A Market Analysis for Universal Music Group label Def Jam Recordings.

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A Market Analysis for
(Def Jam Recordings)
(Anthony D. Smith)
Full Sail University
Project & Portfolio II: Business and Marketing
(6-22-2020)

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EXECUTIVE SUMMARY
This report on Def Jam Recordings will show an analysis and evaluate the current
revenue, and it will also show how stable financially UMG/Def Jam Recordings has become.
Some the methods of analyzing Def Jam will include revenue, analyses, market share of its
parent company, and SWOT Analysis, just to name a few.
Results of data analyzed show that Universal Music Group’s revenues grew by 12.7% to
€1.77bn (around $1.95bn) in the first quarter of 2020. Def Jam Recording’s revenue was
$21.4M. Performance is poor in the areas of profit margins, liquidity and credit control. The
current position is not positive. The major areas of weakness require further investigation and
remedial action by management.
Q1 revenues were affected by the consequences of the Covid-19 pandemic. The
pandemic has certainly impacted physical sales, slowed the touring, and merchandising in the
stores. While adding that streaming by subscription, which generates the largest portion of UMG
revenues by far, is more stable and robust… ad-funded streaming is likelier to be affected, along
with the advertising market as a whole.
Recommendations discussed include Def Jam providing a more engaging and
uninterrupted experience for their customers from a recorded download, stream, and advertising
standpoint, to advertise directly to their target hip-hop consumer, the millennials, and using
Social media platforms during the country’s turmoil and social unrest. Results are based on past
performances and not the present.

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OBJECTIVE
During the pandemic and social unrest in the United States, and the strain on the current
market, suggest ways in which Def Jam Recordings could increase their revenue domestically
and internationally by bringing the label to the front of the industry.
RESEARCH METHODOLOGY
The information that is used in this report is mostly external, secondary information that
was retrieved from the Internet and online databases and was gathered during the month of May
and June 2020. Financial information was current on the day it was found on Yahoo Financial.
Information on Vivendi, the owner of Def Jam’s parent company Universal Music Group, was
based on the most recent year-end figures from 2019 and early 2020.
RESEARCH AND KEY FINDINGS
Def Jam Recordings is an American label
founded in New York City owned by Universal
Music Group (UMG). They are a leader in R&B
and Hip-Hop music, and they have been
pioneers in the music industry since their
inception in 1984, promoting the American Hip
Hop/ R& B music scene. They have many of the
top Hip Hop names in signed to them, such as
Kanye West, 2 Chainz, Jeezy, NAS, Fabolous,
and pop stars such as Justin Bieber.
This Photo by Unknown Author is licensed under CC BY-NC-ND

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Def Jam's top 10 competitors are: World Records,
Like Water Ent, Columbia Records, Cash Money Records, Roc Nation, Young Money, Stem
Disintermedia, Jambox Recording Studio, Thecuttingroom and Brewery Recording Studio.
Together they have raised over 17.0M between their estimated 941 employees. Def Jam's Est.
Annual Revenue $21.4M is ranked 5th among its top 10 competitors. The top 10 competitors
average 60.6M. Def Jam has 811 employees and is ranked 1st among its top 10 competitors. The
top 10 competitors average 159 employees. (OWLER,2020).
UMG’s parent company, Vivendi, is financially
secure, having a net income, in 2020, of 1.5billion usd, (Yahoo Financial, 2020) and a net profit
margin of 10% (Yahoo Financial,2020). Their debt-Assets ratio: Their liabilities were $13B and
the revenue $10B the debt -to -income was 1.3. (Yahoo Financial, 2020). (Appendix A)
(Appendix B).
This Photo by Unknown Author is
licensed under CC BY-SA
This Photo by Unknown Author is
licensed under CC BY-SA

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Universal Music Group/Def Jam Recordings STEEPLE Analysis:
SOCIOLOGICAL:
UMG/Def Jam helps support and partner with organizations around the globe that are
working towards meaningful positive change and social responsibility. As a call to action
following Floyd's death on May 25, after he was held down at the neck by a police officer during
an arrest, Universal Music Group (UMG) plans to launch a company task force for inclusion and
social justice initiatives.
(Universalmusic/Social responsibility,2020), (Billboard, 2020)
TECHNOLOGICAL:
UMG has created some technology to help them advance in the music industry which in
turn gives Def Jam a leading edge in technology. The UMG Accelerator Engagement Network,
Capitol360 Innovation Center, in-house incubator Abbey Road RED, Digital Innovation
Licenses and events within the digital music ecosystem, including hackathons, panel discussions
and educational programming on the business of music. (Universalmusic/Digital-Innovation,
2020).

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ECONOMIC:
Def Jam Recordings is taking its hip-hop talents to Africa with the launch of Def Jam
Africa, the first of UMG’s flagship labels to exist as a standalone entity. The Def Jam U.S. label
is synonymous with quality hip-hop and the African version of the label will be dedicated to
representing just that, along with Afrobeats and trap talent across the continent. Goldman Sachs
estimates sales will reach $80 billion by 2030, which would make Africa’s widely fragmented
music sectors one of the last true music growth opportunities in the world. (Forbes,2020).
ECOLOGICAL:
UMG is the world’s leading music-based entertainment company. They have a unique
responsibility to ensure a robust entrepreneurial ecosystem around music and digital media.
UMG is a lot of companies founded by the most successful entrepreneurs in the history of the
music industry. Today, that culture of risk-taking and invention lives on as there are more
entrepreneurs working within the UMG family than ever before. “Our goal is to help drive the
creation of the next generation of music-related start-ups to deliver exciting experiences to
consumers and new ways for our artists to engage fans.” (Universal Music Group, 2020).

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POLITICAL:
Def Jam is a global industry affected by many political environments. Def Jams parent
company, Universal Music Group contributions are as followed:
Contributions
 Contributions to federal candidates$112,000
 Contributions to committees$56,000
 Contributions to national parties$8,250
 Contributions to joint fundraising committees$6,000
 Miscellaneous contributions$2,500
 Fundraising events$4,071
(opensecrets, 2018).
LEGAL:
The lawful environment of Universal Music Group In has concerns and chances in the
type of IP civil liberties and lawful agreements. A firm has the legal security to protect its
copyright (IP), handling and also modern technology which can raise the reliance of others on it.
(Universal, 2020)

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ETHICAL:
Universal Music Group has The Global Compliance and Ethics Helpline that allows
anyone to confidentially raise a concern or report a violation of the Code. As stated from
Universal Music groups website under Code of Conduct they said: “At all times, we strive to
meet the highest standards placed on us. If we are still uncertain about the ethics or legality of an
issue, we should seek additional guidance before proceeding. At all times, we strive to meet the
highest standards placed on us. If we are still uncertain about the ethics or legality of an issue, we
should seek additional guidance before proceeding.”
(Universal /Code of Conduct, 2020).
CONCLUSIONS
The strategic plan will be focused on re-branding Def Jam Records for the future of its
artist, employees, and leadership. This plan will bring growth to Def Jam Records domestically
and internationally.
Def Jam’s marketing position will continue to grow since it has expanded to other countries
internationally. They have created Def Jam Southeast Asia and Def Jam Africa, and this will
position them to continue to expand their market internationally and increase their revenue
internationally. Def Jam is now a global market and they are poised; as Goldman And Sacs states
to reach $80M by 2030 which will give them even more of the market share and position them to
be one of UMG’s top labels. Being UMG’s flagship label, Def Jam/Def Jam Africa/Southeast
Asia will be the UMG’s 1st label to exist as a standalone entity (Forbes,2020).

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RECOMMENDATIONS
Recommendations are Def Jam providing a more engaging and uninterrupted experience
for their customers from a recorded download, stream, and advertising standpoint. The label
could increase their profit margin considerably by being social conscious by being a voice for the
people that buy their products and use their services.
Def Jam Records has the ability to advertise directly to their target hip-hop consumer, the
millennials. Over 80 million millennials are influenced by this genre and are the number one user
of technology and mobile platforms, since this has increased distributing activity. Using Social
media platforms during the countries turmoil and social unrest can increase awareness of the
brand and help their international label considerably by giving it more free advertising by
targeting the millennials, who use Social media the most.

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REFERENCES.
Hale, K, (June 2020). Def Jam Africa Poised to Take Over The $80 Billion Music Sector With
Afro-Beats
https://www.forbes.com/sites/korihale/2020/06/03/def-jam-africa-poised-to-take-over-
the-80-billion-music-sector-with-afro-beats/#21eee970af5a
Levine, R. (May 2020). Universal Launches Def Jam Africa as Its Latest Big Bet on the
Continent.
https://www.billboard.com/articles/news/international/9390124/universal-music-def-jam-
africa-launch-expansion
Owler (ND). Def Jam's Competitors, Revenue, Number of Employees, Funding and
Acquisitions.
https://www.owler.com/company/defjam
Photos retrieved from: Bing under creative commons.
https://www.google.com/search?q=bing+pictures&oq=bing+p&aqs=chrome.3.69i57j0l7.
7712j0j4&sourceid=chrome&ie=UTF-8
Retrieved from: Opensecrets website. Universal Music group Expenditures. (2018).
https://www.opensecrets.org/pacs/expenditures.php?cmte=C00392464&cycle=2018
Retrieved from: Universal Music Group. Def Jam Recordings ,2020.
https://www.universalmusic.com/label/def-jam/

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REFERENCE
Retrieved from: Universal Music Group.com. (2020).
https://www.universalmusic.com/digital-innovation/
ROGERS, M., ODER, N Library Journal; (10, 2000). MP3 Breaching Copyright Laws. Vol. 125
Issue 16, p15, 2p. Media Source, Inc.
http://web.b.ebscohost.com.oclc.fullsail.edu:81/ehost/detail/detail?vid=17&sid=c52e475f-
58a8-4c9b-95df-61ed189f1ef6%40pdc-v-
sessmgr03&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#AN=3636701&db=lkh
Universal Music Group website. (ND). OUR CODE OF CONDUCT: setting the right tone. Pgs.
5-7.
https://www.universalmusic.com/wp-content/uploads/2018/03/Code-of-Conduct.pdf
Retrieved from: Universal Music Group. Def Jam Recordings, (2020).
https://www.universalmusic.com/label/def-jam/
Vivendi Universal S.A. - Company Profile, Information, Business Description, History,
Background Information on Vivendi Universal S.A. Retrieved from: Reference for
Business, (2020), from
https://www.referenceforbusiness.com/history2/14/Vivendi-Universal-S-
A.html#ixzz6Oc11itH1
Yahoo Finance. (2020). Vivendi SA
https://finance.yahoo.com/quote/VIV.PA?p=VIV.PA&.tsrc=fin-srch

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APPENDICES
Appendix A: Retrieved from: Yahoo Finance. (2020). Vivendi SA
https://finance.yahoo.com/quote/VIV.PA?p=VIV.PA&.tsrc=fin-srch

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Appendix B: Retrieved from: Yahoo Finance. (2020). Vivendi SA
https://finance.yahoo.com/quote/VIV.PA?p=VIV.PA&.tsrc=fin-srch