Universal Music Group

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Universal Music Group

variant name: umg; polygram records

Contact Information:

headquarters: 1755 broadway
new york, ny 10019 phone: (212)841-8000 fax: (212)331-2580 url: http://www.umusic.com


Universal Music Group (UMG) is the largest music company in the world. UMG develops, manufactures, markets, sells, and distributes the full spectrum of recorded music in 63 countries worldwide through its numerous subsidiaries, joint ventures, and licensees that represent a dominating 98 percent of the world's music market. Through its subsidiaries, UMG also engages in music publishing and mail order music/video clubs. The leading U.S. music company also is the market leader in three-quarters of the international market it operates in, including the United Kingdom, Canada, Germany, France, and Brazil. Parent company Vivendi Universal, also owner of Hollywood's Universal Studios, bought UMG from former owner Seagram in 2000.

Covering the classical music market, Universal Classics Group includes such labels as Deutsche Gram-mophon, the world's oldest recording company; industry legend Decca Records, which controls the world's biggest opera catalogue; and Philips Classics. UMG's Verve Music Group is the largest jazz recording company in the world, including legendary jazz artists Louis Armstrong, Count Basie, John Coltrane, Ella Fitzgerald, Diana Krall, and Al Jarreau. Subsidiary Universal Music Enterprises (UME) is responsible for music catalog management of all UMG labels. The label also owns the world's leading Broadway catalog through Decca Broadway. Universal Music Publishing Group, with 43 offices in 40 countries, is one of music's leading publishers and manages the eminent Rondor Music Catalogue. The prestigious company also operates such diverse labels as MCA Records, MCA Nashville, Mercury Nashville, Motown Record Company, Barclay, Interscope Geffen A&M, Island Def Jam Music Group, Motor Music, Polydor, Universal Records, and Verve Music Group. Some well-known names on UMG's artist roster are Sting, Sheryl Crow, Eminem, Dr. Dre, Vince Gill, Melissa Etheridge, Bon Jovi, Andrea Bocelli, Cranberries, Elton John, U2, and Enrique Iglesias.

Other major UMG subsidiaries are Pressplay, a Sony Music UMG joint venture, offering on-demand online music by subscription though affiliates like MP3.com and Yahoo!; GetMusic, along with the getmusic.com Web site, one of the Web's most visited music content sites; and MusicUwant, the first big music company to offer customized music programming for high-speed Internet access and interactive television.


The maker of one of every four albums sold worldwide in 2001, UMG has approximately a 22.7 percent share of the music market worldwide and leads the industry in 70 percent of the markets where it has operations. Owned by French media firm Vivendi Universal, UMG's financial data is reported in euros. Revenues for 2001 were down 6.6 percent from the previous year at $6.5 billion euro, which translates to about $5.8 billion. The United States accounts for 42 percent of UMG's total revenue, another 40 percent comes from Europe, and the remaining 18 percent comes from the rest of the world. During a 52-week period, Vivendi Universal stock ranged from a low of $26.75 to a high of $65.55 and had a price-earnings ratio of 231.15.


Clearly a world leader in the field, UMG's financial performance for the first quarter of 2002 represented a decline of 6 percent. The company attributes this to a lighter release schedule than the previous year, with most of its major releases due out in the latter part of 2002. Also working against the company was the overall worldwide decline in the music industry in early 2002, estimated at 8 percent, attributed to a slimmer release schedule than in the prior year. In that light, UMG fared better than the music industry as a whole, with its market share holding steady. Trends that plague UMG and the industry as a whole include rampant CD-copying and Internet music file-swapping services. The International Federation of the Phonographic Industry (IFPI) valued pirated music activities at $4.2 billion in 2001. Analysts estimate that music sales were off 10 percent in 2001, with poor sales in the largest two markets, the United States and Japan. Media analysts predict that the pirated music trend will only continue and worsen as a new generation of listeners becomes accustomed to seeking out music in this way. Many analysts predict that UMG's newly launched Internet subscription services, including Pressplay, will take no fewer than five years to make a marked difference in sales and eradicate existing free competition.

FAST FACTS: About Universal Music Group

Ownership: Universal Music Group is a subsidiary of Vivendi Universal S.A., a publicly owned company traded on the New York Stock Exchange.

Ticker Symbol: V

Officers: Doug P. Morris, Chmn. and CEO; Zachary I. Horowitz, Pres. and COO; Nick Henny, EVP and CFO; Glen Sanatar, CFO, Universal Music Enterprises; Dan McGill, CFO North America

Employees: 12,000

Principal Subsidiary Companies: Universal Music Group has some 15 record labels, including Interscope Records, The Island Def Jam Group, MCA Records, Inc., and Pressplay. Subsidiary Universal Music Publishing Group is one of the world's leading music publisher and its Universal Music Enterprises manages all of the company's labels' catalogs. Universal Music Group itself is a subsidiary of Vivendi Universal S.A., the French media and utility company.

Chief Competitors: Universal competes with other companies in the music industry, including Sony Music Entertainment, BMG Entertainment, and Warner Music.


The company's long and varied history can be understood by tracing the evolution of the two main companies that eventually came together in 1998 to form UMG, Polygram and Universal. Polygram's beginnings date all the way back to 1898, When the Siemens Company founded Deutsche Grammophon Gesellschaft. In 1924 the company introduced its second brand name to be used abroad, Polydor. In 1962 Siemens entered into a joint venture to create a record company with a Netherlands-based company called Philips Electronics N.V., with subsidiary Philips Phonographische Industries (PPI), who had established the Phillips Classics label in 1951 and acquired Mercury Records in 1960. The agreement gave Siemens 50 percent ownership of PPI, and Philips an equal share of Deutsche Grammophon. The two subsidiaries reorganized as PolyGram in 1972, the same year they acquired Verve Records. The company expanded throughout the 1980s, first acquiring the London-based classical music label Decca in 1980. Philips and PolyGram introduced the music world's first compact disc in 1982, and PolyGram Music Publishing began operations in 1986. Philips gained full ownership of subsidiary PolyGram in 1987. Two years later saw Poly-Gram's initial public stock offering and its acquisition of Island Records. Growth continued through the 1990s with the acquisitions of A&M Records in 1990 and Motown Records in 1993. The following year PolyGram acquired 50 percent of Def Jam Recordings and established a subsidiary in Russia, the first western record company to do so. In 1995 the company moved into Latin America when it bought Rodven Records, the region's largest independent record company. In 1996 PolyGram acquired another 10 percent of Def Jam.

Universal, meanwhile, was founded in Chicago some years later, in 1912, by pioneer filmmaker Carl Laemmle under the name Universal Film Manufacturing Co. Universal relocated to Southern California in 1915. The U.K.-based Decca Record Co., which launched Decca Records in the United States, acquired a controlling interest in Universal Pictures in 1952, while Music Corporation of America (MCA), acquired the Universal Studios property for its newly created TV division, MCA Inc. Universal Pictures and MCA Inc. merged in 1962 when MCA acquired Decca Records. The year 1964 marked the beginning of MCA Music Publishing with MCA's purchase of Leeds Music and Duchess Music, while Universal began opening its Universal City lot doors for visitors, marking the birth of its recreation and theme park operations. The company opened the Universal Amphitheatre in 1972, initiating the company's interests in owning and operating concert venues and live entertainment promotion. Decca merged into MCA Records in 1973, along with ABC Records, acquired in 1979. MCA continued to grow, with the acquisition of Chess Records in 1985 and Geffen Records and GRP Records in 1990. The next year, MCA Inc. was, itself, bought by Matsushita Electric Industrial Co. Four years later, in 1995, ownership of MCA Inc. was passed again when the Seagram Company Ltd. acquired 80 percent of the company. The same year, 1995, MCA established Rising Tide (later renamed Universal Records). In 1996 MCA Inc. was renamed Universal Studios, Inc., and the MCA Music Entertainment Group was renamed Universal Music Group. That year Hip-O Records was also founded, and a 50 percent interest in Interscope Records was acquired.

CHRONOLOGY: Key Dates for Universal Music Group


The Siemens Company founds Deutsche Grammophon Gesellschaft


Siemens enters into a joint venture with Philips Electronics N.V., owner of the Phillips Classics label and Mercury Records


The company reorganizes as PolyGram in 1972, the same year they acquired Verve Records


Polygram acquires classical music label Decca


PolyGram has its initial public stock offering and acquires Island Records


PolyGram acquires A&M Records


Polygram acquires Motown Records


Universal owner Seagram acquires PolyGram and renames the newly combined music operations of the two Universal Music Group


UMG becomes sole owner of Def Jamxs; GetMusic and getmusic.com is launched; UM3, a division of Universal Music International, is created; Universal Music Enterprises (UME) is created; the company acquires additional shareholdings in Universal Music Turkey, Nese Muzik, Mars Musik, and S Musik; launches Universal Music India; invests in the Latin music Web site eritmo.com; MCA Music Publishing is renamed Universal Music Publishing


Acquires Rondor Music; Vivendi Canal Plus merges with Seagram in 2000, resulting in Vivendi Universal, now parent to UMG

In 1998 the separate histories of these two groups came together when Universal owner Seagram acquired PolyGram and renamed the newly combined music operations of the two Universal Music Group. The newly merged UMG continued its long history of expansion—embarking on unprecedented growth as the millennium drew to a close. Highlights from 1999 include UMG's purchase of the remaining portion of Def Jam; partnering with BMG to form the GetMusic Internet content and commerce entity with e-commerce Web site, getmusic.com; the launch of UM3, a division of Universal Music International covering all areas of catalog marketing outside North America; the creation of Universal Music Enterprises (UME); expansion in Turkey with the acquisition of additional shareholdings in Universal Music Turkey, Nese Muzik, Mars Musik, and S Musik; launch of Universal Music India; launch of UMG's Jimmy and Doug's Farm Club label; investment in the Latin music Web site eritmo.com; and the renaming of MCA Music Publishing to Universal Music Publishing. Among its acquisitions in 2000 was Rondor Music, International Publishing Company. French company Vivendi Canal Plus merged with Seagram in 2000, with the resulting conglomerate becoming known as Vivendi Universal, now parent to UMG.


Going into the difficult climate for the music industry in 2002, the goals of UMG were to try and develop a balance between the investment in artist development and effective cost control measures. The company planned to remain focused on costs, artist development, and beginning legitimate digital music offerings for the public. To cover a variety of media, UMG also partnered with Popstars television shows in several European countries in 2001. Popstars artists produced major hits in France, the United Kingdom, and Germany.

Vivendi's strategy for the company as a whole is based on a consumer-focused attitude, committed to anticipating consumer needs and building consumer loyalty to create and deliver high-quality services and products that satisfy consumers worldwide. Vivendi hopes to strengthen leadership in each of their markets; concentrate on internal growth, which it noted should be above 10 percent for the year; continue restructuring when necessary; finish integrating teams; and reinforce the synergies in their businesses. As an example of revenue synergies, Vivendi launched Universal Music Mobile in France, which drew on their strength's in telecommunications and music to target a younger audience.

Universal launched its "Universal Best" campaign, running from June to August 2001, which offered music fans a selection of 40 "Best Of" albums from a wide variety of artists in diverse genres at discounted prices. Music included selections from rock, R&B, dance, pop, and New Age. The goal was to reintroduce some of the company's greatest songs and showcase collectible editions by the company's headlining acts at affordable prices. The strategy was implemented, in part, to help combat music piracy and attract music lovers with limited disposable income.


UMG was built through acquisitions, a tradition the company has continued into 2000 and beyond. Through strategic acquisitions, UMG hopes that through its latest acquisitions, it will find the right business model to realize profits via the Internet. One of the most significant developments in that area was the founding of Pressplay, a subscription, on-demand online music service that allows consumers to stream, download, and burn music onto compact discs. Artist development will also be key for the company moving into 2002 and beyond as the overall slump in the music industry forces the company to come up with "the next big thing" that will stimulate record sales in the United States and worldwide.

Internationally, UMG continued the trend of gaining market share in other countries. In 2001 UMG purchased legendary Latin and Tropical label RMM Records founded by Ralph Mercado 14 years ago and has delved into the Latin music genre in recent years. Following major structural and personnel changes at all levels, Universal Music Latin Maerica/Iberian Peninsula, Universal became the market leader in Spain and Portugal during the year 2001. The company aims to be the clear number one label in the region.


Looking to the Internet as the way of the future, UMG became the world's leading Internet music publisher through a variety of growth strategies. The company acquired a stake in online music leader ARTISTdirect, Inc.; expanded its e-commerce activities by creating Universal eLabs and Global e; invested in Listen.com, the Internet's online directory to legal downloadable music; and launched Pressplay, a joint venture with Sony Music Entertainment, all in 2000. Universal eLabs was formed to provide research and strategies for developing and implementing global e-business and new technology distribution for UMG. With pirated music on the Internet a growing problem in the music industry, UMG's Pressplay offers on-demand, digital music online that may be downloaded and burned on to compact discs from artists represented by Universal, Sony, EMI, and several independent labels. Pressplay's services are also offered by subscription through affiliates MSN, Yahoo!, and sister company MP3.com. MP3.com, acquired in 2001, contained more than 1.2 million song and audio files, 185,000 artists, and had 5 million visitors. MP3.com Europe had more than 3 million registered users with sites adapted the markets in the United Kingdom, France, Germany, and Spain.

Another sign that UMG seeks to leverage Internet profits is by purchasing the remaining 50 percent of Get-Music from former partner BMG in 2002. The company's ventures, which include GetMusic and MusicUwant also offer a range of online, high-speed online, offline, and television music options. UMG also struck a non-exclusive licensing deal with Streamwaves, the leading digital music subscription company, which would add U.S. Universal Music titles to Streamwaves' on-demand subscription music service.


UMG supplies a diverse mix of music products and services, including the manufacture, marketing, sales, and distribution of the full spectrum of recorded music in 63 countries worldwide through its numerous subsidiaries, joint ventures, and licensees worldwide. Through its subsidiaries, UMG also engages in music publishing; online, on-demand subscription music services; and mail order music/video clubs.

Toward their goal of maximizing catalog repertoire through non-traditional and alternative channels, the company's Universal Music Enterprises (UME) entered into an agreement with alternative marketing company Disc Marketing, Inc. in 2002 to create E-CDS for corporate clients that will contain content including video and animated content, music tracks, television commercials, product information, and links to Web sites where products are sold and/or promoted, and more. With speedy, high-quality sound and video downloading, the E-CD may be used alone or along with a Web site in the corporate client's marketing campaign with print, TV, radio, and online elements. Disc Marketing uses new media and music to aid in marketing its clients brands, which include Target, NASA, Toyota, Betty Crocker, General Mills, Princess Cruises, Kellogg's, and Sears. Disc Marketing also supplies audio programming for United Airlines, Air Force One, and Air Force Two.


The company encourages employees to contribute their time and money in volunteer initiatives and other ways that reflect their personal values and interests. The Vivendi Universal Foundation is the philanthropic arm of the organization, with the main goals of supporting the under-privileged in the United States, France, and elsewhere. Fondation Vivendi Universal in France was created in 1996 to aid in the causes of unemployment and inequality of opportunity. Over the following five years, its funding created or maintained 18,000 jobs in local services—1,377 jobs created in 2001 alone. Another interest of the foundation includes narrowing the digital divide, a modern form of inequality. Vivendi Universal foundation in Berlin funded some 40 projects, which created 122 jobs and secured another 50. The Vivendi Environment team Water Force aided the Red Cross in providing water to 100,000 people in Afghanistan. The company subsidiaries in Hungary team with UNICEF helped launch a program to equip all children's hospitals with free TV sets, computers, and access to the Internet.

Vivendi's philanthropic focus in the United States is on young people, especially those with limited resources, in four major areas: education, music, the arts, and new technologies. The foundation supported some 54 programs and donated more than $15 million. One of the many programs the company supports is Reach Out and Read, a project that combines pediatric checkups with literacy in an effort to encourage avid reading at a young age. The project distributes more than 550,000 books in the manner. Another U.S. program the company participates in helps children learn about the consequences of racism and prejudice for the benefit of society.


UMG is the leading global music company, enjoying a 22.7 percent share of the world market in 2001 and operations in 63 countries worldwide. The company's numerous subsidiaries, joint ventures, and licensees represent a dominating 98 percent of the world's music market. UMG also owns the largest music catalog and one of the leading global music publishing companies, Universal Music Publishing Group. One of every four albums sold worldwide in 2001 was a Universal album. UMG is also the world leader in classical music, with a 41 percent share worldwide. Sales outside the United States account for 58 percent of the company's total revenue. The company is a market leader in three-quarters of the international market it operates in, including the United Kingdom, Canada, Germany, France, and Brazil.

Of late, the company has been expanding even further into the Latin market with the 2001 acquisition of legendary Latin and Tropical label RMM Records. The company's UM3, a division of Universal Music International, is designed to maximize the value and profile of Universal Music's catalog outside North America. Its three main areas of concentration are Catalog Marketing; Commercial and Consumer Marketing; and TV Merchandising. With more than 2 million subscribers, UMG also maintains the largest mail order music/video club in Europe, Britannia, a UK-based operation founded in 1969. The company also operates DIAL, the largest music/video club in France founded in 1970.


As a an international company with 12,000 employees, UMG recognizes and prizes cultural diversity within the organization. They believe their multi-cultural background is a unique strength to be drawn upon to preserve, promote, and protect the distinct cultural character in the countries, communities, and local regions that it serves. They also value the variety of their musical content, which serves to represent their own heritage and the cultural diversity worldwide.


Universal Music Group's talent roster boasts some of the most well-known and popular recording artists in the world. Evidence of that could be found at the 44th Grammy Awards ceremony held in February 2002, where UMG snagged 32 awards. Some of the company's most successful artists of 2001 included Shaggy, boasting UMG's best selling album of the year at more than 10 million copies; India.Arie, nominated for seven Grammy awards and whose debut album sold 1.3 million copies; Enrique Iglesias, boasting the hit single, Hero and selling more than 4 million albums; and Mary J. Blige, with 2.7 million Grammy-nominated albums sold and a chart-topping single. In other musical genres, Andrea Bocelli won the best-selling album of the year at 3.6 million copies, and Diana Krall sold 2.1 million copies of her Grammy winning best-selling jazz album of the year. The U.S. number one selling country album was also a Universal album, O Brother, Where Art Thou? which also ranked as best-selling soundtrack of the year, sold 4.5 million copies, and received four Grammy Awards.

Other major characteristics that the company prizes in its employees are creativity, and the company seeks to promote imaginative, initiative, individual expression and creative freedom, which not only reflects the company's enterprising spirit, but drives their continued growth and innovation. Teamwork, observation of strict ethical standards, value creation, and social responsibility are also named by the company as part of its value system.



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"universal acquires the remaining 50% share of getmusic from bmg." billboard, 5 may 2001.

"universal best for less." new straits times, 9 july 2001.

"universal hays latin label." los angeles business journal, 2 july 2001.

"universal music enterprises and disc marketing, inc. join forces in the cd music premium market." pr newswire, 23 may 2002.

"universal music group." the gale group, june 2002. available at http://galenet.galegroup.com.

"universal music group." hoover's online, june 2002. available at http://www.hoovers.com.

universal music group home page, 2002. available at http://www.umusic.com.

"universal purchases tropical indie rmm." billboard, 7 july 2001.

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"universal settles into new rhythm with lopez," 1 september 2001.

vivendi universal home page, 2002. available at http://www.vivendiuniversal.com.

For an annual report:

on the internet at: http://www.vivendiuniversal.com

For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. universal music group's primary sic is:

3652 phonograph records tapes & disks

also investigate companies by their north american industry classification system codes, also known as naics codes. universal music group's primary naics code is:

334612 prerecorded compact disc (except software), tape, and record reproducing

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Universal Music Group

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