Philippa Kaur

EMMANUEL FABER used to be seen as the spiritual son of Franck Riboud, honorary chairman and former boss of Danone, whose father Antoine co-founded the French yogurt-maker. Mr Riboud handpicked Mr Faber as his successor and loyally backed his transformation of Danone into France’s first entreprise à mission, a corporate form with a defined social purpose.
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In recent months the relationship has soured. According to the French press, Mr Riboud thinks Mr Faber is more interested in saving the planet than saving his firm. Danone’s share price fell by 27% in 2020 while those of rivals such as Nestlé and Unilever made gains amid pandemic larder-stocking. Its full-year results, due on February 19th, are unlikely to inspire investors’ confidence.

Danone has been hit harder by covid-19 than rivals because of its large bottled-water business. Its Evian, Badoit and Volvic brands make money mainly from sales in restaurants, bars and airports. But that is not the only problem. In 2017 Danone overpaid for WhiteWave, an American maker of health-focused fare that it bought for $12.5bn. The deal, which strained the balance-sheet but did not produce hoped-for returns, is the main reason for Danone’s current malaise, says Alan Erskine of Credit Suisse, a bank. Bruno Monteyne of Bernstein, a broker, points to years of underinvestment in brands, which face stiff competition from supermarkets’ private labels, at a time when Danone’s dairy and baby-food businesses slow as birth rates fall and people drink less milk.
Faced with these challenges, in October Mr Faber announced an overhaul of the business along more geographic lines. Perhaps 2,000 jobs will be cut. It was the fifth reorganisation on his seven-year watch.
Enough already, huffs Artisan Partners, an American investment fund which says it is Danone’s third-biggest shareholder with a 3% stake. In a meeting with board members on February 16th it demanded Mr Faber’s exit, a stop to his latest restructuring, and the sale of struggling brands such as Mizone, a Chinese vitamin drink, and the Vega range of plant-based foods.
Artisan is the latest Anglo-Saxon meddler to pile on the pressure. In November Bluebell Capital Partners, a London-based hedge fund that owns a stake in Danone, demanded that the firm boot out Mr Faber and split the role of chairman and CEO. Causeway Capital Management, an American fund, has echoed Bluebell’s call.

Mr Faber’s entourage refers to the demands, which appear to have the blessing of 65-year-old Mr Riboud, as a “revolution of gunslinger grandpas”. The activists may still succeed, and not just because they are not in fact that wizened. Helpfully, the French state is staying out of the fray; its spokesman said it had no comment. The government has no stake in Danone, but in 2005 declared it an “industrial jewel” to be defended against foreign buyers. Maybe not when they have an ally on the inside. ■
This article appeared in the Business section of the print edition under the headline “Culture wars” More

MINING BOSSES often leave under a cloud, ousted after a profit slump, a public-relations disaster or pit-hole calamity. Not so Ivan Glasenberg. For his last set of results on February 16th the boss of Glencore offered shareholders—including himself—a reinstated dividend and an upbeat outlook. Leaving on a high after 19 years in the top job will not make life easier for his anointed successor, Gary Nagle.
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All miners have had a bull run of late as commodity prices have surged. China’s appetite for natural resources is unabated. America and Europe are planning infrastructure pushes that will juice demand. The green tinge of such stimulus spending is especially good news for Glencore, a big producer of the cobalt, copper and nickel needed for electric cars and the like.

Investors on the earnings call were as focused on life after Mr Glasenberg. It may not be so different. Those used to seeing the Swiss firm run by a fast-talking South African accountant who has spent much of his career on the coal side of the business might not notice the handover, due to happen in the next few months. Like his predecessor, Mr Nagle is all those things. He will become only the fourth boss to lead the company since its founding in 1974.

Investors expect continuity in the business. Mr Glasenberg has re-engineered a pure commodities trader into a firm that also digs the stuff up. The model has not delivered stellar returns, at least since the firm went public in 2011 (see chart). But trading profits last year were fat and Mr Nagle says the set-up is fit for purpose.
Three thorny dossiers will keep him busy. The first is coal, of which Glencore is the biggest shipper. The banks that fund its trading arm are under pressure to cut ties to polluters. Glencore has some green credentials and says it is running down coal assets gradually. But a more radical move, like a spin-off, may be needed.
Then there is the Democratic Republic of Congo. A big source of copper and cobalt profits, it is also in the sights of America’s Department of Justice. Glencore denies any wrongdoing. After the Congolese elected a new president in 2018 some faces that helped Glencore thrive are being replaced. Dan Gertler, who teamed up with Glencore to develop assets in the DRC, recently earned a partial reprieve from American sanctions (he also denies wrongdoing). The copper belt is rife with rumours that Mr Gertler may be looking to cash out.
Perhaps the trickiest dossier is Mr Glasenberg. He will not upgrade himself to chairman, as some CEOs are wont to do. But he intends to keep his 9% stake, making him the second-biggest shareholder. And, potentially, its biggest back-seat driver.■

This article appeared in the Business section of the print edition under the headline “Pit stop” More

THE SCRAMBLE to electrify motoring resembles a car race. Tesla and like-minded startups, unencumbered by the legacy of the internal combustion engine (ICE), are surging up the straight. Behind them, jostling for position at the first corner, are the established carmakers, urged on by ever-tightening government deadlines for clean power to supersede fossil fuels. Many are calling time on the ICE. On February 17th Ford’s European division said that it would go all-electric by 2030. Days earlier Jaguar Land Rover (JLR), an Indian-owned firm based in Britain, announced that the posh Jaguar brand would become fully electric by 2025. In January General Motors (GM) promised it would make only zero-emissions cars after 2035.
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No one is dedicating more resources to electrification than Volkswagen Group, says Herbert Diess, the German giant’s boss. The company plans to spend around €73bn ($88bn) over the next five years on battery power and digitisation, he says. “The competition is now taking the same decisions,” Mr Diess notes, alluding to rival firms’ pledges.

Among the old guard, vw is indeed firmly in the driving seat. A fifth of the millions of cars it sells will be electric by 2025. Some analysts think that by then VW will churn out more electric cars than Tesla, today’s market leader. Mr Diess is more circumspect. A year ago he was confident his firm would lead the world in electric vehicles in ten years’ time. Now he is less sure, admitting that Tesla’s surging shares give it the resources to grow fast. Although Apple’s talks with carmakers such as Hyundai and Nissan did not go anywhere, the tech giant’s evident interest in an iCar could yet make it a force to be reckoned with, Mr Diess admits. But he still thinks that the electric race is Volkswagen’s to lose, not least because the cashflow from its traditional business gives him the money to invest in the future.
Indeed, despite all the noise about electrification the old ICE technology has plenty of mileage left in it. Unlike his counterparts at Ford Europe, JLR or GM, Mr Diess is unwilling to set a date for the demise of the fossil-fuel engine. His electric plans for 2025 still leave four-fifths of his firm’s cars powered by petrol or diesel. Volkswagen is a global company and, he says, many markets will not be ready for electric cars by 2035. Coal-fired power stations will still provide part of the electricity that might charge batteries, making electric cars a moot proposition. In places such as Latin America ICE-friendly biofuels will be the prevailing green alternative to petrol.
Scratch the surface and the ICE seems to be lurking even at firms which claim to be forsaking it. GM says its target is an aspiration. Citigroup, a bank, notes that the majority of investment by established carmakers is still directed towards conventional power trains. BloombergNEF, an energy-analysis firm, reckons that more than one in three cars sold in 2040 will be powered by petrol and diesel. Some will sport the Volkswagen logo. ■
For the full interview with Herbert Diess go to economist.com/VWpod

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This article appeared in the Business section of the print edition under the headline “ICEy conditions ahead” More

IF BUSINESS HAD a Moses, “Thou shalt link pay to performance” would be on his tablet. Compensation committees have, however, tended to stick to a narrow reading of the commandment. Whereas they reward good behaviour, deterring the bad is an afterthought. Worried that this may lead bosses to adopt a mentality of “heads we win, tails shareholders lose”, boards are rethinking their priorities—partly in response to pressure from regulators and investors, but also to shifting social winds. Perfectly balanced incentives remain as elusive as the promised land. Still, measures designed to ensure that misconduct does not pay are becoming central to the debate about how to craft bosses’ salary plans.
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The most striking change of recent years has been the rise of the “clawback”. This is a provision in pay plans that gives the board the right (or, less commonly, an obligation) to yank bonuses or stock awards given but later found to be unjustly earned. A prototype, contained in America’s Sarbanes-Oxley reforms of 2002, required retrieving pay from chief executives and chief financial officers whose sins caused accounting restatements. The idea gained traction after the global financial crisis. The European Union mandated recouping money from wayward bankers. In America Congress told regulators to craft a new clawback rule. While they mulled this, big firms got the message and began to draw up such policies voluntarily. Some 93% of those in the S&P 500 index now say they have one covering cash bonuses, equity awards or both, according to ISS, a proxy-advisory firm, up from a small minority before Sarbanes-Oxley.

As such provisions have grown in popularity, two things have happened. First, the list of misdeeds covered has lengthened. What initially applied solely to criminal financial conduct now extends to almost anything that might damage a firm’s reputation. That includes creating a toxic corporate culture, sexual harassment and “inappropriate” personal relationships; cupping backsides is taken as seriously as cooking books.
The second development is that more firms—albeit still a minority—are plucking up the courage to invoke the provisions. Wells Fargo clawed back $28m from John Stumpf on top of the $41m he forfeited when he resigned as CEO of the lender in 2016, after a probe concluded he had engendered a culture that encouraged employees to open fake accounts to lift sales. Goldman Sachs tapped a dozen current and former executives for $175m last year to help ease the pain of whopping fines over the investment bank’s role in the 1MDB embezzlement scandal. McDonald’s is trying to recoup $57m of severance pay from its ex-boss, Steve Easterbrook, who was fired over sexual relationships with underlings.
The Goldman Sachs case encapsulates the pros and cons of clawbacks. The firm won plaudits for its stance; here was a Wall Street giant willing to make top brass pick up some of the tab for wrongdoing. But what initially seemed a bold move became an embarrassment when Gary Cohn, its former second-in-command, who had cashed in his pay awards on joining the Trump administration in 2016, demurred. The stand-off ended when Mr Cohn agreed to pay a sum, reportedly $10m, to charity. Much as the bank tried to spin this as fair, it was made to look impotent.
The episode underlines that, when it comes to compensation, he who has already paid the piper finds it harder to call the tune. Goldman Sachs’s board could have shown more spine and seen Mr Cohn in court, if only to signal it was serious about holding grandees to account. That, though, would have been costly and risky. Lawyers’ fees might have exceeded what Mr Cohn owed as they wrangled over what is “excessive” pay, “inappropriate” behaviour or “inadequate” oversight in a scandal that involved decisions at many levels. The court might have sided with Mr Cohn, who was never personally accused of wrongdoing. Boards must also consider potential bad publicity. McDonald’s was put on the back foot when Mr Easterbrook claimed it already had information about his liaisons, including sexually explicit emails, when it approved his severance package.

Unsurprisingly, then, some firms try to just put the mess behind them. GE decided last month not to claw back pay from an ex-boss, Jeff Immelt, after a huge write-off and a probe into disclosure policies led to a $200m fine for the industrial conglomerate. (He denies wrongdoing.) Drugmakers accused of stoking the opioid epidemic have also eschewed clawbacks. Such clauses may deter some executives from reporting misconduct. And broadening what is considered wrongdoing creates ambiguity. Some firms include behaviour “embarrassing” to them. Might a CEO expressing exotic political views count?
Fire, brimstone and bonuses
Still, deterrence efforts are proliferating. One popular policy is to lengthen deferral periods for pay, by a year or more for cash bonuses, and a similar period beyond the vesting date for equity grants—in some cases until after the executive leaves the firm. Though less dramatic than clawbacks, this has the advantage of reducing the chance that the money has left the company before alleged misbehaviour emerges. Last month CVS Health, other pharmacy chains and even a few drugmakers (like Bristol Myers Squibb), agreed on a set of extended-deferral principles with a group of investors who had threatened to agitate over the firms’ role in the opioid crisis.
Clawbacks, too, will spread. For one thing, the pandemic recession has stoked anger over excessive executive pay—particularly perceived pay-for-failure such as Boeing’s $62m payoff to Dennis Muilenburg, who presided over the bungled response to two crashes of its 737 MAX passenger jets. And big investors like such provisions. In just a few years BlackRock, the world’s biggest asset manager, has gone from tepid to wholehearted support for them. What better way to focus executives’ minds than to make it clear that what the board giveth, the board can take away? ■
This article appeared in the Business section of the print edition under the headline “Red in tooth and clawback” More

“SUCCESS BREEDS complacency. Complacency breeds failure. Only the paranoid survive.” So said Andy Grove, the Hungarian emigré who helped turn Intel from a scrappy startup in the 1960s into the firm that did more than any other to put the “silicon” in Silicon Valley. They will be ringing in the ears of Pat Gelsinger, Intel’s new boss, who took over on February 15th. He takes the helm of a company that looks, from some angles, to be in rude health. With $78bn in revenue in 2020, it is the world’s biggest chipmaker by sales. It has a 93% share of the market for powerful—and lucrative—chips that go into data-centre computers, an 81% share in desktop PCs, and operating margins of around 30%.
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Yet Intel’s share price has underperformed those of rivals. Nvidia, a firm with one-seventh of Intel’s revenues, has a market capitalisation, at $370bn, that is half as high again (see chart). The manufacturing technology on which much of Intel’s success was built has fallen behind. It has missed the smartphone revolution. Some of its big customers, such as Apple and Amazon, are turning into competitors. Mr Gelsinger inherits quite the in-tray, then.

Start with production. Chipmaking is propelled by the quest for smallness. Shrinking the components in integrated circuits, these days to tens of nanometres (billionths of a metre), improves the performance of both the components and the microchip as a whole. For decades Intel led the way, its “tick-tock” strategy promising a manufacturing revolution every other year. Now “it has lost its mojo,” says Alan Priestley of Gartner, a research firm, who worked at Intel for many years. Its “ten nanometre” chips were originally pencilled in for 2015 or 2016 but did not start trickling out until 2019—an unprecedented delay. The technology is still not mature. In July Intel said the next generation of “seven nanometre” chips would not arrive until 2022, a delay of at least six months.
Manufacturing stumbles have cost it business. AMD, its most direct rival, outsources production to Taiwan Semiconductor Manufacturing Company (TSMC), whose technology is now ahead of Intel’s. That means AMD’s chips are generally faster, and consume less power; its market share has more than doubled since 2019.
A second challenge is the industry’s growing specialisation—a problem for Intel’s traditional forte of general-purpose chips, especially if desktop PCs continue to stagnate. Technology giants, flush with cash and keen to extract every drop of performance for their specific purposes, increasingly design their own semiconductors. In 2020 Apple said it would drop Intel from its laptops and desktops in favour of custom-designed chips. Amazon is rolling out its “Graviton” cloud-computing processors, also designed in-house and made by TSMC. Microsoft, whose cloud business is second only to Amazon’s, is rumoured to be working on something similar.
Intel has also failed to make any headway in smartphones, the most popular computers ever made. An effort in the late 1990s to build graphics chips, which have also proved handy for artificial intelligence (AI), and to which Nvidia owes its enviable valuation, petered out. Attempts to diversify into clever new sorts of programmable or memory chips—in 2015 it paid $16.7bn for Altera, which makes them—have so far not paid off in a big way.

Mr Gelsinger has yet to say how he plans to deal with the challenges. He does not look like a revolutionary. He began working at Intel aged 18, before leaving in 2009 to preside over EMC, a data-storage firm, and for the past nine years heading VMware, a software firm. In an email to Intel’s staff after his appointment was announced he invoked its glory days, recalling being “mentored at the feet of Grove, [Robert] Noyce and [Gordon] Moore”, the last two being the firm’s founders. Like them but unlike his predecessor, Bob Swan, Mr Gelsinger is an engineer, who in 1989 led the design of a flagship chip.
His first job will be to try to turn the firm’s ailing manufacturing division around. Intel already outsources the manufacturing of some lower-end chips to TSMC. Its production woes will force it, at least temporarily, to send more business to Taiwan, perhaps including some of its pricier desktop and graphics chips. Daniel Loeb, an activist investor with a sizeable stake in Intel, sent a letter to the firm’s management in December urging it to abandon factories entirely and restrict itself to designing chips that other firms, such as TSMC, would make. On paper, that looks attractive: Intel capital expenditure in 2020 amounted to $14.2bn, almost all of it on its chip factories. AMD, meanwhile, spun out its manufacturing business in 2009, and is thriving today. Nvidia has been “fabless” since its founding in 1993.
Finding a buyer could be tricky, says Linley Gwennap, a veteran chip-industry watcher, precisely because Intel’s factories are now behind the cutting edge. Most of the world’s chipmakers, which might be tempted by the fabs, are in Asia. Since chips are a front in America’s tech war with China, politicians may veto a sale to a non-American bidder.
In any case, Mr Gelsinger has said he will ignore Mr Loeb’s suggestion. In January the new boss said that, although the firm may use more outsourcing for some products, he intends to pursue the hard, costly task of restoring Intel to its customary position at chipmaking’s leading edge. He also seems minded to pursue his predecessor’s strategy of diversifying into new products, including graphics-to-AI chips. “Our opportunity as a world-leading semiconductor manufacturer is greater than it’s ever been,” he wrote. The direction of travel, then, is not about to change. Intel’s shareholders will have to hope that Mr Gelsinger can at least get it back on the pace.■
This article appeared in the Business section of the print edition under the headline “Hard reboot” More

WHEN WILL most people be back at the office? As with Tantalus and the fruit tree, the prize seems to be close, only to recede out of reach. A survey conducted by Morgan Stanley, an investment bank, found that employees have adjusted their expectations for when they are likely to repopulate their desks, moving the date back from April to June. Given the slow pace of vaccinations in some countries, even that may be optimistic.
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Companies have also had to adjust their expectations. Brian Kropp of Gartner, a research and advisory firm, says that businesses have gone through three phases. In the first, during the spring of 2020, they thought that the pandemic would be short-lived and that corporate life would soon return to normal. In the second, economic restrictions seemed set to last indefinitely and companies figured there was little point in planning for a post-pandemic world. In the third, current, stage the vaccines have brought hope of a reversion to normality, and businesses are trying to work out what the new world will look like.

Interestingly, Mr Kropp observes that views have switched since the start of the pandemic. A year ago, many executives were dubious that productivity could be maintained if employees worked from home. Staff, meanwhile, enjoyed the greater flexibility. Now managers are much more comfortable with the idea. But employees are hankering after the office, at least for part of the time.
This employee restlessness seems to relate to the sheer length of the lockdown. The novelty has worn off and working from home seems much less appealing in winter. And the time spent on screen has led to a feeling of fatigue.
It has also led to increased stress. A study of 1,500 workers in 46 countries by the Harvard Business Review found that 85% said their well-being had declined and 55% felt they had not been able to balance their work and home lives.
The problems are physical as well as mental. A survey of Italian workers found that 50% reported greater neck pain, and 38% increased lower-back pain, while working remotely. This is probably because home furniture is not designed to accommodate extensive computer use.

This does not mean that workers want to go back to the old days entirely. The Morgan Stanley survey found that employees said that, in future, they would like to work from home for two days a week, on average, compared with just one day a week before covid-19.
When people do come back, mask-wearing and social distancing will have to continue for a while. Even if they legally can, few employers will force their employees to get vaccinated, not least because of the furore this might arouse. Gartner surveyed 116 human-resources professionals and only 9% were planning to mandate vaccination. This may mean that 30-35% of American worker will not be vaccinated, Gartner says. They will be vulnerable to catching the virus at work.
Another problem for companies is that employees have become less loyal as the pandemic has progressed. Mr Kropp says that workers are spending more time looking for jobs online and updating their LinkedIn profiles. Since few businesses are hiring at the moment, not many employees have left. But when the economy opens up again, there might be a rush for the exit.
The urge to depart may not be universal. As Bartleby has argued before, the pandemic has divided workers into slackers and Stakhanovites. The first group are getting away with the minimum effort. The second are working even longer hours than before. It is the Stakhanovites who are more likely to leave, Mr Kropp argues, if they feel their efforts are not adequately rewarded.
All this presents challenges for managers who are planning a return to normal. They may have to redesign their offices to create more distance between desks, and come up with a system for allocating space to employees who may turn up for just three days a week. They need to recreate camaraderie within their teams and make sure their best employees do not head out the door.
Issues of equity may be trickiest of all to deal with. Women appear to be keener on working from home than men are. But Mr Kropp warns that managers have a tendency to reward those employees whom they can see, at the expense of those with whom they have reduced contact. That could widen the existing gender pay gap. In short, when the all-clear finally sounds, that may be just the start of managers’ problems.
This article appeared in the Business section of the print edition under the headline “Back for good, or bad” More

WANDER AROUND Seoul’s residential neighbourhoods at dawn and you will invariably encounter a Coupang delivery van. In the past few years South Korea’s mini-Amazon has parked itself in a choice spot amid a crowded e-commerce market by steadily expanding the range of products it offers to deliver in time for breakfast, so long as customers order before midnight. Some items arrive the same day. The strategy looked sensible before the covid-19 pandemic. After 2020 it looks inspired. Coupang’s revenue nearly doubled from $6.3bn in 2019 to $12bn last year. It employs 50,000 people, twice as many as a year ago, and controls a quarter of South Korean e-commerce, up from 18% in 2019, according to Digieco, a research firm.
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The 11-year-old firm has yet to make money—its cumulative $4.1bn loss so far has been bankrolled by venture capital, notably SoftBank’s $100bn Vision Fund, which owns a 37% stake, according to estimates by Bloomberg. Cashflow has improved, says Kim Myoung-joo of Mirae Asset Daewoo, an investment firm in Seoul. But it needs more capital to grow.

Happily for Coupang, investors’ appetite for startups seems insatiable, as the boom in blank-cheque companies created to merge with them shows (see article). So on February 12th it filed the paperwork for an initial public offering (IPO) on the New York Stock Exchange. It may go public as soon as next month, at a market capitalisation that could surpass $50bn.

Coupang is the latest in a generation of young e-commerce stars nibbling at the heels of Amazon and Alibaba, a Chinese titan. The incumbents are being challenged at home (by Shopify in Amazon’s American backyard, and Meituan and Pinduoduo in Alibaba’s), as well as in places like Latin America (by Argentina’s MercadoLibre) or South-East Asia (by Sea, a Singaporean group). The upstarts’ sales have soared of late (see chart ). In the past 12 months they have more than quadrupled their combined stockmarket value, to $1trn.
With no known plans to expand abroad, Coupang’s prospects depend on fending off local rivals. These range from the e-commerce arms of big conglomerates such as Lotte and Shinsegae to internet platforms like Naver and upstarts like Baemin, a food-delivery service backed by Germany’s Delivery Hero. To extend its dominance Coupang must thus continue to nurture the customer goodwill it has garnered thanks to those pre-dawn deliveries. The firm prides itself on employing delivery workers directly, and has a newsroom section dedicated to correcting allegations, for instance over working conditions, that it deems false or distorted. But it has not escaped scrutiny of the e-commerce industry. Earlier this month it had to apologise after a government commission classified the death of a young contract worker at one of its logistics centres as an industrial accident.
Even if it manages to keep consumers on its side, as seems likely, long-term growth could require looking beyond fulfilment and logistics, thinks Ms Kim. MercadoLibre and Sea owe significant chunks of their rich valuations to adjacent businesses, from e-payments to gaming. To thrive in South Korea’s isolated online ecosystem, Coupang may need to occupy more than one niche. ■

This article appeared in the Business section of the print edition under the headline “South Korea’s baby Amazon” More

FROM “GOLD DIGGER” to “Money, Money, Money”, Vivendi’s shareholders have lots of tunes to whistle as they stroll to the bank. On February 13th the French conglomerate announced plans to spin off Universal Music Group, its most valuable asset and the world’s largest record label. Vivendi and Tencent, Universal’s Chinese co-owner, will each retain a 20% stake, with the rest distributed among Vivendi’s shareholders.
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Universal, which owns the rights to those Kanye and ABBA classics, among other discographies, will be the second big label to go public. Warner Music Group did so last June. Its value has since risen by 28%, to $20bn. Vivendi expects Universal’s to exceed €30bn ($36bn).

Eight years ago, when Vivendi turned down €7bn for Universal from SoftBank, a Japanese group, the offer looked generous. The recorded-music industry was on its knees, revenues cut almost in half by online piracy. Now the internet is powering a revival, as streamers like Spotify bring in subscribers. Universal posted a 5% rise in revenues, year on year, in the first nine months of 2020. Industry sales should surpass their peak in 1999 within three years.
By going solo Universal will shed the “conglomerate discount” that weighs down Vivendi’s shares, as would-be investors in the music business are put off by its parent’s TV, advertising, telecoms and other interests. The music business is thirsty for capital. An executive at another label reports bidding wars in which artists offered $200,000 to sign in the morning command $500,000 by day’s end. Vivendi, for its part, is looking at new media acquisitions, many of which are going cheap.
Yet the listing also hints that recorded music’s comeback may be nearing a crescendo. Double-digit revenue growth in recent years will drop to about 3% a year by 2024, forecasts Bernstein, a broker. Three in five American homes now have a music-streaming subscription, up from one in five in 2016. The share won’t go much higher. Artists, as well as platforms like TikTok, are pressing labels for a better deal on royalties. “There’s a phrase in French: ‘The trees don’t grow right up to the sky’,” says Simon Gillham, who sits on Vivendi’s management board. “There’s a right time to cash in on the value you’ve created.”
This article appeared in the Business section of the print edition under the headline “Musical shares” More