Universal Music Group: The Gatekeepers of Music - [Business Breakdowns, EP. 32]

**Patrick O'Shaughnessy** (0:00)
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**SPEAKER_2** (1:35)
This is Business Breakdowns.
Business Breakdowns is a series of conversations with investors and operators diving deep into a single business. For each business, we explore its history, its business model, its competitive advantages and what makes it tick.
We believe every business has lessons and secrets that investors and operators can learn from and we are here to bring them to you. To find more episodes of breakdowns, check out joincolossus.com. All opinions expressed by hosts and podcast guests are solely their own opinions. Hosts and podcast guests may maintain positions in the securities discussed in this podcast. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.

**Patrick O'Shaughnessy** (2:20)
Today, we are running a special episode of Business Breakdowns on our Invest Like the Best feed. When we launched breakdowns, we hoped to cover industries and businesses that were well known but poorly understood. This deep dive on Universal Music Group, UMG, and the music industry is just that. You will walk away with a whole new appreciation for artists, labels, and what streaming technology has done for a historic industry. If you enjoy this episode, please be sure to subscribe to Business Breakdowns on your preferred podcast player and check out our growing catalog of episodes.
Today, we're breaking down Universal Music Group. As one of the largest music businesses in the world, UMG is home to many of the world's greatest artists, including Taylor Swift, U2, and the Beatles catalog.
A discussion on UMG requires a deep dive into the history of music itself, how it was historically monetized, the shift from physical to digital, and what streaming has meant for various pieces of the ecosystem. Our guest, Arman Gokgol-Kline, a partner and investor at Ruane, Cunniff, and Goldfarb, walks us through that evolution of the music industry before we dive in on UMG. In our discussion, we first break down the industry pre and post Napster, looking at the ways music was sold historically and how that led to both record profits and a consumer revolution. We then assess streaming's impact on the industry and how contrary to what you might think, labels may be more important in a marketplace where it's easier than ever for creators to record and release music. Finally, we finish with UMG's place in the ecosystem, the primary drivers of the business, how they're able to attract the world's superstars, and how they think about deploying dollars to acquire new artists and timeless catalogs. Please enjoy this fantastic breakdown of Universal Music Group.
We get to talk today about one of my absolute favorite topics, which is music and the business behind it. I've been obsessed with music since I was right in that sweet spot of Napster, of like cresting into my music fandom right as Napster came out. And so I think that's the place we have to start. There's this line in the sand and the history of music. Maybe it's late 90s, early 2000s when the whole business changed. And we have to start there. Before we talk about UMG, maybe you can begin by just laying out what you view as the important points of history in the business of music.