Warner Music Group just reversed a trend of slowing streaming revenue growth. how?

“Well, I’m glad that we suddenly no longer have to worry about the collapse of the music industry.”

Yesterday afternoon, shortly after, a well-known music industry investor sent MBW a joyful text message Warner Music Group Calendar second quarter earnings announcements.

The wording is tongue-in-cheek and the underlying message is somewhat serious.

back universal music group and sony Both companies reported that streaming revenue growth slowed in the three months to the end of June, and panic about music’s long-term growth story has spread to Wall Street offices.

Industry observers began to worry; industry analysts began to frown. That Goldman Sachs Chart display Over 1.2 billion music streaming subscribers By 2030, it suddenly felt a bit unconvincing.

Then Warner Music Group Changed the narrative.

WMG’s The CEO released the latest quarterly results yesterday (August 7) Robert Kinkelthey have a key statistic in mind: Warner’s Recorded music streaming revenue, including ad funding and subscriptions, climbs Annual growth of 10.2% Calculated on a constant exchange rate and like-for-like basis.

Specifically, the company’s recorded music subscription streaming revenue performed better Annual increase of 13.7% On the same basis.

Relief from Wall Street soon filled the entire stock market: IAfter WMG announced the results yesterday, Warner and Part of Universal Music Group stock price rises 1.9% and 6.5%, respectively.

Implosion averted!

However, as Universal Music Group’s recorded music streaming revenue grows 4.1% compared with the same period last year In calendar second quarter, Sony gains Annual growth of 5-6%how did Warner Use your own power to reverse the trend to such a dramatic extent double digit growth In this season?

Robert Kinkel and his WMG management team revealed several key reasons why WMG’s Earnings conference call yesterday (August 7).

Here are three of them…

1) Hit! Remember them?

Industry leaders like Robert Kinkel It’s right to spend a lot of time these days discussing the “combinatorial effect” of controlling millions of songs and recordings in the streaming world ——In this world, the listening of many markets around the world is no longer concentrated on the hottest blockbusters in the United States as in the past, and the so-called “middle class” of independent artists remain Gain market share.

Turns out it’s all true Warner like some major league frontline hits At the top of the chart for the second quarter of the calendar.

according to brightWarner Records released four Top 10 The biggest audio streaming songs in the US in the first half of 2024, including all top three: Benson Boone’s beautiful things, Zach Bryan and Kacey Musgraves i remember everythingand teddy swimming Losing control. (All three are provided by Warner Record.

This not only improved Warner’s performance this season, WMG’s A relatively weak hit/blockbuster release schedule last quarter (Q2 2023) also contributed to year-over-year growth.

“WMG has more new artists debuting in the Spotify Global Top 10 than any other music company so far in 2024.”

Robert Kinkel, WMG

explain Kenl On WMG Q2 Earnings: “The beauty of streaming is that a newly released hit has a halo effect on the rest of an artist’s catalog. As we help artists develop loyal fan bases, each new hit will drive growth in their catalog, and when we amplify and extend that halo effect, it builds stickiness, turning hits into evergreen deep catalogs.

Kenl Pointing out that “As of 2024, WMG will have more new artists making their debuts. Spotify global top 10 More than any other music company”.

He expressed his appreciation for the successful WMG artist program that has impacted this season, including Benson Boone, Zach Bryan, Dua Lipa, Twenty One Pilots, Atmas, Teddy Swim, Megan Thee Stallion, Gunnar, Charli XCX, Bur Na boy, and macta.

Kenl It was also revealed that Warner has a new version of Battlefront from Coldplay, David Guetta, Benson Boone, Mike Towers, Cher, Fred Iron and Diljit Dosanjh Second half of 2024.

Warner’s executive vice president/chief financial officer spoke on the earnings call, Brian CastellaniConfirmed: “[A] The number of new launches as well as the number of previously released products, a strong lineup gave us momentum in the quarter.

2) Warner is seeing strong subscriber growth among its DSP partners this month (and isn’t seeing the same issues Universal experienced in Q2 with some streaming services, according to Kyncl)

If you want to read all about why MBW believe Spotify Increased its “market share” Part of Universal Music Group Calendar second quarter earnings, try an in-depth analysis.

Short version: UMG Executives said last month that while they were concerned Spotify and YouTube Music Calendar’s growth in Q2, they were disappointed by “slowing new user additions” at other companies “Large Streaming Partner”. literally have means apple music and Amazon Music.

Warner Music Group It seems that the same trend is not observed, or at least not to the same extent.

explain Kenl Yesterday: “We have been warning the financial community to make sure not to focus on just one company, Spotify That is, as a representative of the industry as a whole, as it is more diverse. No changes to our revenue mix [between streaming partners]”.

Brian Castellani Then reiterated: “We continue to see The growth of our few top DSPs has been quite steadydriven by subscriber growth and upward trends, but [also] Price drops are smaller.

“I’ve noticed that investor attention has recently been focused on the dynamics between record labels and DSPs, with some speculating that this is The opponent is playing a zero-sum game. This is not the case… [there is] Multiple partners have ample room for user growth in both mature and emerging markets.

Robert Kinkel, WMG

Specifically, during calendar second quarter, Castellani, Warner’s Results “were once again seeing fairly consistent performance from the top DSPs, supported by growth in subs.”

Additionally, Warner’s calendar second-quarter results also benefited from the same period last year, the CFO said. Spotify’s landmark price increase Last July.

However, Castellani Confirm WMG No more seeing year-over-year gains YouTube Music Price increases in 2023.

interestingly, Robert Kinkel took a moment to tell the assembled analysts WMG’s Earnings call: “I’ve noticed that investor attention has recently been focused on the dynamics between record labels and DSPs, with some speculating that they are playing a zero-sum game with their rivals. This is not the case. We are actively working with our partners to drive growth for all of us.

additional Kinkel: “The streaming dynamic remains healthy, with ample room for user growth in both mature and emerging markets with multiple partners.”

3) Unlike Universal, Warner wasn’t crushed by Meta’s shocking video in calendar Q2… but that will be the case next quarter.

Warner Music Group’s Executive Vice President/CFO spoke on yesterday’s earnings call, Brian Castellanirevealed quite a bit in his summary of Warner’s quarterly financial results.

Castellani warned that in its fiscal fourth quarter (the third calendar quarter), Warners will see approx. US$10 million Future Quarterly – covering music recording and publishing – from Yuan Decided to no longer license (and make available on its platform) Premium music videos.

that’s a US$40 million Full year plunge WMG Compared to the previous year.

Because this impact will not hit WMG Until the next quarter (calendar Q3), it apparently didn’t impact the company’s streaming (read: ad-funded streaming) numbers in calendar Q2.

“On the second anniversary of our existing Meta deal, we want to make it clear that they will no longer provide premium music videos to their users. This change to Meta’s product will generate approximately $10 million per quarter for the recorded music and music publishing industry Revenue Impact.

Brian Castellani, Warner Music Group

That’s not the case at Universal: During Universal’s second-quarter earnings call last month, the company explained Yuan Abandoning quality music videos is a big driver Universal MG’s Ad-funded streaming revenue drops Annual growth of 3.9% During the quarter, this was another drag on Universal MG’s A holistic streaming media growth story.

Small reminder: According to Music and CopyrightWarner Music Group’s recorded music division has a 16.8% Global market share of digital music industry revenue in 2023. 32.4%.

Therefore, it may be a reasonable assumption Yuan for payment universal quality music video ratio $40 million annual payment Brian Castellani implying Facebook The company has paid WMG Quality videos from the past year.

about YuanExecutive Vice President/Chief Financial Officer of UMG, boyd muir, “Meta has previously provided premium music videos on Facebook,” it told Universal Pictures investors last month. Compared to other music products, this product is less popular among the Facebook user base. Therefore, starting this May, Meta will no longer license our premium music videos.

Muir Adding: “Meta is now focused on other areas involving music content and we are working together to expand these areas as part of a multi-faceted update.”global music business