Written By: Niambi Bridge
In response to the rise of independent and distribution services, major record labels such as Universal Music, Sony and Warner have leaned into acquisitions to maintain their dominance.
For instance, Sony acquired an initial stake in The Orchard in 2012 followed by a further buyout in 2015 for full ownership of the company. The major label’s acquisition of AWAL in 2021 brought in a company recognised for its artist-friendly terms, including equitable revenue splits, minimal advances and full creative control.
However, Sony’s acquisition of AWAL raised concerns with the UK’s Competition and Markets Authority (CMA), which argued that it could stifle competition and reduce options for artists seeking independent paths. Following a two stage consultation addressing competitive considerations, the CMA ultimately decided to clear the deal.
Streaming has fundamentally changed how labels generate revenue, with many artists now choosing to go independent. This shift has reduced the share of digital streaming revenue that major labels earn from platforms like Spotify. Under Spotify’s “pro-rata” model, revenue is allocated on total play volume, which favours major players and leaves less room for smaller or indie artists. Consequently, some industry members are advocating for fairer payment structures that distribute streaming revenue more equitably.
Independent labels have been affected by these market shifts with many shifting focus from niche or emerging genres to safer, more commercially viable ones in order to survive.
As of Q3 2024, Universal Music Group maintains its hold as the largest market shareholder with a share of 38.47%, followed by Sony at 27.25% and Warner at 18.42%. Indie labels collectively account for 15.85%. Despite competitive pressures, the music industry remains profitable, evidenced by Universal Music’s decision to go public in 2021 and its remaining acquisition of PIAS, which boosted revenues.
Yet, these profitable moves have not spared the industry from layoffs and restructuring, particularly within Universal Music and Sony. In the UK, Universal Music recently consolidated several frontline labels into the Island EMI and Polydor Label Groups, aiming for efficiency but at the cost of job losses. Similar layoffs have hit the US, with cuts at Meta, Atlantic Records, Tidal, and other music-adjacent firms.
These redundancies raise important employment law issues, especially in the UK where stringent protections apply. Employers must conduct fair consultations and explore alternative roles to prevent unfair dismissal claims. Whilst high-ranking executives affected by these layoffs may receive substantial severance packages, they often face restrictive non-compete clauses that prevent them from joining competing firms or companies immediately, which complicates their job transitions.
· Mental health and union support : The emotional toll of job losses is significant, especially in a personal industry like music. Unions, such as the Musicians’ Union, frequently step in to negotiate fair exit terms, particularly for employees with royalty points or intellectual property rights tied to their work. This adds another layer of complexity, as questions around royalties and fair compensation post-layoff become essential considerations for affected staff.
· Impact on younger and Black employees: Young employees, interns and Black-driven labels often feel the effects of restructuring more acutely. Young workers face reduced job security and career growth as labels consolidate. Additionally, Black-owned labels may struggle to balance commercial survival with a commitment to promoting urban genres and Black talent amid industry cutbacks.
Despite the challenges, these structural shifts could offer a silver lining for some affected employees. As major labels like Universal and Sony restructure, opportunities may open up in freelance roles. Although there are less legal safeguards for freelancers in comparison to employees, this shift may allow former employees to work with a variety of artists across competing labels without traditional conflicts of interest. Freelancing also offers distinct advantages:
· Flexibility: Freelancers can choose projects that resonate with them, setting their own schedules and achieving a healthier work-life balance.
· Earnings potential: Freelancers have uncapped income potential, compared to fixed salaries in corporate roles.
· Diverse client base: Working independently allows professionals to collaborate with a broad range of artists, encouraging innovation without corporate restrictions.
· Entrepreneurial opportunities: Many may seize the chance to launch their own ventures, such as marketing, PR, or artist management services tailored to the evolving music industry.
As the industry continues to transform, some creatives are exploring new fields like TV, sports, gaming and influencing, where their skills remain relevant and can provide more stability. This period of change presents both challenges and opportunities for reinvention, particularly for historically underrepresented groups and emerging talent.