Streaming now top recorded revenue source for Warner Music


Warner Music Group has announced a new milestone this afternoon: streaming is now the largest source of revenue for its recorded music business.

The label group’s streaming income has now overtaken both its physical revenues and its downloads sales – streaming actually overhauled the latter in the first quarter of 2015, so a year later it has now also surpassed physical.

“Our recorded-music streaming revenue continues to grow at an impressive rate, rising 59% this quarter,” said CEO Steve Cooper as WMG announced its latest quarterly financial results, for Q1 2016.

“Just five quarters ago, streaming was the third-largest revenue source in our recorded-music business, behind both downloads and physical. Today, we are the first major music company to report that streaming is the largest source of revenue in our recorded-music business.”

WMG’s total first-quarter revenue grew 10% year-on-year to $745m, with digital revenues up 21% to $360m within that – 48.3% of the company’s turnover. WMG recorded a net profit of $12m in Q1, down from $19m last year.

Within the recorded-music business, WMG reported $621m of revenues, up 10% year-on-year, including a 20% rise in digital revenues to $328m – 52.8% of its recorded income.

The group’s publishing division generated $127m of revenues in Q1, up 9% year-on-year. Digital publishing revenues jumped 38% to $33m within that.

Overall, WMG hailed revenue growth across its major regions: 17% in Asia, 17% in Latin America and 12% in Europe.

In his prepared statements to analysts, Cooper also addressed the current industry debate around YouTube, safe-harbour legislation and the “value gap” between the number of free, ad-supported on-demand music streams and the revenues they generate for the music industry.

“We fully support this unified movement to clarify copyright legislation around so-called ‘safe harbours’ in order to create the conditions necessary for the improved monetisation of music,” said Cooper.

It is imperative that we ensure a fairer correlation between the massive consumption of music via services built around user-uploaded content and the value generated for artists, songwriters and rightsholders.  We have made our views known through our submissions to the European Commission and the US Copyright Office.”

In the latter filing, submitted as part of the ongoing US consultation on the DMCA legislation, WMG criticised YouTube’s Content ID system for identifying and monetising user-uploaded videos featuring its content.

“Content ID does not do a sufficient job in identifying videos incorporating recordings that are in the Content ID system, and even back in the 2009 timeframe, video creators knew how to defeat detection by Content ID,” claimed WMG’s submission, which added that the tool does not identify live performances by its artists.

WMG was actually the first major label to strike a licensing deal with YouTube, back in 2006 – before it was acquired by Google. When that deal expired in 2008, the companies failed to reach terms, leading WMG to attempt to withdraw its catalogue from YouTube.

In its filing, WMG outlined how its blocking efforts were “thwarted” despite spending “approximately $2m over approximately a nine-month period in 2008-2009” trying, leading it to eventually sign another deal.

“Although the company put on a brave face at the time, the terms of the arrangement reached by WMG with YouTube in September 2009 were only slightly better than the terms that WMG declined in December 2008,” claimed the filing.

Cooper’s comments today follow quotes from WMG’s CEO of international and global commercial services Stu Bergen at the recent launch event for the IFPI’s latest music-figures report.

“Our inclination as an industry is that we lean in to innovation and consumer choice. But we have to balance that with the constant struggle to make sure our artists and labels get paid appropriately,” said Bergen.

At Warner, our view is constantly evolving, but we are not allergic to advertising-supported models. It’s a matter of how strong the support is.”

In his earnings call today, Cooper was more positive about the potential of the wider streaming market, citing that the emergence of streaming as its largest source of recorded revenues.

“This rapid transformation is evidence of our ability to sign, develop and market artists that thrive in the streaming world,” he said. “Reaching these achievements is made possible by healthy macro trends in the recorded music industry, as well as tireless execution by our global operators.”

Now read: Music Ally’s report on the music industry’s Safe Harbour battle

Stuart Dredge

Read More: Data News
One response
  • Will Buckley says:

    Warner Brothers, once the most respected and artist centric label, has been in decline for decades. While some may read the headline as a tribute to streaming’s success, the reality is it points out WB’s failure to work physical product, as opposed to just be depending on streaming for revenue.

    Before you take out the pitchforks and accuse me of living in the past, the reality is that while physical still sells, labels are making a mistake by just abandoning the format and the high return it delivers.

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