Taylor Swift, Rolling Stones Help Drive Universal Music Group Quarterly Results – Hollywood Reporter

Subscribe for full access to The Hollywood Reporter
Subscribe for full access to The Hollywood Reporter
The music major posted its fourth-quarter earnings, with CEO Lucian Grainge saying of its licensing standoff: “There must not be free rides for massive global platforms such as TikTok.”
By Georg Szalai
Global Business Editor
Universal Music Group, whose artist roster includes the likes of Taylor Swift and Olivia Rodrigo, reported improved fourth-quarter financials. Quarterly revenue rose 9 percent, or 15.6 percent on a constant currency basis, to 3.2 billion euros ($3.5 billion), with UMG touting “strong growth across all segments.” It cited album top sellers from the likes of Taylor Swift, The Rolling Stones, Drake, Jung Kook and Stray Kids.
The music giant’s chairman and CEO Lucian Grainge also used the quarterly earnings conference call to emphasize that there should be “no free rides” for the likes of TikTok, which has been in a standoff with UMG, and that the company was looking to use AI in a responsible way that protects its artists.

Related Stories

The music giant has as of late feuded with TikTok, pulling songs from Taylor Swift, Lady Gaga and Drake from the short-form video playtform at the end of January after failing to come to terms on a new licensing deal with the fast-growing social video platform. The music label unveiled the move in a blistering open letter to artists and songwriters last month entitled “Why we must call time out on TikTok.”
It was no surprise then that on Wednesday’s earnings conference call the UMG CEO once again touted the company’s focus on artist-centric business models, which he emphasized must apply to “all platforms, not just music streaming platforms,” arguing that this will ensure a “healthier” and a “more competitive” environment that ensures “fair compensation” for artists.
“There must not be free rides for massive global platforms such as TikTok that refuse to meaningfully address issues around AI, platform safety, or pay their fair share for our artists’ and songwriters’ work,” Grainge said. “That is why we are grateful for the outpouring of support not only from individual artists and songwriters, but from artists’ rights organizations, independent labels and publishers, songwriters, advocacy groups, and others.” Those share “our resolve that all platforms that operate or seek to build businesses on the music of artists and songwriters must protect, as well as fairly compensate them.” He concluded that it was “at the core of who and what we are” to ensure “win-win outcomes.”
CFO Boyd Muir mentioned that TikTok-related revenue amounted to only about 1 percent of UMG’s total annual revenue. That annual revenue hit 11.1 billion euros in 2023, or $12.0 billion, with 1 percent of that amounting to about $120 million. “Because other platforms in the social video category achieve much greater monetization, we’re focused on accelerating our partnerships with YouTube, Meta, Snap and others,” he highlighted.

Executive vp, chief digital officer Michael Nash said on the earnings call that UMG wouldn’t comment on the status of negotiations with TikTok and said it was too early to draw “meaningful” conclusions on the impact to date of pulling music content from the platform on UMG’s digital reach. “To the extent that several weeks of data tells us anything, we do know that Universal Music Group streaming consumption remains stable globally and regionally for frontline and catalog,” he said. “In fact, we’ve observed no discernible negative impact on our broader digital business. In fact, we’ve seen a slight uptick in terms of frontline consumption and catalog consumption over that short period of time.”
He also shared thoughts on the revenue impact from taking UMG content off TikTok. “If consumption shifts from TikTok to other short video platforms like Reels or YouTube Shorts, we believe that we can in fact recapture some lost revenue,” Nash argued. “Over half of TikTok monthly active users already also use other short video services. In some markets, that percentage is as high as 70 percent. These are services that monetize engagement at a much higher rate. So revenue-positive consumer migration is easily foreseeable.”
Grainge summarized his takeaway on the finanicial impact of the TikTok dispute this way: “It’s a not material part of the multidisciplinary jigsaw where we promote and market our music globally.”
Outlining his thinking on AI, the UMG CEO told the earnings call that it includes such core things as “ensuring that human artists are not economically disadvantaged, protections against deep fakes and transparency requirements for AI companies regarding how they train their models on our IP and the artists’ work and their creativity. It is critical that as an industry, we advocate for the public policies that put the appropriate guardrails in place so that the market can best deliver win-win outcomes.”

Grainge also highlighted that UMG learned from the past when music companies waited too long to face up to disruptive technology. “Instead of waiting for AI to take hold, and then trying to figure out business models that will fairly compensate artists and music companies, we got ahead of the game,” he said. Collaborating with YouTube and “a number of entrepreneurial enterprises,” he emphasized that UMG is still proceeding “always with artists at the forefront of our thinking.” He added: “Even as we’re helping artists protect their rights to their work and their names and likenesses, we fully understand that the technology is not just a threat. The reality is that AI has the potential to enhance and support the creative process and produce revolutionary music experiences. So we continue to strike groundbreaking agreements with companies to develop responsible commercial uses for AI and expect many more exciting developments and partnerships this year.”
UMG’s recorded music revenue in the fourth quarter jumped 8.3 percent compared to the year-ago period, or 14.7 percent on a constant currency basis.
Within recorded music, subscription revenue rose 8.9 percent, or 15 percent in constant currency, “driven by the growth in global subscribers as well as the impact of price increases at certain platforms.” Streaming revenue declined 1.3 percent, but grew 5.6 percent on a constant currency basis “as the broader advertising industry continued to gradually recover.”

Elsewhere within recorded music, UMG’s physical revenue increased by 10.6 percent, or 17.0 percent in constant currency, driven by improvements in vinyl sales in the U.S. and Europe. Downloads and other digital revenue fell 49.2 percent, or 45.8 percent in constant currency, though as download sales continued their industry-wide decline and other digital revenue also declined. License and other revenue improved 26.5 percent, or 34 percent in constant currency, helped by licensing growth and “strength in neighboring rights, synchronization, touring, sponsorship and the timing-related benefit of a new licensing deal,” UMG said.
Beyond recorded music, music publishing revenue for the fourth quarter also increased, to the tune of 8.7 percent, or 15.4 percent in constant currency, with UMG explaining: “The strong revenue improvement was driven by the continued growth in subscription and streaming revenue and improvements in synchronization and mechanical revenue.”
Finally, merchandising and other revenue in the fourth quarter jumped 18.8 percent, or 26.5 percent in constant currency, “driven by growth in direct-to-consumer sales, which more than offset a decline in touring merchandise sales on lower touring activity compared to the prior-year quarter.”
UMG also reported that its quarterly adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), a key metric of profitability, rose 9.2 percent, or 15.1 percent on a constant currency basis, to 677 million euros ($734 million).

Grainge lauded the strong year that UMG artists had on various charts, on Spotify, Apple Music, YouTube and beyond. The music giant touted that it had “nine of the top 10 on the IFPI Global Recording Artist of the Year chart; six of the top 10 global artists on Spotify; and 13 of the top 20 most-streamed songs globally on Apple Music.”
But with an eye on the future, UMG recently unveiled a “strategic organizational redesign” that will generate €250 million in annual savings by 2026, through a combination of layoffs and other operational efficiencies. The first phase will achieve €125 million in annual savings by 2025, including €75 million in 2024, the firm said on Wednesday, emphasizing that the plan was “designed to achieve efficiencies in targeted cost areas while strengthening labels’ capabilities to deepen artist and fan connections.”
In 2024, UMG expects to incur restructuring charges of 125 million euros ($135 million), with approximately 100 million euros ($108 million) of that falling into the first quarter, Muir said. “We will continue to look at accelerating our progress on phase two, and if we’re able to do so, we could see some additional savings and severance costs later in 2024.”
The music major recently struck a deal with YouTube to launch an AI Music Incubator that embraces AI-related musical tools though. “The historic collaboration underscores our belief that the best way to ensure responsible AI development is through market-led solutions,” Grainge said previously. “Specifically, we agreed that YouTube will embrace a set of AI principles that empower human creativity and embrace artist interests.”

Added Muir: “We continued our strong performance in 2023, with robust (revenue) and (profit) growth driven by both our artists’ and songwriters’ exceptional performance, as well as progress across our strategic initiatives.”
Sign up for THR news straight to your inbox every day
Sign up for THR news straight to your inbox every day
Subscribe for full access to The Hollywood Reporter
Send us a tip using our anonymous form.

source

Sim

Related Posts

Celebrities With Red Hair That Give Us Major Color Inspiration – Southern Living

Celebrities With Red Hair That Give Us Major Color Inspiration  Southern Livingsource

Patrick Mahomes recalls advice he gave to Travis Kelce amid pursuit of Taylor Swift as Chiefs QB claims to be – Daily Mail

By Oliver Salt Published: 20:50 BST, 23 May 2024 | Updated: 21:10 BST, 23 May 2024 5View comments Not only does Patrick Mahomes throw touchdown passes, but…

Patrick Mahomes Jokingly Takes Credit For Travis Kelce, Taylor Swift Relationship – Sports Illustrated

Football season is gradually beginning to ramp up as rosters gather across the league for organized team activities, the first substantial step towards training camp. Which means…

Why Patrick Mahomes is taking 'some credit' for Taylor Swift-Travis Kelce romance – New York Post

Why Patrick Mahomes is taking ‘some credit’ for Taylor Swift-Travis Kelce romance  New York Post source

Patrick Mahomes Told Travis Kelce to 'Go for It' With Taylor Swift – Us Weekly

By clicking Sign In, you agree to our Terms and Conditions and that you have read our Privacy Policy.Sign InUp with your social accountWe won’t post to…

Review: The Eras Tour concert film 'hits different' than live show – The Shorthorn

Review: The Eras Tour concert film ‘hits different’ than live show  The Shorthornsource

Leave a Reply

Your email address will not be published. Required fields are marked *