Warner Music Group (WMG  ) priced its $1.925 billion IPO at $25 per share offering 77 million shares, for an overall valuation of $13.2 billion. Previously, WMG was a public company from 2005 to 2011.

In its 2019 fiscal year, Warner Music's revenue was $4.4 billion. $2.6 billion of this was digital revenue. From the previous year, revenue grew 10%, and it earned $258 million. Warner Music's IPO is expected to be well-received given its above-average growth rates, exposure to streaming music, and attractive margins.

New Business Model

The music business has undergone seismic shifts in the last couple of decades. Up till the late 90s, the business was mainly about discovering, developing, and promoting talented artists. This part of the business was more of an art than a science. However, once, the artists had a few hits, the record labels would print money, as they could sell millions of albums.

This period ended with the advent of file-sharing as record sales plunged, putting the entire business model into jeopardy. Many smaller labels disappeared, but the larger labels were able to survive and successfully pivot. Revenues are increasing due to streaming music. Revenue for live performances also has continued trending higher.

One major cost-saving for record labels is that due to social media, there's less risk in signing new artists. Artists' talent can be validated by how popular their music and engaged their fanbase is on sites like Youtube and Soundcloud.


Along with Sony Entertainment (SNE  ) and Universal Music Group (VIVHY  ), Warner Music is one of the three major record labels. Among these three, it's the smallest. It has 29 of the 100 top-selling American albums of all time.

It started in 1958 as Warner Brothers wanted a place for its movie stars to record music. From there, the division grew through acquisitions and worked with some of the biggest names in music history including Frank Sinatra, Neil Young, Led Zepplin, the Doors, Van Halen, Fleetwood Mac, the Eagles, the Ramones, Madonna, and Prince. Some of its most famous current artists include Cardi B, Ed Sheeran, and Bruno Mars.

From its roots as a part of Warner Brothers' movies, the company has become its massive entity with locations in 50 countries and the ability to distribute music globally. This distribution allowed it to partner with many smaller music labels throughout its history like Geffen and Island Records.