Marketing analysis on Warner Bros Music Group

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A Market Analysis for
(Warner Music Group)
(Alexander Barrett)
Full Sail University
Project & Portfolio II: Business and Marketing
(6/27/2020)

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EXECUTIVE SUMMARY
The report is an in-depth look at Warner Music Group’s current condition in the market and also
a look into the projected future for the company and industry. Unfortunately, it was hard to find
in-depth financial information on WMG due to the company just recently entered the public for
trading, therefore all of the information presented was around the market that WMG is in.
The current trends in the music industry show that WMG is in a volatile moment in history.
COVID-19 has downsized projected earnings for 2020 by 29% (Wang & Wang, 2020) however,
there is still hope for the industry to be rise up to being worth $140 billion by 2030 (Wang &
Wang, 2020). The screaming halt is due to the cancelation of live concerts which is limiting
sources of income mainly down to streaming sales. There is, however, an opportunity to be had
because of spikes in vinyl sales as of late 2019 (Asprou, 2019). This is an opportunity to generate
hard copy sales which are much more profitable than streaming sales.

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Coachella Music Festival photo Brought courtesy of Rolling Stones Magazine
OBJECTIVE
For this analysis paper, the compiled information found can be geared towards the company’s
ability to overcome its artist distribution delay problems that have come up due to COVID- 19.
To overcome this issue, Warner Music Group (WMG) needs to rewrite its business model
around artists performing and selling merch via strictly the internet, to keep sales going during
the time being. Typically, music touring is the driving income for WMG because they can sell
merch and promote albums while on the road. Another threat on the table is the continued piracy
of music. The course of action that can be taken is in the form of vinyl records. According to an
article titled “Vinyl records to outsell CDs in 2019 for the first time in 40 years”, viny record
sales are expected to rise to 4.5 million (Asprou, 2019). However, this stat can be skewed due to
COVID – 19’s effect on the overall market right now.

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RESEARCH METHODOLOGY
For information brought forth in this paper, I used sources that were secondhand news articles
from the internet. The information was gathered in the month of June however, some of the
sources were published in late 2019. The challenges that came up were finding information that
reliable because it is pretty usual for privately owned record labels to have a lockdown on their
internal business affairs. It also should be mentioned that the statistical information brought forth
could be change due to COVID-19’s effect on the music industry.
RESEARCH AND KEY FINDINGS
Warner Music Group (WMG) is a record label that is involved in the promotion, development,
licensing, and marketing of signed artist’s music and is Traded on the NASDAQ. WMG also
owns many affiliated labels underneath its belt that vary by genre. They have Atlantic Records
for hip hop music, Warner Music Nashville for country music, and Spinnin Records for
electronic music. Through its large selections of artists, WMG has enriched music listener's
lives. These artists include Lil Uzi Vert, Ed Sheeran, Dua Lipa, and Bruno Mars to name a few.
Brand Statement: For WMG, music is more than a business, it’s the bread and butter of culture.
Music can empower us to love ourselves for who we are like Lizzo, it can infuse us with energy
like Jack Harlow. But most importantly, it can bring us together when we need it most.
Current State of the Music Industry: When doing research on the current condition of the music
industry, one can make a clear observation that it is hurting right now. According to a Rolling
Stones article on the music industry during COVID -19, the global music revenue is expected to
drop 25% (Wang &Wang, 2020). For the recorded music industry, specifically, it is predicted to
take a 29% dip from its original 2020 forecast (Wang &Wang, 2020). This a huge drop that will

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affect many music businesses such as WMG and many more, however, there is long-term good
news. Goldman Sachs, an American investment bank, predicts that the global music industry will
be worth $140 billion by 2030, the main earners being live shows and music streaming (Wang
&Wang, 2020).
WMG’s Target Market
Age: 18 to 34
Geographic: United States
Gender: Male (50%) Female (50%)
Usage Rate: 2-3 hours a day
Image courtesy of Bruno Mars 24k Magic World Tour

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CONCLUSIONS
With the information stated above, what does it mean for WMG? It can be concluded that the
company is competing in the market at the moment that is in a downfall at the current moment
due to COVID-19. And this will have a steep effect on the company. Currently WMG’s gross
profit for TTM is set at $2,093,000 with a net worth of $149,000,000. These could drastically
change for this quarter and the next depending on the handling of COVID-19. So for the time
being, WMG is going to have to get crafty with how they are going to churn a decent profit to
stay afloat during this crisis.
Image courtesy of Economic Times India

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RECOMMENDATIONS
A solution that can be favorable to WMG would be to vamp up marketing for vinyl records with
their artist’s new releases. As the article stated back in the objective, vinyl has been growing in
popularity amongst many music listeners, especially amongst indie music listeners who consume
bands such as Arctic Monkeys (Asrpou, 2019). It should also be noted that by pushing more
vinyl record sales, WMG can turn a great profit due to how much more they can make off of a
hard copy record vs a digital stream. Back in the glory days, WMG and many other labels were
making even more money than they were now because they were selling hard copy CDs to
consumers at $4.99 (Debbie, n.d) vs earnings of $0.006 per stream on Spotify (Livni, 2018). But
since the transition to streaming, record labels have been scraping for pennies to keep their
earnings up to keep afloat (Sisario & Russel, 2016). With all this being said, WMG can set a goal
next quarter of this year to get together a marketing plan to incentivize music consumers ages 18
to 25 (Music listening Habits in the U.S, By Age 2019, 2019) Males and females who listen to
indie/hip-hop, living in the U.S to want to buy a vinyl of their favorite artist’s new album. This
should be achieved within this year and needs to be reevaluated every financial quarter to ensure
that the new strategy is being received well from the target audience.

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REFERENCES
Asprou, H. (2019, October 22). Vinyl records to outsell CDs in 2019 for the first time in 40 years.
Classic FM; Classic FM. https://www.classicfm.com/discover-music/millennials-are-going-nuts-
for-vinyl-revival/
Atlantic Records Artists. (2017). Atlantic Records Official Website.
https://www.atlanticrecords.com/artists
Bruno Mars 24K Magic World Tour I 24K Magic Available Now. (2000). Bruno Mars Official Website.
https://www.brunomars.com/
Debbie, D. (n.d.). CD Production & Pricing. Soundwaves.Org. Retrieved June 28, 2020, from
https://soundwaves.org/shoppingcart/pages/CD-Production-&-Pricing.html
Hall, S. (2020, May 27). This is how COVID-19 is affecting the music industry. World Economic Forum.
https://www.weforum.org/agenda/2020/05/this-is-how-covid-19-is-affecting-the-music-industry/
IMF sees Indian economic growth rebounding to 7% next fiscal. (2019, October 23). The Economic
Times. https://economictimes.indiatimes.com/news/economy/indicators/imf-sees-indian-
economic-growth-rebounding-to-7-next-fiscal/articleshow/71720800.cms
Livni, E. (2018, December 25). Mariah Carey’s record-breaking day shows how little musicians make
from Spotify. Quartz. https://qz.com/1507361/mariah-careys-record-breaking-day-shows-how-
little-musicians-make-from-spotify/#:~:text=Spotify%20pays%20whoever%20holds%20the
Music listening habits in the U.S. by age 2019. (2019, June 12). Statista.
https://www.statista.com/statistics/749666/music-listening-habits-age-
usa/#:~:text=Music%20listening%20frequency%20in%20the%20U.S.%202019%2C%20by%20
age%20group&text=As%20of%20June%202019%2C%2068

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Sisario, B., & Russell, K. (2016, March 24). In Shift to Streaming, Music Business Has Lost
Billions. The New York Times. https://www.nytimes.com/2016/03/25/business/media/music-
sales-remain-steady-but-lucrative-cd-sales-decline.html
Smale, W. (2019, November 25). Downloading: “People said it would end record labels.” BBC News.
https://www.bbc.com/news/business-50475324
Wang, A. X., & Wang, A. X. (2020, May 15). Goldman Sachs Expects Global Music Revenue to Drop
25% This Year. Rolling Stone. https://www.rollingstone.com/pro/news/goldman-sachs-music-
revenue-report-2020-1000479/