Business
Page: 389
Warner Music Group reported quarterly revenue was up 9% as of mid-year, as the third-largest U.S.-based music company beat Wall Street estimates for revenue and profit on big album releases by Ed Sheeran, Melanie Martinez others.
WMG reported revenue for its fiscal third quarter ending June 30 rose to $1.56 billion — analysts had expected $1.47 billion — driven by strong releases and a 15.5% uptick in music publishing revenue of $283 million. Streaming revenue rose by 9.5% overall and digital revenue was up 8.8% to $1.03 billion compared to the year ago quarter. Net profit edged slightly lower to $124 million from $125 million a year ago but still beat analysts’ expectations.
“We had a great release slate with lots of momentum and success, but at the same time our catalog has also delivered,” WMG Chief Executive Robert Kyncl said on a call with analysts. “We are firing on both engines.”
WMG’s stock was up 8% by mid-day trading in New York.
Executives said the current quarter is off to a good start with major releases from Lil Uzi Vert, Dua Lipa and the Barbie movie soundtrack, and upcoming releases from Zach Bryan and Charlie Puth.
“Our results show we’re gaining real traction,” Kyncl said, adding that as price increases from Spotify, YouTube and others filter in to WMG’s financials this quarter, the company can expect continued strength.
“We see these initial price increases as an encouraging start,” Kyncl said. “There’s no evidence that the services are experiencing elevated levels of customer churn. We believe the market will bear further price increases in the future, and we’re expecting that they’ll arrive on a more regular cadence than in the past. “
The growth in music publishing revenues was driven by a 26.4% uptick in digital revenue and 27.1% increase in streaming revenue, reflecting the impact of digital deal renewals and a revenue true-up of $9 million from the CRB. Mechanical revenue spike about 45% primarily due to a higher share of physical sales in the quarter.
Recorded revenue rose 7.8%, bolstered by a 5.6% increase in digital revenue and a 6.3% increase in streaming revenue on the stronger release schedule and growth in ad-supported revenue.
WMG prefers to use operating income before depreciation and amortization (OIBDA) as a metric to assess its overal business health, and OIBDA increased 18% to $275 million in the quarter compaired to $233 million a year ago. Adjusted OIBDA rose 16% to $297 million from $255 million a year ago.
Key WMG financial highlights:
Total revenue rose 9% to $1.56 billion for the second quarter 2023, from $1.43 billion in the same quarter 2022.
Net profit, or net income, was flat at $124 million this quarter compared to $125 million in the year ago quarter.
Digital revenue rose 8.8% to $1.03 billion from $944 million in in the year ago quarter.
Streaming revenue rose 9.5%
Recorded music revenue rose 8% to $1.28 billion from $1.19 billion in the year ago quarter.
Music publishing revenue rose 16% to $283 million from $245 million in the year ago quarter.
Operating income was up 29% to $189 million from $146 million in the year ago quarter.
OIBDA was up 18% to $275 million compared to $233 million in the year ago quarter, with OIBIDA margin of 17.6%, up from 16.3%.
Shortly after notching his first Billboard 200 top ten album with Been One, Rylo Rodriguez became the first artist signed to Lil Baby’s Glass Window Entertainment through a partnership deal with Motown Records and Capitol Music Group. According to sources, the signing of Rodriguez is believed to be a multi-million deal. “I’m overly excited for Rylo […]
The music industry has progressed rapidly over the last decade. TikTok is launching music careers, sites like YouTube are creating new distribution channels and artists like Grimes are open-sourcing their vocals for generative AI creation. But for all of that progress, the opaque systems that control the industry are not in favor of artists driving culture. As listeners, we’ve seen the tip of the iceberg with Taylor Swift’s highly publicized re-recording of her masters and Megan Thee Stallion’s legal dispute with her record label over unpaid royalties.
Music is the most consumed category of art on the planet, and it’s time to evolve the system so that all artists — from top recording stars to indie creators to those who are just getting their careers started — are set up to succeed. But to really grasp what’s needed to shift the power dynamic in the direction of artists, it’s important to peel back the complexities of music revenue.
Changing the narrative on music revenue
There’s a false narrative that is pervasive in the media that says music doesn’t generate any money, driven in large part by the litany of really bad record deals that draw public attention (like the aforementioned Megan Thee Stallion example). But in reality, music makes money — it’s the artists who don’t get paid what they deserve.
The streaming revolution of the 21st century has transformed the way people consume music. But despite streams making up 80-90% of the industry’s revenue, artists see few of those dollars after industry players take their inevitable cuts. Though record labels serve a valuable role in the music ecosystem (from marketing and developing an artist to licensing and distribution), artists can be haunted for decades by bad deals signed early in their careers that unknowingly give away creative control and a significant portion of their future earnings. Artists who have signed contracts with unfavorable terms typically don’t earn negotiating power until they’ve amassed a large following and a fruitful career.
Why the bad deals?
Most artists simply don’t know what they’re signing — it’s not necessarily that they’re making a bad decision. As an artist myself, I experienced this firsthand early in my career. It would take years for me to get paid for my songs — and as someone who’s proficient in accounting from my time studying business in college, my inability to see how much I made from my music was mind-boggling.
The reason that deals are so opaque is that music revenue is growing and coming from more sources than ever before, which creates a complex web of intermediaries within the ecosystem. Every different distributor has a different deal with every different streaming service, and every label has a different deal with every streaming service. And the streaming services are not transparent about how their rates differ across these various deals. Beyond that, there are numerous types of royalties — from performance royalties to mechanical royalties to in-app streaming royalties. Therefore, when it comes to signing on the dotted line, artists must blindly place their trust in a network of counterparties, lacking any real visibility into their actual earnings once every entity has taken their cut. All of this is perpetuated because record labels are incentivized to control information so they can make more competitive deals with artists.
As a result, artists gravitate to what comes naturally — the music. They don’t want to worry about the business side of things because the system isn’t set up in a way that empowers them to ask questions or negotiate favorable deals, and it distracts them from doing what they love.
Finding the opportunity in technology
To rewrite the way music institutions approach music revenue and income, we need to make it as transparent as possible. It seems like a lofty goal for an industry that has long been set in its ways, but technology is making it possible. My company Royal recently launched a free tool that allows any artist to estimate the streaming revenue for their songs. The hope is that artists become more empowered to make deals that uplift their careers.
I’ve also been bullish on crypto since its earliest days, for a variety of reasons, including its ability to transform the music industry with transparency. Blockchain is inherently transparent — in fact, the one thing you can’t do on a blockchain is hide information. It’s all there, at all times. It’s also time-stamped which establishes a clear provenance (traceability of ownership over time). This is especially useful in the music business, where copyright infringement plagues artists and record labels alike. Perhaps most importantly, leveraging tokens that represent rights enables artists to see the value of their songs and create tangible benchmarks upon which to negotiate better deals. With more information always comes more power.
Artists don’t know how much money they’re missing out on, but they could. And it doesn’t have to be a public battle when they do find out. If we embrace technological progress to improve outdated systems, we can create an open data ecosystem that gives artists not only more transparency into their earnings and fan bases but more control over their artistic careers. Better deals alongside more creative freedoms is a winning combination that can define the next 30 years of music — we just have to be willing to change.
Why should artists even care?
As much as streaming has changed the music industry for the better, there are still unanswered questions about how value accrues in this system. Do we equate the value of passively listening to a sleep playlist in the background to actively listening to your favorite album with friends?
This talk of numbers and questions of value may seem like a distraction for artists who just want to spend their time making music — but ignoring this topic completely opens the door to predatory industry practices that threaten musicians’ longevity and entire legacies.
More industry transparency should improve all the variables that play into an artist’s career and result in musicians keeping more ownership of the art they create. Having the humility to acknowledge what music is actually worth is the first step in unlocking more value in this new era of the industry.
Justin Blau is CEO of Royal and a world-renowned musician and producer, known as 3LAU. An early crypto adopter, Justin has been advocating for building the investable layer of music on blockchains since 2017. In 2021, he founded Royal to empower artists to share their music with fans and give people the opportunity to invest in music.
Iggy Azalea is clarifying reports that she has spoken out in support of rapper Tory Lanez (born Daystar Peterson) as the “Say It’ MC is awaiting sentencing in his felony assault and weapons case in connection with his attack on Megan Thee Stallion in July 2020. The Associated Press reported on Monday that Azalea was among the dozens of people who wrote the judge in the case, with her note asking that the sentence be “transformative, not life-destroying.”
In a series of tweets, however, Azalea wrote, “I have not been in touch with tory for months, I have no reason to be, but I do wish him well,” adding, “I don’t ‘support’ anyone. the whole thing is full of oddities. My letter never mentioned anything in regard to what happened that night.”
Lanez’s sentencing will stretch into Tuesday (Aug. 8) and in a written statement, Megan described the ongoing trauma she has suffered since Lanez shot her in the feet after they left a Hollywood party together three years ago. “Since I was viciously shot by the defendant, I have not experienced a single day of peace,” Megan said in a statement read by Los Angeles County Deputy District Attorney Kathy Ta. “Slowly but surely, I’m healing and coming back, but I will never be the same.”
Megan, who testified during the trial, said she struggled with appearing in person to read the statement, but said she, “simply could not bring myself to be in a room with Tory again.”
In a further clarification, Azalea noted that she was told her statement would be for the judge’s eyes only. “Yet it’s being discussed in public? I never intended to publicly comment,” she wrote. “Iam not in support of throwing away ANY ones life if we can give reasonable punishments that are rehabilitative instead. I support prison reform. Period.”
Further explaining why she wrote a statement, Azalea said she was asked to share her “genuine experience and the type of punishment I think he deserves: I did.” In another tweet Azalea lamented that the statement became a topic of conversation on Monday because, in her words, “it’s not really an explosive revelation. Yes: he should be held accountable. No: the charges don’t warrant 5plus in prison.”
She argued that “most agree” with her position because “it’s a reasonable take.”
Though Megan did not come to court to make her statement in person, she asked Judge David Herriford not to take that as a sign of indifference and urged him to issue a stiff sentence to Lanez. Sentencing hearings typically take only a few hours, but Herriford allowed attorneys for each side to argue factors for Lanez’s potential sentence, allowing seven witnesses to give statement’s about the rapper’s charitable works, his childhood trauma and his status as a father to a six-year-old son.
Prosecutors have asked the judge to hand down a 13-year sentence to Lanez, 31, who was convicted of three felonies: assault with a semiautomatic firearm, having a loaded, unregistered firearm in a vehicle and discharging a firearm with gross negligence. Lanez’s lawyers have argued in a sentencing memo that he should get only probation and be released from jail to enter a residential substance abuse program.
See Azalea’s tweets below.
For the record:1. I have not been in touch with tory for months, I have no reason to be, but I do wish him well. 2. I don’t “support” anyone.the whole thing is full of oddities. My letter never mentioned anything in regard to what happened that night. 3. I was told this…— NOT IGGY AZALEA (@IGGYAZALEA) August 8, 2023
I really hate that this is todays discourse online because it’s not really an explosive revelation. Yes: he should be held accountable. No: the charges don’t warrant 5plus in prison. Most agree with that sentiment because it’s a reasonable take. This is not news worthy. 🤷♀️— NOT IGGY AZALEA (@IGGYAZALEA) August 8, 2023
For 2023, Billboard is introducing the R&B/Hip-Hop Power Players’ Choice Award, a peer-voted accolade chosen by Billboard Pro members to honor the executive they believe has made the most impact across the R&B/hip-hop music business over the past year. After three rounds of voting, Billboard Pro members have chosen Pierre “P” Thomas, CEO of Quality Control, to […]
In February, TikTok’s billion-plus users received an unexpected gift for Valentine’s Day: exclusive access to the catalog of one of hip-hop’s most revered labels, Death Row Records. Snoop Dogg had purchased the catalog in 2022 and pulled it from streaming services. So the only place to hear tracks from Snoop’s classic Doggystyle or 2Pac’s 10-times-platinum All […]
HYBE’s growing roster of K-pop groups and a heavy touring schedule helped revenue improve 21.2% to 621 billion won ($472 million) in the second quarter of 2023, the South Korea company announced on Tuesday (Aug. 8). Revenue for the six-month period surpassed 1 trillion won ($760 million) for the first time in the company’s history.
Strong album sales by Seventeen and Tomorrow X Together led HYBE to 22.7 million albums in the first half of 2023 and put the entertainment business on pace to far surpass sales of 22.2 million and 15 million in calendar 2022 and 2021, respectively.
Seventeen’s 10th Mini Album ‘FML’ sold 3.99 million units globally on its first day of release and debuted at No. 1 on the Billboard 200 albums chart dated May 13. Nine years after Seventeen’s debut, the group’s fandom “is growing significantly, which is leading to selling out and reprinting of older albums as the group is attracting much attention,” CEO Ji-won Park said during the earnings call.
Tomorrow X Together sold 3.54 million albums in the quarter. NewJeans accounted for 2.1 million units and nabbed its first No. 1 on the Billboard 200 with the Get Up EP. Le Sserafim sold 1.9 million units and Enhypen moved 1.8 million units. HYBE’s sixth- and seventh-best-selling artists were solo members of BTS: Jimin sold 1.6 million units and Agust D sold 1.3 million units.
A revitalized global concert business and more artists on tour helped HYBE’s concert revenue improve 85.4% to 157.5 billion won ($120 million). Suga attracted 290,000 fans to 28 concerts in 10 cities across South Korea, the United States, Southeast Asia and Japan. HYBE plans to have 111 concerts by seven artists in 2023, almost double the 59 concerts by four artists in 2022.
Merchandise and licensing revenue improved 13.3% to 111.9 billion won ($85 million). Contents revenue dropped 28.1% to 50.8 billion won ($39 million) while fan clubs and other indirect revenue grew 29.4% to 21.8 billion won ($17 million).
Despite the strong demand for its artists’ albums and concerts, HYBE’s operating profit declined 7.9% to 88.3 billion won ($67 million), however, and operating margin as a percent of revenue dropped to 13.1% from 17.2% in the prior-year period. CFO Kyung-Jun Lee attributed the decline to expenses related to BTS’s Festa concert in June to celebrate the group’s tenth anniversary and “substantial investment” in Weverse Con festival, also in June. Adjusted earnings before interest, taxes, depreciation and amortization declined 1.2% to 106.4 billion won ($81 million).
Weverse, HYBE’s in-house social media platform, finished the second quarter with a record 9.5 million monthly active users, up 200,000 MAUs from 9.3 million in the first quarter and more than 50% greater than the 6 million MAUs in the second quarter of 2022. In the second quarter, Weverse launched a payment method called Jelly; Weverse DM, a subscription-based private chat service that allows fans to exchange messages with artists; and Fan Letter, a feature that allows fans to write and decorate messages to artists.
Shares of HYBE rose as much as 4.6% to 287,000 won ($218.03) on the South Korea Stock Exchange Tuesday morning. As of Monday’s closing price, HYBE’s share price had gained 58.2% year to date.
Elon Musk says his potential in-person fight with Mark Zuckerberg would be streamed on his social media site X, formerly known as Twitter.
The two tech billionaires seemingly agreed to a “cage match” face-off in late June. Zuckerberg is actually trained in mixed martial arts, and the CEO of Facebook’s parent company Meta posted about completing his first jiu jitsu tournament earlier this year.
“Zuck v Musk fight will be live-streamed on X,” Musk wrote in a post Sunday (Aug. 5) on the platform. “All proceeds will go to charity for veterans.”
Musk said earlier Sunday he was training for the fight by lifting weights.
“Don’t have time to work out, so I just bring them to work,” Musk wrote.
Whether or not Musk and Zuckerberg actually make it to the ring in Las Vegas has yet to be seen — especially as Musk often tweets about action prematurely or without following through. But even if their cage match agreement is all a joke, the banter has gained attention.
It all started when Musk, who owns X, responded to a tweet about Meta preparing to release a new Twitter rival called Threads. He took a dig about the world becoming “exclusively under Zuck’s thumb with no other options” — but then one Twitter user jokingly warned Musk of Zuckerberg’s jiu jitsu training.
“I’m up for a cage match if he is lol,” Musk wrote.
Representatives of X, Meta and Ultimate Fighting Championship, which owns the venue where the fight might take place, didn’t immediately respond to emails seeking comment.
Musk’s push to stream the video live on X comes as he aims to turn the platform into a “digital town square.” However, his much-publicized Twitter Spaces kickoff event in May with Florida Gov. Ron DeSantis announcing his run for president struggled with technical glitches and a near half-hour delay.
Musk had said the problems were due to “straining” servers because so many people were trying to listen to the audio-only event. But even at their highest, the number of listeners listed topped out at around 420,000, far from the millions of viewers that televised presidential announcements attract.
SM Entertainment’s second quarter earnings, which were announced Wednesday (Aug. 2), helped shares of the K-pop music company, home to such acts as NCT Dream and Red Velvet, gain 7.6% to 137,700 won ($105.59) this week. That made it the top performer of the 21 stocks in the Billboard Global Music Index this week. The […]
Two weeks into earnings reports for the second quarter of 2023, the music streaming business is showing that subscriptions — not advertising — are the dependable driving force behind the industry’s growth.
Subscriptions — which accounted for 65% of the U.S. recorded music business in 2022, up from 63% in 2021, according to the RIAA — aren’t affected by economic forces that influence how brands spend their advertising dollars. Consumers continue to pay monthly or annual fees for Spotify, Apple Music, Amazon Music, YouTube Music, Deezer and other offerings. Even faced with higher prices (see “pricing power” below), more people are opting for subscription services.
More information will be gleaned in the coming weeks from earnings results from Warner Music Group (Aug. 8), HYBE (Aug. 8), Sony Music Entertainment (Aug. 9), Tencent Music Entertainment (Aug. 15), Cloud Music (Aug. 24) and Anghami (no date set).
Based on earnings by Universal Music Group, Spotify, Deezer, Believe and Reservoir Media, here are three takeaways from reported results through Aug 4.
The subscription market is holding up well. Spotify beat expectations for both monthly active users (MAUs) and subscribers, “aided by improved retention and marketing efficiencies,” the company explained in its July 25 shareholder presentation. Spotify’s premium subscribers grew 17% year-over-year to 220 million, beating its guidance of 217 million. Spotify’s MAUs increased 27% year-over-year to 551 million compared to guidance of 530 million. Universal Music Group attributed subscription growth in its recorded music segment — 13% in the second quarter and 11.6% in the first half of the year — to “broad-based growth in subscribers across all major global platform partners.” Reservoir Media CEO Golnar Khosrowshahi cited Spotify’s “higher than expected subscriber numbers” in the company’s Aug. 2 earnings call and said its strong quarterly results “reflect increasing demand trends for streaming music globally.” Not all subscription services made gains, though. Deezer lost 100,000 subscribers from June 30, 2022, to June 30, 2023, and Pandora ended the quarter with 6.2 million subscribers, down 100,000 from 6.3 million a year earlier.
Services have pricing power. Spotify raised its individual subscription plan in the U.S. on July 24 to great fanfare. After all, the price had gone unchanged since the service launched in the United States in 2011, although the family plan price increased by $2 per month in 2021. Spotify is relatively late to the game, though. Deezer raised its price from 9.99 euros to 10.99 euros in January 2022 — a major factor in the company’s direct subscriber average revenue per user climbing 4.9% year over year. Apple Music and Amazon Music both raised their prices last year as well. And according to Deezer CEO Jeronimo Folgueira, the increase had “pretty much no impact on churn” — the number of subscribers who leave a service over a period — and “clearly demonstrated that music is highly undervalued, and that platforms like us have more pricing power than initially anticipated.” That said, Folgueira stated that Deezer’s guidance for full-year revenue growth does not include another price increase later in the year.
The advertising market continues to have challenges. At Spotify, music advertising revenue grew in the “mid-single digits” year-over-year, lower than the 12% (15% at constant currency) growth in total ad-supported revenue. That implies advertising revenue from podcasts, which was up 30% year-over-year, contributed to most of the growth. Spotify also noted “softer pricing due to the macroeconomic environment” that offset double-digit gains in impressions. Universal Music Group’s ad-supported streaming revenues were up 5% in the second quarter and 2% in the first half of the year. UMG’s CFO Boyd Muir said “it’s too early to call a positive turnaround in the market.” Believe is “still impacted by the weak ad-supported monetization,” said CFO/chief strategy officer Xavier Dumont. The advertising malaise extends to broadcast radio, too. Weak national advertising “remained the main factor driving a decline in total revenue,” Frank Lopez-Balboa, Cumulus executive vp/treasurer/CFO, said in the company’s July 28 earnings call. National brands appear likely to increase ad spending in the second half of the year, however, according to B Riley Securities analyst Daniel Day.