Major music labels most exposed to AI threat, says Rothschild & Co Redburn

Rothschild & Co Redburn analyst Ed Vyvyan, who breaks down in a new report how AI music generation works, what it can and cannot do, and the investment implications, argues that the major labels – Universal Music Group (UMGNF), Warner Music Group (WMG) and Sony Music Group (SONY) – are “most exposed” and threatened by further market share erosion and catalog devaluation. The firm is “agnostic” on incumbent streaming platforms, like Spotify (SPOT), since “their fate rests on strategic decisions yet to be made,” the analyst tells investors. Meanwhile, Live Nation (LYV) and CTS Eventim (CEVMY) have been “swept into the broader anxiety around potential ‘AI losers’,” but these live music event operators are among the least exposed to disintermediation, which is why the firm now views them as “the most compelling opportunities in the sector,” the analyst added.