The world’s largest music label, Universal Music Group, has come up with yet another innovative approach to the industry-wide revenue problem. On Monday, Universal announced a partnership with Havas Group, a global advertising and public relations firm, to better target, appeal to, and attract new audiences.
The resulting establishment of the Global Music Data Alliance between Universal and Havas can be read as the label’s latest ploy to prop up sagging revenues as download sales go the way of the compact disc and the dinosaur (read: extinct). It is a nimble pivot for a major label stalwart, showing that UMG and chairman Lucien Grainge are not afraid to invest heavily in data mining and the digital market.
The music industry is in a state of serious flux. After digital music sales declined for the first time in 2013, they did the same thing this past year, confirming industry fears that music consumers were more and more prefering streaming sites like Spotify, Pandora and SoundCloud to download sites like iTunes, and with them the lower royalty payments back to artists and labels. Universal and fellow majors Warner Music Group and Sony Music Entertainment have seen revenues dip as a result. For the first six months of 2014, Universal posted revenues more than 10 percent lower than the same period of time in 2013. While its digital music side actually generated more revenue — thanks largely to a boom in streaming subscribers, though sites like Spotify have been blamed by artists and labels for not paying enough royalties — it was not enough to counterbalance revenue lost from physical sales.
With the Havas alliance, Universal is putting even more of their eggs into the digital basket in hopes that knowing their audience better will help them cut through the tremendous noise generated by the web. Universal already utilizes the industry-standard-setting Artist Portal, invented by former UMG interns, to go at the troves of audience data with a fine-tooth comb to best determine when to schedule releases, the best places to send artists on tour, and the best way to market their music.
Havas will act as an extension to that proprietary work done by the Artist Portal, adding a consumer behavioral element to the existing artist and fan data. If Universal can, at the moment, determine how best to market a band or artist to its current fans, the label is hoping Havas can help it target and attract new audience members for each of its vast catalogue of musicians.
There is a French connection between the two multinationals that likely smoothed any of the deal’s rough edges: Universal is owned by Paris-based Vivendi, and Havas is also based in the French capital. In fact, Vivendi’s chairman and largest shareholder Vincent Bolloré is also the largest investor in Havas. The latter company is run by his son, Yannick Bolloré, and the resulting partnership looks a way for the chairman to consolidate his holdings while also creating cross-industry synergy.