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UMG revenues grew 16.1% year-on-year to €2.15bn in Q3 2021


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Freshly minted as a public company, Universal Music Group published its latest quarterly financial results yesterday, with revenues up 16.1% year-on-year to €2.15bn (just under $2.5bn) in the third quarter of 2021.

That included 15.5% growth for the company’s recorded music revenues to €1.71bn – 79.5% of the total – with streaming firmly in the driving seat. UMG’s streaming revenues for recorded music were up by 14% to €1.13bn, although it also saw growth in physical sales (up 8.9% to €280m) and an impressive 49.3% spike in licensing and other revenues to €218m.

Universal’s publishing arm also impressed, with revenues up 19.8% year-on-year to €363m. UMG cited “continued growth in subscription and streaming, the timing of certain society distributions and from an improvement in synchronization” as the keys to that growth. It also noted that catalogue acquisitions had helped to offset the “delayed impact of last year’s Covid-related slowdown” on publishing income.

There were some interesting points in UMG’s earnings call with analysts. UMG isn’t yet splitting out its streaming earnings between subscriptions and ad-supported, although it will from next quarter.

Digital boss Michael Nash did say that video and social platforms “represent about two thirds of total ad supported business for Universal Music, and they’re both growing really fast. People used to think of ad-supported as merely a customer-acquisition tool, a lower-value substitute for subscription. But with the evolution of social and video, music is now endemically tied to the growth of large global platforms. We’re very excited about that, and we think there’s inherent growth potential there.”

A couple of analysts probed on why UMG’s year-on-year growth in streaming revenues – 14% – lagged the 27% year-on-year growth reported by Spotify yesterday. UMG’s executives batted that one back though.

“The Spotify results were very positive, and frankly that’s very very encouraging for our growth prospects,” said CFO Boyd Muir. “We see the market more broadly, and our results will not always align with those of any single partner, and in particular in any quarter.” He later fielded another question on this. “Spotify is but one platform, and their results are very, very positive, and we’re very, very pleased. We will be the beneficiary of that, but we see across multiple platforms.”

There was also a question about the ceiling for paid streaming subscriptions, with one analyst wondering whether 40% (of a population) is the limit, based on Sweden. Nash suggested that it’s higher.

“What we’re seeing in Sweden in 2020 is actually a 45% penetration rate for paid subscription. US is below 40%, about 38%, so if we accept that Sweden was the target, I think there’s going to be continuing growth that’s going to be driven by innovation… across the digital ecosystem,” he said.

“But if we take the 45% as a target metric, there’s plenty of headroom in a market that’s as developed as the US. Other developed markets are more like 24% relative to that 45%. You’ve got high growth markets and they’re below 4%… So yes, I think there’s an indication in those numbers that there’s significant opportunity for growth in penetration.”

This story was corrected on 28 October with the correct 2021 figure for UMG’s streaming and subscription revenues.


Written by: Stuart Dredge