Warner Music Group chief Steve Cooper has welcomed Spotify’s tests of higher-priced subscriptions, and hopes that it might persuade rivals to follow suit. “We do think this is good news that Spotify is beginning to take more seriously upward bound pricing, and the news that they’re going to be testing in a number of countries was well received, at least by us,” Cooper told analysts in WMG’s earnings call yesterday.
“I think that as subscription strength and grows and as these services offer more verticals, that it is likely that we continue to see across a number of the more substantial players exercising their ability to raise prices.” Cooper cited Amazon Music’s HD tier, which costs $14.99 a month, as an example of other price-raising moves. “I think the other services, given that Spotify is essentially a pureplay, will look at this as an opportunity to also test the market and follow along.”
What about those earnings? WMG’s revenues were essentially flat year-on-year at $1.13bn last quarter – the company’s fiscal Q4 – with recorded music revenues up 1% to $958m, and publishing revenues down 2% to $169m. “We’re proud of everything we’ve accomplished in the past year, despite the challenging conditions that the world has faced. We’re essentially flat against a record-breaking prior year,” noted Cooper in a statement. Streaming revenues were up 16.2% year-on-year.
Cooper also stressed the opportunities WMG sees beyond subscription: “Just the beginning. It is only one of our many avenues for long-term growth”. Social partners including Facebook, TikTok and Snap; livestreaming; gaming platforms like Roblox and Fortnite; podcasting (“WMG currently produces dozens of podcasts,” Cooper reminded analysts); fitness services were among the others.
Chief financial officer Eric Levin was also asked by an analyst whether WMG sees platforms like TikTok and Twitch as licensing models, or more like streaming. “Really, these look more like streaming,” he replied. “Licensing is generally more of a case-by-case type situation. Whereas these really are ‘full catalogue plus new music’ licences, access to the full portfolio and that is much more like streaming.”
Cooper also had some sharp words for some of the investment firms spending big on publishing catalogues. “Our business is to work with our artists and those copyrights to create more momentum and more success by being proactive and not letting them sit in a vault for the next five, 10 or 15 years,” he said.
“What we see with other investments coming into the market where substantial capital is put against these investments, those organisations are investment organisations. And, frankly, it looks to me like it’s a fixed income arbitrage play, as opposed to how do we work with the artists in these copyrights to ensure that we are doing everything we can proactively to optimise the results of their songwriting efforts.”
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