the direction of the industry before its competitors, translating foresight into dominance. The question is whether it will once again choose reinvention over the comfort of established practice and affirm that genuine leadership in the global music economy endures only when institutions align themselves with the art, and the artists that give them purpose.
Editor(s): Jonathan Wang, Asima Hudani
Researcher(s): Michael Au
