Bloomberg | January 23, 2011 | Kristen Schweizer
Vivendi SA’s Universal Music Group, home to artists such as Lady Gaga and Mariah Carey, is targeting broadband users in emerging markets like Brazil by signing deals with phone providers there to carry online music services.
“We are re-organizing so fast-growing economies contribute more in proportion and slow-growing economies are less,” Chief Executive Officer Jean-Bernard Levy said in an interview at the MIDEM music industry conference in Cannes, France, this weekend. “We cannot be stuck inside the 20 richest countries.”
As the music market shrinks and fewer people purchase CDs, Universal and other record labels are relying on emerging markets, where broadband consumption is surging. Record companies have been licensing online music services such as Spotify and Rdio and relying on premium ads around online videos to help make up for a drop in CD sales as more physical shops shutter and online piracy shows no signs of waning.
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Vivendi, which bought Brazilian telecommunications company GVT Holding SA in 2009, now has a “strong foothold” in that country, Levy said. Universal also has a deal with Reliance Communications Ltd. to offer music on the Indian company’s mobile-phone network.
Levy, who said he listens to artists from Kanye West to Serge Gainsbourg on his iPod, said Universal Music is in line to report a “double-digit” profit margin for its 2010 earnings. The company has been restructuring to become more efficient and cut costs.
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