Warner Music Group is the latest major label to declare its financial results for the second quarter of 2012.
The company’s losses narrowed from $46m in Q2 2011 to $32m in Q2 2012, although revenues dipped 5% from $688m to $654m in that time. The group’s digital revenues rose 13% year-on-year to $230m, accounting for 35.2% of overall sales.
Breaking this down, recorded music revenues dropped 5.3% year-on-year to $518m, with digital up 13% to $215m, taking a 41.5% share. Warner’s publishing revenues dropped 4% to $140m, with digital up 7% to $16m.
“The increase in Recorded Music digital revenue more than offset the decline in physical revenue on a constant-currency basis,” claimed WMG in its press release.
The big story emerging from the results focuses on streaming, though. Streaming music services now account for 25% of WMG’s recorded music digital revenues – which means around $54m in the second quarter – and are growing at a “significantly higher rate” than downloads (albeit from a much smaller base).
Note: ‘streaming’ for WMG includes services like Spotify and Rhapsody, but also YouTube, Pandora and Sirius XM.
A reminder: back in February 2010, then-WMG boss Edgar Bronfman Jr made his infamous comments on the future for free streaming music services in a financial call:
“Free streaming services are clearly not net positive for the industry and as far as Warner Music is concerned will not be licensed. The ‘get all your music you want for free, and then maybe with a few bells and whistles we can move you to a premium price’ strategy is not the kind of approach to business that we will be supporting in the future.”
Although admittedly, he had changed his tune by February 2012:
“We see Spotify as incrementally positive. It’s not slowing down music sales or downloads. We would all love to make more money from Spotify, but Spotify needs to make money, too. But artists should know that it is a real and growing revenue stream.”