This week, Goldman Sachs published its 2026 edition of “Music in the Air” — the bank’s annual deep dive into the music industry’s financial trajectory. The headline number is bullish: a compound annual growth rate of 5.9% for recorded music through 2035, taking the sector to $56.1 billion. It is the first time since 2022 that Goldman has upgraded its recorded music forecast.
The same week, Universal Music Group — the world’s largest music company — confirmed the departure of the heads of Def Jam, Polydor UK, Republic Records, and Interscope Geffen A&M in the space of a few days, as part of a €250 million annual cost-cutting programme that has been running since 2024 and is expected to conclude in 2027. Both of these things are true simultaneously. And the reason they are not a contradiction is the most important thing the Goldman report actually says.
What Goldman Is Actually Predicting
The headline CAGR is real, but it is unevenly distributed. Goldman is bullish on live entertainment, which it describes as “one of the strongest growth stories in media.” It is bullish on distributors — the companies that move music between artists and platforms. It is bullish on DSPs, which have subscriber growth runway in developing markets, pricing power through multi-user plan restructuring, and new revenue lines through audiobooks, AI tools, and high-fidelity audio tiers.
On the actual owners of music rights — meaning record labels and publishers — Goldman takes what it describes as “a more selective approach.” The exact formulation from the report is worth quoting precisely: “Broadly, we favor distributors of music and audio, as well as live entertainment businesses, over owners of music rights, where we take a more selective approach.” Distributors over owners. That is a significant statement from a bank that has been covering this sector for decades, and it requires unpacking.
The Structural Risk Goldman Names
The reason Goldman is cautious about labels is not primarily about short-term revenue. It is about a structural shift that AI is accelerating. As the report puts it: “As Gen AI significantly lowers the barriers to entry for music creation, record labels face a structural risk of market share dilution. The traditional royalty payout model could be pressured as millions of AI-generated tracks entering the music streaming ecosystem divert a portion of the royalty pool away from human-created IP.”
This is the same mechanism we have covered repeatedly in YouBeat — the streaming royalty pool is finite, and every AI-generated track that captures streams diverts money from human creators. Goldman is now pricing that risk into its investment thesis on major labels. The bank does see AI upside — estimating that “AI-related licensing, creation tools, and new monetization opportunities have the potential to drive ~10% upside to Recorded Music revenues by 2035” — but that upside accrues to the broader ecosystem, not necessarily to the label tier specifically.
The distinction Goldman draws between distributors and rights owners is structurally precise. Distributors — companies like The Orchard, DistroKid, Tunecore, CD Baby — make money on the movement of music, not on its ownership. As the volume of music being distributed explodes (Deezer alone was receiving 90,000 AI-generated tracks per day as of this summer), distributors benefit from scale. Rights owners, meanwhile, face dilution: more tracks competing for the same royalty pool means each track earns less, even as total industry revenue grows. The music industry’s total revenue can expand and the major labels’ share of it can shrink simultaneously. Goldman is saying both will happen.
The UMG Layoffs in Context
Against this backdrop, the week’s executive departures at Universal take on a different dimension than a routine restructuring story. Tunji Balogun — Chairman and CEO of Def Jam, one of the most culturally significant labels in the history of recorded music — is leaving before the end of 2026. Ben Mortimer is exiting as President of Polydor UK. Sam Riback and Nicole Wyskoarko are stepping down as Co-Presidents of pop and rock A&R at Interscope Geffen A&M. Jim Roppo has left Republic Records and has since been named Vice Chairman at rival Warner Records Group. Rebecca Allen, UMG UK’s Chief Artist and Strategy Officer, departed after 27 years at the company.
These are not mid-level redundancies. These are the people who ran the labels that signed and developed the artists whose catalogs are, in Goldman’s own framing, the source of UMG’s value. And they are leaving as part of a cost programme that targets €250 million in annual savings — €90 million already delivered in 2025, €40-50 million expected in 2026, another €35-45 million forecast for 2027.
The programme was introduced in February 2024, following a period in which UMG’s share price underperformed significantly against broader market indices — a fact the Goldman report implicitly acknowledges when it notes that its coverage of rights owners requires a “more selective approach.” UMG is not collapsing. Its catalog remains one of the most valuable collections of recorded music in human history. Its publishing arm, its streaming revenue, and its catalog acquisition strategy are all still functioning. But the company is clearly adjusting its cost structure to a future in which the growth it generates may not flow as predictably through traditional label infrastructure as it once did.
The Paradox Goldman Is Describing
Here is what the 2026 Music in the Air report is actually saying, stripped of its financial language: the music industry is entering a period of significant revenue growth, but the distribution of that growth is shifting away from the companies that have historically controlled it. Live entertainment captures more. Distributors capture more. DSPs capture more — through subscriber growth, through pricing, through new revenue lines. AI licensing creates new flows of money that did not exist before.
The rights owners — the labels — are not being cut out entirely. But their structural position is weaker than it was a decade ago, and the forces making it weaker are accelerating rather than abating. The Goldman report is the first time a major Wall Street institution has stated that position explicitly, in a document that institutional investors will read and act on. The UMG layoffs are what that position looks like in operational terms. When the bank that covers your stock tells the investment community that your sector faces structural dilution risk, the logical response is to reduce fixed costs and concentrate decision-making in fewer, higher-leverage roles. Which is exactly what UMG is doing.
What Comes Next
Goldman is not predicting the end of the major labels. Its forecast still sees recorded music revenue nearly doubling over the next decade. But it is predicting a reordering of who captures that value — and that reordering is already underway, visible in the executive departures, in the cost programmes, in the shift from label-centric to distributor-centric investment theses.
The music industry has always been cyclical in its power structures. The major labels consolidated in the 1990s, lost ground to digital disruption in the 2000s, recovered through streaming in the 2010s, and are now navigating a second disruption that is faster, more systemic, and harder to license its way out of. Goldman’s 2026 forecast is optimistic about music. It is cautious about the labels. Those two positions, held simultaneously, are probably the most accurate description of where the industry stands right now.
Rudy currently based in Bergamo, here since 2019.
https://www.linkedin.com/in/rudy-cassago-522452179/
