For Major Labels, 2024 Was the Year of Independents

In the ‘00s, The Smashing Pumpkins frontman Billy Corgan looked at the disruptive nature of early social media platform MySpace and saw the death of the record label. It didn’t exactly work out that way — not with MySpace, not with Facebook, not with TikTok. In fact, the major music companies became adept at using these platforms to break artists and perpetuate their market power; if there’s a breakout song on TikTok, labels rush into an old-fashioned bidding war. While social media certainly disrupted the music business, it didn’t uproot the traditional record label model.

There have been numerous other game-changers over the years that failed — on their own, at least — to radically alter how major labels do business, including independent distribution. After TuneCore launched in 2006, major labels continued to sign artists and own their intellectual property, albeit to broader “360” deals that incorporated more than recorded music rights. Nor did the advent of streaming by itself reshape the structure of major record labels. The artists with the most streaming success are involved with major labels in one way or another, be it a traditional record contract, a joint venture or, in rare cases like Taylor Swift, a distribution deal.

Corgan may have misjudged social media’s sole impact on record labels, but he wasn’t entirely wrong about its ultimate influence. When combined, social media, independent distribution and streaming form a potent combination that has changed the balance of power and induced major labels to change how they promote music around the world. This dynamic isn’t exactly new, but it was never clearer than in 2024. This year, major labels have increasingly embraced the role of being service providers to those parties who prefer to remain independent and retain ownership of their intellectual property.

A few years ago, Universal Music Group (UMG) was pouring money into superstar acquisitions such as Bob Dylan’s and Sting’s song catalogs. More recently, the company has been focusing on its artist services model. In the last three months alone, UMG acquired indie label group [PIAS] and agreed to acquire Downtown Music Holdings for $775 million, though the proposed deal has encountered opposition from the independent music community and will need to pass regulatory scrutiny before being finalized. The company also purchased Outdustry — which has an artist- and label-services arm that focuses on China, India and other high-growth emerging markets — and bought a stake in Chord Music Partners, giving UMG distribution and publishing administration duties for the more than 60,000 songs in the investment vehicle’s catalog.

In fact, 2024 played out much like UMG CEO Lucian Grainge said it would. His January memo predicted the company would continue to expand globally and offer labels outside of mature markets a “full suite of artist services” while “acquiring local labels, catalogs and artist services businesses.” To be fair, UMG was already on that path: In 2022, it acquired m-theory’s artist services company and installed its founders, JT Myers and Nat Pastor, as co-CEOs of Virgin Music Group to expand Virgin’s independent music division globally.

Warner Music Group (WMG) appears to have sensed the shifting landscape, too, as there has been a noticeable shift in messaging during Robert Kyncl’s tenure as the company’s CEO. In the Stephen Cooper era, WMG was the music community’s leading investor in Web3 startups. In contrast, Kyncl has chosen to focus on expanding WMG’s footprint globally. WMG briefly signaled its interest in acquiring Believe in March and April after the French company announced a CEO-led effort to take the company private. Notably, Believe has a global label services business and a presence in developing markets that take advantage of the “glocalization” of local markets and global streaming platforms’ ability to help music travel across borders. WMG ultimately passed on pursuing Believe, but Kyncl has followed his peers’ interest in emerging markets, purchasing stakes in Indian companies Divo and Global Music Junction.

The service model isn’t an entirely original approach. Grainge wrote that UMG is “creating the blueprint for the labels of the future,” but UMG is doing what major music companies have always done: following trends and buying independent companies that established a particular market. Sony Music already bought into the service model with The Orchard and AWAL, the latter purchased in 2022 for $430 million. Independents such as Believe, OneRPM and Symphonic Distribution have become established players by combining distribution and artist services, while investors have poured money into independents such as Create Music Group — which this year raised $165 million at a $1 billion valuation — and gamma, which is backed by $1 billion.

But the well-established blueprint was never more of a hot commodity than in 2024. In the music business, nothing signifies the relevance of a business model like the major labels’ desire to buy it and integrate it into their systems — especially when the largest music companies feel they have no choice. The holy trinity of social media, independent distribution and global streaming platforms has given artists an alternative to the much-derided major label record contract. Artists who want to own their intellectual property and have more creative control have never had more of the tools necessary to be independent. That includes financing options, such as advances from well-funded independents or royalty advances from a new breed of financial services companies. When there’s no need for radio promotion and shelf space at brick-and-mortar retailers, the independent model looks a lot more attractive — not only for artists but for the major labels that have become increasingly keen on buying into it.

Ironically, the major labels’ acceptance of the independents’ business model means the music business is becoming less independent. Trade groups such as the Association of Independent Music and IMPALA quickly spoke out against UMG’s agreement to purchase Downtown, just as they did with Sony Music’s purchase of AWAL. U.K. regulators ultimately concluded that AWAL was a “relatively small player” and that the deal did not substantially reduce competition. Time will tell if competition watchdogs feel the same about UMG’s much larger purchase of Downtown. In any case, the independents have proved that artist and label services businesses are a good fit for the modern music business. The next step was always going to be consolidation.