UMG UMG

The business

UMG is the largest of the three major music companies. It sells the right to use music: recorded-music royalties from streaming platforms (Spotify, YouTube, Apple, Amazon, TikTok), physical and download sales, publishing royalties from anyone who performs or licenses its songs, and artist merchandise. Recorded Music carries the franchise: €9.5B of FY2025 revenue, 76% of the total, with Music Publishing at €2.3B (18%) and merchandising the remainder. Inside that, subscription plus ad-supported streaming was 55% of H1 2026 revenue; the subscription royalty line is the stream the whole valuation rides on. The moat, in one sentence, is an irreplaceable catalog plus A&R scale that gives pricing power over any platform that needs music; whether it holds against maturing platforms is a separate audit.

What the financials do not show: UMG's revenue is a take-rate on other companies' subscriber bases, so growth decomposes into platform subscriber adds, price increases, and UMG's share of streams, and only the third is fully in its control. The last two quarters rewired the math. Downtown Music ($775M, closed Feb 20, 2026 per the completion release) added €288M of lower-margin artist-services revenue in H1. Ad-supported streaming excluding Downtown fell 3.9% in constant currency in Q2, which management attributed to deceleration at advertising-based platform partners and the timing of deal renewals. And Q2 subscription revenue excluding Downtown grew 6.7% constant currency, below the 8-10% band set at the September 2024 Capital Markets Day and roughly half of Q1's 12.5%.