Why I Don’t Own Universal Music Group (Despite Loving the Business)

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1/

Bill Ackman has been promoting Universal Music for years.

He once said:

“If I could only own one stock for 10 years and markets were closed, it would be UMG.”

In theory, I understand why.

2/

Music is universal.

It is the lowest-cost form of entertainment.

It scales globally.

It generates royalties.

It throws off free cash flow.

From the outside, it looks like the Netflix of music.

Simple. Predictable. Durable.

3/

More people on Earth = more music.

More smartphones = more streaming.

More platforms = more consumption.

On paper, this is the perfect business.

A global royalty machine.

4/

But now let’s leave theory and enter the real world.

The core problem is this:

Music is becoming commoditized.

Artists are becoming independent.

Gatekeeping is dying.

And that changes everything.

5/

Twenty years ago, labels were gatekeepers.

If you wanted distribution, promotion, and access, you needed them.

Today?

You need an internet connection.

That’s it.

6/

If you are in New York, Lagos, London, or Singapore, you can:

Open Instagram.

Open YouTube.

Upload your music.

Build an audience.

Monetize directly.

No label required.

7/

A perfect example is Burna Boy.

He built a global audience largely on his own.

Campaigns. Branding. Distribution. Reach.

No traditional gatekeeper.

Millions of fans worldwide.

8/

This is not an exception.

This is the new default.

The barriers to entry in music are collapsing.

And when barriers collapse, margins follow.

9/

So what do labels still do?

Mostly:

Distribution

Administration

Legal

Catalog management

Marketing support

Important services.

But not irreplaceable.

And not worth monopoly rents.

10/

The “label as kingmaker” model is dead.

Artists no longer need permission to be heard.

They need algorithms and attention.

Not contracts.

11/

Yes, Universal owns an old catalog.

But here is an uncomfortable truth:

Kids today don’t listen to The Beatles.

They just don’t.

And the next generation will care even less.

12/

Cultural memory is shrinking.

Hits don’t last decades anymore.

They last months.

Maybe a few years.

Then they are replaced.

13/

Music cycles are accelerating.

Streaming cycles.

Social media cycles.

Trend cycles.

Everything is faster.

Everything decays quicker.

14/

Artists understand this.

So what do they do?

They fight for ownership.

They fight for catalogs.

They fight for control.

15/

Because one hit today can be monetized forever.

If you own it.

If you don’t, you are working for someone else.

16/

Look at the smartest artists.

Beyoncé.

Taylor Swift.

They structured their careers around ownership.

Not dependence.

17/

Beyoncé became a billionaire by owning her distribution and content.

Taylor Swift re-recorded her catalog to regain control.

This is not rebellion.

This is rational economics.

18/

The era of “sign away everything and be grateful” is over.

Artists now think like entrepreneurs.

That is bad for labels.

19/

Yes, there will always be superstars.

Michael Jackson.

Madonna.

Marvin Gaye.

Icons will exist.

But icons don’t justify $20B+ valuations alone.

20/

You cannot build a durable monopoly on talent that does not belong to you.

Talent walks.

Catalog ages.

Power shifts.

21/

Universal looks cheap.

Universal looks stable.

Universal looks perfect in theory.

I agree.

22/

But structurally, the industry is moving against them.

More creators.

More independence.

More platforms.

Lower switching costs.

That is not a moat.

That is erosion.

23/

This is not about bankruptcy risk.

Universal will survive.

It will generate cash.

It will pay dividends.

It will look “safe”.

24/

But “safe” is not enough for me.

I want businesses that get stronger with time.

Not businesses that slowly leak power.

25/

In music, power is shifting to:

Creators.

Platforms.

Algorithms.

Direct-to-fan models.

Not labels.

26/

My conclusion:

Universal Music is a high-quality company.

It is well run.

It is profitable.

It is disciplined.

But structurally challenged.

27/

It is perfect in textbooks.

Imperfect in reality.

28/

That is why, despite liking the business and understanding the bull case:

I don’t own it.

I won’t own it.

It is not for me.

29/

As investors, we don’t get paid for loving businesses.

We get paid for understanding where power is going.

30/

My capital follows that reality.

Not the theory.