Universal Music Quarterly Revenue Rises 6.4% With Help From Streaming Price Hikes

Universal Music Group (UMG) is starting to see the fruit of higher prices and new deals with streaming platforms. The company’s recorded music division saw its subscription revenue climb 10.6% year-over-year (up 13% at constant currency) due in part to price increases at “certain platforms,” the company said in its second quarter earnings release on Wednesday (July 26). That gain helped UMG’s revenue reach 2.7 billion euros ($2.94 billion at the quarter’s average exchange rate), representing a 6.4% year-over-year increase (8.8% in constant currency), mainly due to the growth in recorded music as well as merchandising.

In contrast, music publishing revenue for the quarter was 464 million euros ($505 million), down 2.5% year over year (0.6% in constant currency) — partly due to a one-time catchup in the second quarter of 2022 that recognized the receipt of higher income than was accrued at the end of 2021. (The company changed the timing of accrued revenue from collecting societies.) Excluding these accounting changes, which created a challenging prior-year comparison, UMG’s publishing revenue grew 22.8% (25.7% in constant currency).

Streaming will provide more to the company in the coming quarters and years — both in terms of higher royalties and a closer working relationship. Not only can UMG expect increased revenue in the coming months from Spotify, which raised prices on numerous subscription tiers in the United States and other markets on Monday, but the streaming giant shares UMG’s concerns about fairly compensating and promoting “real artists” above lesser content (encompassing things like AI-generated tracks and generic mood music) flooding the platform, CEO Lucian Grainge said during Wednesday’s earnings call. “And as part of our newly expanded agreement, [Spotify has] committed to continue to work to address them,” Grainge said. “In addition, they will be collaborating with us on deep data analysis, formally taking part in a foundation piece of our expanding artist-centric initiative.”

Grainge continued a recurring theme from recent earnings calls by pitting “real, actual human beings who have real, actual fans” against “those devoted to gaming the system, to committing fraud, to flooding the platform with content that music fans do not want.” He expressed confidence that UMG “will bring those principles to life across the streaming world.” When asked by an analyst when UMG would complete its first artist-centric royalty model — a shift from the traditional method of divvying up pooled revenue — Grainge declined to provide a specific timeline and said UMG is “long-term confident” in its ability to transform the market.

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