Warner Music Group’s recorded-music business generated $311m from streaming in the final quarter of 2016 – its fiscal Q1 – taking it to more than $1bn for the last calendar year, according to its latest financial results.
The label group’s digital revenues grew by 25% year-on-year to $402m last quarter, while its overall revenues grew by 8% to $797m. Meanwhile, publishing arm Warner/Chappell saw its digital revenues spike by 59% to $43m, and its overall revenues grow by 7% to $124m in the same period.
Those $311m of (recorded) streaming revenues were up 46.7% year-on-year, while WMG’s downloads and other digital revenues fell by 17.3% to $91m. Streaming thus accounted for 77.4% of WMG’s digital recorded-music revenues in the final quarter of 2016, and 39% of its overall recorded-music revenues for that period.
In WMG’s earnings call last night, CEO Steve Cooper elaborated on the trends in 2016, and the growth that his company sees ahead. “In calendar 16, the top four recorded music markets all grew, driven mainly by increases in subscription streaming revenues,” said Cooper.
“While we cannot expect the industry’s transformation to be entirely predictable, or for its trajectory to be linear, we believe global growth will continue for the foreseeable future. Although there are now more than 100 million music subscribers around the world, that still only represents a bit over 1% of the global population. It’s just a drop in the bucket. As an industry we have only fulfilled a fraction of the streaming model’s long-term potential.”
Cooper’s colleague, CFO and EVP Eric Levin, did go slightly off-message (from an industry perspective) when answering one analyst’s question about YouTube. While he acknowledged the arguments around monetisation and safe harbours, he also suggested that the popularity of YouTube is NOT hampering the growth of subscription audio-streaming services.
“Look, YouTube has clearly been a very popular for years consumer opportunity, and there are multiple things where YouTube provides both benefits to promote music, but also concerns in terms of how it monetises music and in terms of how they use safe harbours for content that isn’t the original and official videos,” said Levin.
“So YouTube has been out there for a while, and remains an issue that the industry continues to work on addressing. That said, the rest of the industry is continuing to move forward aggressively. Consumers are finding out the benefits of subscription streaming, and we see no signs of that slowing up because of YouTube, or otherwise.”
Levin also said that new entrants like iHeartRadio’s paid tiers and Amazon Music Unlimited are welcome – “The more competitors there are competing to grow and market subscription services, especially paid subscription services, we think the more likely the category is to continue or expand its growth” – and hailed Ed Sheeran’s recent “one-two punch” of releasing two new tracks on the same day, saying that it has also sparked “an uplift in activity for Ed’s first two studio albums” on streaming services as a result.
Cooper also praised the RIAA’s “aggressive” action against stream-ripping services, and talked about more positive technologies.
“We’re staying alert to new consumer behaviour patterns and exploring additional revenue streams,” he said. “This includes the rise of voice-activated devices like Amazon’s Echo, as well as continued experimentation with early-stage technologies such as high-resolution audio, virtual reality and augmented reality.”
This article was amended after quotes from Eric Levin were incorrectly attributed to Steve Cooper
Tools: platforms to help you reach new audiences
Tools :: Wyng
Through Music Ally’s internal marketing campaign tracking, we’ve recently discovered an interesting website by the…