Music Industry Predictions for 2026: Live Music Expansion, UMG & Downtown, and the Suno AI Deal
The entertainment industry is notoriously unpredictable, a lesson illustrated by a decades-old Hollywood stunt involving 50 parrots trained to squawk a movie title that was ultimately changed. As we begin a new year, forecasting the future remains a risky endeavor, but here are three predictions for the music business in 2026, with a promise to relocate to the Bolivian rainforest if proven wrong.
The Majors Double Down on Live Music
Warner Music Group CEO Robert Kyncl’s recent observation that major music companies will evolve into “full service” entities within five years signals a significant shift in strategy. “Today we don’t offer management; we don’t offer live promotion,” Kyncl stated in an October interview with Bloomberg. “There are a lot of services like that we’re not in the business of here in the United States… And I think that is going to change.”
This move reflects a broader trend: the three major labels – Universal Music Group, Sony Music Entertainment, and Warner Music Group – are increasingly focused on diversifying revenue streams beyond traditional music rights. Adjacent income, particularly from merchandise, name & likeness licensing, and live events, has become a key driver of growth over the past decade.
Sony Music provides a compelling case study. In the third calendar quarter of 2023, its ‘Other’ category – encompassing license revenue, merchandise sales, and ticketing/live performances – generated over $529 million, a 16.8% year-over-year increase. Notably, this ‘Other’ revenue nearly tripled the $184.9 million generated from global physical music sales in the same period. This represents a dramatic shift from 2021, when physical sales still surpassed ‘Other’ revenue at Sony. [Insert chart comparing Sony’s ‘Other’ revenue vs. physical sales from 2021-2023]
The acquisition of merchandise powerhouse Ceremony Of Roses in 2022, now estimated to generate over $500 million annually, and the 50% stake in the Jackson Estate in 2024 (and the resulting income from the live MJ musical) underscore Sony’s commitment to this strategy. Universal Music Group’s Bravado is projected to generate around $900 million this year, while Warner Music Group’s ‘expanded rights’ business – including merchandise, touring, and sponsorship income – brought in $639 million in the first nine months of 2025, boosted by merchandise services for Oasis’ global tour.
As WMG’s latest annual report highlights, “We believe that entering into expanded-rights deals… has permitted us to diversify revenue streams and capitalize on other revenue opportunities.” Expect to see the three majors further expand into live music promotion over the next 12 months, particularly as streaming growth stabilizes and the monetization of “superfans” becomes a central focus.
Universal’s Pursuit of Downtown: The Curve Royalty Systems Dilemma
Universal Music Group’s acquisition of Downtown Music Publishing faces a potential hurdle: the European Commission’s concerns regarding UMG’s ownership of Curve Royalty Systems. The EC fears UMG could leverage Downtown-owned Curve to access commercially sensitive data from independent labels.
In response, UMG has committed to divesting Curve, with strict criteria for potential buyers: financial stability, genuine independence from UMG, and proven expertise in running the business. Merlin, a collective of powerful independent labels, could be a natural fit, acquiring a platform that already serves many of its members. However, UMG’s potential reluctance to engage with Merlin, given their vocal opposition to the Downtown deal, complicates matters.
Other potential suitors include B2B service providers like SESAC/AudioSalad or royalty processing specialists such as Vistex or Milana Lewis’ Tone. A key wrinkle is that UMG will retain a “sanitized” duplicate of Curve’s technology, allowing them to independently develop the platform while being temporarily barred from poaching existing Curve customers.
Ultimately, UMG’s primary objective remains securing Downtown’s publishing administration empire and FUGA’s B2B infrastructure.
The Suno AI Deal: A Precedent with Unanswered Questions
The Warner Music Group/Suno AI deal, while groundbreaking, raises several concerns. The initial fundraising pitch deck from Suno lacked detailed commitments to music licensing, and the meaning of Suno’s promise to “deprecate” its previous models post-WMG license remains unclear. Crucially, the compensation for past infringement of songwriters’ and artists’ work remains unresolved.
Despite these concerns, two key aspects suggest other rightsholders will eventually follow suit. First, the agreement establishes a vital precedent: music must be licensed by generative AI platforms, and any derivative works must compensate the original creators who opted in. Second, industry insiders believe Warner Music Group secured a minority equity stake in Suno as part of the deal.
As one analyst noted, “If a chunk of ownership is on the table, all parties will be that much more motivated to lay down their litigious weapons and make peace.” While concerns persist regarding Suno’s practices, the potential for ownership stakes will likely incentivize Universal Music Group, Sony Music Entertainment, and Merlin to engage in negotiations and reach similar licensing agreements.
