Still, Blavatnik made a good deal. He had bought Warner Music in 2011 for $3.3 billion, at a time when the label business was widely considered to be on the brink of extinction - record sales had collapsed and piracy was still in its heyday.

The manna of streaming has changed the landscape and opened up new opportunities for labels. Goldman Sachs promoted Warner Music's IPO, assuring us that their market would double again in ten years. Halfway through the process, events are proving him right so far.

Neither are Warner Music's accounts, as evidenced by its sales doubling between 2014 and 2024, while its profits have almost quadrupled over the period. But investors are anticipating the next move. Surprisingly gullible with some sectors, they are inclined to play defensively here.

It's true that the race to acquire music rights resembles a speculative mania. In 2021, when catalogs of titles were trading at more than twenty times their sales, Warner Music CEO Steve Cooper warned that these transactions "defied all financial logic", and likened the bidding to the Yukon gold rush.

The industry's three heavyweights - Warner, Universal and Sony - were now seeing aggressive private equity funds sponsored by KKR, Blackrock and Apollo, among others. Cooper was subsequently dismissed and replaced at the helm of Warner by Robert Kyncl, a former Netflix and YouTube executive - which says a lot about the direction of the labels' strategy.

MarketScreener had long been anticipating a hangover in the sector. This summer, Universal's CEO urged investors to excuse a decline in streaming revenues and focus on the "long term".

Earlier this year, KKR left the table by selling Chord to Universal. For the New York firm, this was a great exit at the highest price, and many investors interpreted it as a turnaround signal.

The valuations of Warner and Universal illustrate the paradigm shift. The former is trading at x13 its expected EBITDA over the next twelve months, compared with x16 its realized EBITDA over the last twelve months. The latter still commands a net premium, at x16 its expected EBITDA over the next twelve months, versus x25 its actual EBITDA over the last twelve months.

As it stands, the best way to capitalize on the boundless growth of streaming was still to invest in Netflix or Spotify - i.e., on the distribution side - rather than in labels.