Universal Music Group

Economic crisis? What economic crisis? Certainly when it comes to Universal Music Group’s financials, the numbers continue to be buoyant. The major label group reported its Q4 and full-year results yesterday.

Its Q4 revenues were up 16.7% year-on-year to €2.94bn ($3.12bn at current exchange rates) while UMG’s full-year revenues grew by 21.6% to €10.34bn. The latter included healthy upswings in recorded music revenues (up 16.3% in 2022) and publishing revenues (up 34.8%).

UMG’s recorded revenues from streaming grew by 18.7% to €4.48bn in 2022, with subscription streams accounting for nearly three quarters (73.5%) of that. Meanwhile, in publishing it saw 49% growth in digital revenues to €1.04bn – a key milestone for the songwriting side of UMG’s business.

UMG proudly announced that its roster includes four of the top five global artists in 2022, and 15 of the top 20 – this is referring to global music body the IFPI’s recently-published chart. That’s clearly great for UMG, but we wonder if it might spark another debate about whether that level of dominance is entirely healthy for the wider industry.

Notes of interest from UMG’s earnings call yesterday include chairman and CEO Sir Lucian Grainge’s latest thoughts on streaming. He noted that this is the first time UMG has ever generated more than €1bn of Q4 revenues from music subscriptions, adding that UMG’s consumer research “indicates that music subscriptions continue to hold up very well in a challenging economic environment”.

He later said that UMG expects “double-digit growth in subscription for 2023” despite the wobbly economic and geopolitical climate. Digital boss Michael Nash referred to internal consumer research suggesting “more than 100 million subscriptions that we could potentially garner” in 13 major markets studied.

Grainge offered an update on UMG’s efforts to develop new streaming-payouts models with DSPs. The company announced its partnership with Tidal in January, but now it has a second. “I’m pleased to tell you that we have been working with Deezer as well, and discussions with several of the other major global platforms are also underway.”

Grainge also said that UMG’s ‘artist-centric’ push extends beyond music streaming services to “all platforms, including short-form video, which are reliant on artists and their music”.  Later in the call, UMG’s digital boss Michael Nash batted back a question about how negotiations are going with TikTok, but made it clear that UMG wants it to follow the path of “win-win partnerships” trodden by YouTube.

“They were the focus of value-gap concerns in the previous decade. They’ve now become excellent partners with the stated ambition of being the leader in monetisation by the middle of the decade,” he said. “We think that the new value-gap issues in short-form video can also be constructively addressed through the development of win-win partnerships.”

Grainge also lobbed his latest brickbats at new entrants in the music-rights ownership game from the financial industry, painting them as ‘passive’ entities. “There are many who claim they actively manage rights, but they do not,” he said.

“Why? Their lack of infrastructure, their lack of experience and expertise, and even more critical, in many cases, their inability to acquire all the rights necessary to actively manage anything. As a result, they wind up as passive participants who do nothing and therefore cannot exploit the full potential of the fractional rights that they do own.” Oof!

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Stuart Dredge

Music Ally's Head of Insight

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