iHeartMedia
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The radio business’ slog through a slow advertising market appears to be improving in 2024. “As we look to the year ahead, we see 2024 as a recovery year and we expect a return-to-growth mode,” iHeartMedia CEO Bob Pittman said during the company’s Thursday (Feb. 29) earnings call for the fourth quarter of 2023. Explore […]
iHeartMedia received $101.4 million from the sale of BMI, in which it held a minority stake, to New Mountain Capital, the company announced Monday (Feb. 12) through an SEC filing. The sale was finalized on Feb. 8. iHeartMedia had previously announced on Nov. 27 that it expected to receive approximately $100 million from the sale, […]
The Billboard Global Music Index — a diverse collection of 20 publicly traded music companies — finished 2023 up 31.3% as Spotify’s share price alone climbed 138% thanks to cost-cutting and focus on margins. Spotify is the single-largest component of the float-adjusted index and has one of the largest market capitalizations of any music company.
The music index was outperformed by the tech-heavy Nasdaq composite, which gained 43.4% with the help of triple-digit gains from chipmaker Nvidia Corp (+239%) and Meta Platforms (+194%). But the Billboard Global Music Index exceeded some other major indexes: the S&P 500 gained 24.2%, South Korea’s KOSPI composite index grew 18.7% and the FTSE 100 improved 3.8%.
Other than Spotify, a handful of major companies had double-digit gains in 2023 that drove the index’s improvement. Universal Music Group finished the year up 14.7%. Concert promoter Live Nation rode a string of record-setting quarters to a 34.2% gain. HYBE, the increasingly diversified K-pop company, rose 34.6%. SM Entertainment, in which HYBE acquired a minority stake in March, gained 20.1%.
A handful of smaller companies also finished the year with big gains. LiveOne gained 117.4%. Reservoir Media improved 19.4%. Chinese music streamer Cloud Music improved 15.8%.
The biggest loser on the Billboard Global Music Index in 2023 was radio broadcaster iHeartMedia, which fell 56.4%. Abu Dhabi-based music streamer Anghami finished 2023 down 34.8%. After a series of large fluctuations in recent months, Anghami ended the year 69% below its high mark for 2023. Hipgnosis Songs Fund, currently undergoing a strategic review after shareholders voted against continuation in October, finished the year down 16.6%.
Sphere Entertainment Co., which split from MSG Entertainment’s live entertainment business back in April, ended 2023 down 24.4%. Most of that decline came before the company opened its flagship venue, Sphere, in Las Vegas on September 29, however. Since U2 opened the venue to widespread acclaim and earned Sphere global media coverage, the stock dropped only 8.5%.
For the week, the index rose 1.1% to 1,534.07. Fourteen of the index’s 20 stocks posted gains this week, four dropped in price and one was unchanged.
LiveOne shares rose 15.7% to $1.40 after the company announced on Friday (Dec. 29) it added 63,000 new paid memberships in December and surpassed 3.5 million total memberships, an increase of 29% year over year. iHeartMedia shares climbed 14.6% to $2.67. Anghami continued its ping-pong trajectory by finishing the week up 16.9%.
Shares of iHeartMedia got a boost from the sale of its stake in BMI, rising 7.9% to $3.00 and making the radio giant the best-performing music stock of the week.
The company announced on Monday (Nov. 27) that it expected to receive approximately $100 million from the sale of BMI to New Mountain Capital. With a current market capitalization of just $423 million, the $100 million pre-tax windfall could provide a boost to a stock that has fallen 51.1% this year. iHeartMedia’s announcement said the company plans to use the proceeds for general corporate purposes, “which may include the repayment of debt.” At the 2023 Wells Fargo TMT Summit on Wednesday, CFO Rich Bressler told investors, “You should assume that we will reduce debt with it.”
The BMI sale follows iHeartMedia’s announcement in its third-quarter earnings that it has paid off $519 million of debt since the second quarter of 2022. In the third quarter, the company retired $89 million in principal balance for $65 million cash, according to its Q3 2023 investor presentation. Debt reductions to date are expected to save the company about $43 million in annual cash interest. Additional debt redemptions aided by the BMI sale will further reduce interest expenses and help its bottom line while the advertising market recovers. “I think we’re in terrific shape from the liquidity generation and free cash flow,” Bressler said on Wednesday, “and also in terrific shape to be able to take advantage of opportunities in the marketplace to improve the capital structure.”
The Billboard Global Music Index dropped 0.2% to 1,449.08 as nine of the 20 stocks finished the week in positive territory, 10 stocks posted losses and one was unchanged. Year to date, the index has gained 24.1%.
The week was notable for the unremarkable movements — either positive or negative — in most stock prices. In the absence of earnings results or major news releases, the biggest companies on the Billboard Global Music Index were confined to a narrow band of results. Warner Music Group shares rose 3.8% to $34.59, Universal Music Group gained 1.5% to 24.60 euros ($26.80), Spotify fell 0.5% to $180.75 and Live Nation dropped 3.9% to $84.23.
Anghami, the Abu Dhabi-based music streamer, had the index’s largest drop, diving 18.1% to $2.30. Still, the company’s share price is up 44.2% year to date and has gained 129% since receiving a notification, from the Nasdaq Stock Market in October, regarding its stock’s closing price falling under the $1.00 per share threshold for 30 consecutive days. Companies whose stocks fall below $1.00 for extended periods face being de-listed from the exchange.
While music stocks dropped slightly, some major indexes finished the week at new highs. On Friday, the S&P 500 rose 0.8% to 4,594.63, its highest mark of 2023 and its best showing since March 2022. The Dow Jones Industrial Average, a collection of 30 blue-chip companies, rose 2.4% to a new all-time high of 36,245.50. The Nasdaq composite gained 0.4% to 14,305.03 — nowhere close to its all-time record of 16,057.44 set in 2021 but close to its 2023 high of 14,446.55 set on July 19. In the United Kingdom, the FTSE 100 gained 0.5% to 7,529.35. South Korea’s KOSPI composite index grew 0.3% to 2,505.01.
iHeartMedia shares dropped 19.6% to $2.01 this week as the company warned investors of continued softness in radio advertising dollars. Fourth quarter results “will be weaker than we originally anticipated,” said CEO Bob Pittman during Thursday’s earnings call. In October, consolidated revenue was down 8% from the prior-year period. For the fourth quarter, iHeartMedia expects consolidated revenue excluding political ad revenue to decline in the low single digits.
Still, iHeartMedia’s third-quarter results were in line with previous guidance. Revenue of $953 million was down 3.6% from the prior-year period, a bit better than the guidance of a low single-digit decrease. Adjusted earnings before interest, taxes, depreciation and amortization of $204 million was within the guidance of $195 million to $205 million.
The week’s sharp decline brought iHeartMedia’s year-to-date loss to 67.2%, far deeper than the declines of broadcast radio company Cumulus Media (-21.9%) and satellite radio company SiriusXM (-20.7%). Not only has broadcast radio suffered from weak national advertising, it lacks the high growth rates of music streaming and podcasting. PwC’s latest forecasts call for U.S. radio advertising revenues to rise just 4% from 2023 to 2027 while U.S. podcast advertising — where iHeartMedia has a large footprint — will grow 41% to $2 billion.
Next year’s elections should provide a shot in the arm, though. “As we look forward to 2024, we expect to generate significantly better free cash flow driven in part by an improving macro environment, as well as the impact of political dollars,” said CFO Rich Bressler. In 2020, the company generated $167 million in political revenues, he noted.
The Billboard Global Music Index mostly held steady this week, dropping just 0.3% to 1,390.68. Of the index’s 20 stocks, seven gained this while while 13 finished in negative territory. Most stocks had low-single-digit gains or losses and iHeartMedia was the only stock with a double-digit move in either direction.
French company Believe was the index’s greatest gainer of the week after improving 7.4% to 9.93 euros ($10.64). German concert promoter CTS Eventim, which will release third-quarter earnings on Nov. 21, gained 5.5% to 62.75 euros ($67.24). Music streaming company LiveOne gained 4.7% to $1.12. Chinese music streamer Cloud Music, which has not yet announced the date of its third-quarter earnings release, gained 3.3% to 99.50 HKD ($12.74).
Shares of Sphere Entertainment Co. dropped 1.5% to $35.95 after a roller-coaster week. Following the company’s Nov. 3 announcement that CFO Gautum Ranji had left the company, Sphere Entertainment shares dropped 9.6% to $32.97 on Monday. The share price fell an additional 4.5% to $31.87 on Wednesday following the quarterly earnings release. But Sphere Entertainment picked up momentum in the latter half of the week, gaining 12.8% over Thursday and Friday to close at $35.95.
U.S. stocks were broadly up this week despite news that consumer sentiment declined in November and expectations for future inflation reached their highest level since 2011. The Nasdaq composite rose 2.4% while the S&P 500 improved 1.3%. Many major U.S. tech stocks posted big gains. Microsoft hit an all-time high of $370.09 on Friday and finished the week at $369.67, up 4.8%. Apple rose 5.5% to $186.40. Amazon improved 3.6% to $143.56. Meta jumped 4.5% to $32.8.77. In the United Kingdom, the FTSE 100 fell 0.8%. South Korea’s KOSPI composite index gained 1.7%.
Music companies’ third-quarter earnings reports have so far been full of good news and positive trends. Subscription and streaming growth continue to drive revenues for record labels and publishers. Live entertainment continues its post-pandemic expansion. Margins are healthy. Overall, these have been solid report cards for the state of the music business.
Among the companies to report thus far are Universal Music Group, Sony Music, Spotify, Believe, Sphere Entertainment Co., MSG Entertainment, HYBE and SiriusXM. Next week’s earnings reports will come from Warner Music Group (Nov. 16) and Tencent Music Entertainment (Nov. 14). German concert promoter CTS Eventim will report on Nov. 21.
Here are seven items from the earnings releases to date that stood out and deserve more attention.
Universal Music Group struck out against “merchants of garbage.” During Universal Music Group’s Oct. 26 earnings call, chairman and CEO Lucian Grainge got a lot of attention when he bemoaned the “merchants of garbage” — creators of low-value functional music such as generic mood music and nature sounds — that want to be on equal royalty terms at streaming platforms as such UMG artists as Taylor Swift, The Beatles and The Rolling Stones. Grainge’s memorable turn of phrase came in defense of UMG’s artist-centric royalty scheme crafted in partnership with French music streaming service Deezer. “Sorry, I can’t really think of another word for content that no one really actually wants to listen to,” Grainge said.
Spotify’s price increase gave a much-needed uplift to subscription revenues. The price for an individual Spotify subscription in the U.S. was $9.99 from 2011 to July 2023. The price hike to $10.99 in roughly 50 markets may have arrived later than its competitors, but it came just when Spotify needed a boost. Spotify’s premium average revenue per user dropped 6% year over year (1% at constant currency) mainly because the company had a larger share of family plans compared to the prior-year, CFO Paul Vogel said during the July 25 earnings call. Early returns from the price increase in the U.S., U.K. and dozens of other markets helped offset those losses. Because Spotify’s number of subscribers increased 16% year over year to 226 million, subscription revenue grew 10% year over year (16% at constant currency) to 2.9 billion euros ($3.1 billion). With three full months of a price increase in the fourth quarter and considering the price increase covered about 75% of Spotify’s revenue base, the company expects the price increase to provide “a positive, mid-single digit” benefit (excluding foreign exchange) in the fourth quarter, said Vogel.
No company lowered guidance, and some have raised guidance. Sony Music raised guidance for revenue and adjusted operating income before depreciation and amortization by 5% and 4%, respectively. Reservoir Media raised guidance for fiscal 2024 revenue and adjusted EBITDA by 10% each. It’s one thing for a company to meet expectations it had previously laid out to investors. But raising previously released expectations is something else altogether — a sign the future will be better than expected. It’s usually a benefit to the stock price, too. The share price is the present value of future cash flows. When an estimate for future cash flows takes a sudden jump, that changes the financial model used to calculate the share price.
Consumers aren’t slowing their spending on live music. In August, concerns arose that a resumption of student loan payments, paused to help people struggling during the pandemic, would take a bite out of pocketbooks and cause music fans to pull back on the record amounts they were spending on live entertainment. Three months later, there is no indication that consumers are slowing down, according to Live Nation. “We’re seeing no sign of weaknesses,” said president and CFO Joe Berchtold, noting that Ticketmaster’s October sales in North American were up double-digits year over year. “We’re not seeing any pullback in any way from a club to a stadium tour from Milan to Argentina right now,” added president and CEO Michael Rapino.
SM Entertainment has big plans for its new publishing subsidiary, Kreation Music Rights. The K-pop stalwart has been “aggressively recruiting global writers” and plans to have 80 of them under contract this year, CEO Jang Cheol Hyuk said during the Nov. 8 earnings call. SM Entertainment is pursuing collaborations with both domestic and international publishers and plans to recruit foreign writers “who wish to advance into K-pop by establishing overseas subsidiaries,” Jiang said.
Radio advertising continues to struggle — but the clouds may be starting to part. iHeartMedia’s October revenues were down 8% and the company expects its fourth-quarter revenue excluding political revenue to be down in the mid-single digit percent year over year. The fourth quarter will be iHeartMedia’s strongest quarter of the year “but will be weaker than we originally anticipated due to some dampening of advertising demand which coincided with the uncertainty caused by the recent geopolitical events,” CEO Bob Pittman said during Thursday’s earnings call. That said, iHeartMedia’s digital business “is sort of in recovery mode,” said Pittman, and the company is “seeing the pieces falling into place” for radio’s recovery as most advertisers expect to be “back in growth mode…and spending to support that” in 2024.
The market for catalog acquisitions isn’t slowing down. Reservoir Media CEO Golnar Khosrowshahi said catalog prices aren’t contracting despite higher interest rates. “We’re still seeing a lot of demand for assets and continued infusion of new capital within the competitive set,” she said during Tuesday’s earnings call. “And that is certainly fueling the demand. The pipeline is robust. And it ranges in size from large to a lot of smaller deals.” Reservoir Media hasn’t been suffering from sticker shock, though. Acquisitions in the Middle East-North Africa market — such as some catalog of Saudi Arabian label Mashrex in June — provide the company with good value, Khosrowshahi added. “If we’re looking at a market here that is somewhat saturated with a lot of capital in the marketplace, and we’re able to execute [deals in MENA] at these lower multiples, that makes it just that much more attractive to us.”
For some music companies, 2022 was the payoff for weathering the darkest days of the COVID-19 pandemic. When business returned that year — sometimes in record-setting fashion — these companies rewarded their executives handsomely, according to Billboard’s 2022 Executive Money Makers breakdown of stock ownership and compensation. But shareholders, as well as two investment advisory groups, contend the compensation for top executives at Live Nation and Universal Music Group (UMG) is excessive.
Live Nation, the world’s largest concert promotion and ticketing company, rebounded from revenue of $1.9 billion and $6.3 billion in 2020 and 2021, respectively, to a record $16.7 billion in 2022. That performance helped make its top two executives, president/CEO Michael Rapino and president/CFO Joe Berchtold, the best paid music executives of 2022. In total, Rapino received a pay package worth $139 million, while Berchtold earned $52.4 million. Rapino’s new employment contract includes an award of performance shares targeted at 1.1 million shares and roughly 334,000 shares of restricted stock that will fully pay off if the company hits aggressive growth targets and the stock price doubles in five years.
Live Nation explained in its 2023 proxy statement that its compensation program took into account management’s “strong leadership decisions” in 2020 and 2021 that put the company on a path to record revenue in 2022. Compared with 2019 — the last full year unaffected by the COVID-19 pandemic — concert attendance was up 24%, ticketing revenue grew 45%, sponsorships and advertising revenue improved 64%, and ancillary per-fan spending was up at least 20% across all major venue types. Importantly, Live Nation reached 127% of its target adjusted operating income, to which executives’ cash bonuses were tied.
The bulk of Rapino’s and Berchtold’s compensation came from stock awards — $116.7 million for Rapino and $37.1 million for Berchtold — on top of relatively modest base salaries. Both received a $6 million signing bonus for reupping their employment contracts in 2022. (Story continues after charts.)
Lucian Grainge, the top-paid music executive in 2021, came in third in 2022 with total compensation of 47.3 million euros ($49.7 million). Unlike the other executives on this year’s list, he wasn’t given large stock awards or stock options. Instead, Grainge, who has been CEO of UMG since 2010, was given a performance bonus of 28.8 million euros ($30.3 million) in addition to a salary of 15.4 million euros ($16.2 million) — by far the largest of any music executive.
This year, shareholders have shown little appetite for some entertainment executives’ pay packages — most notably Netflix — and Live Nation’s compensation raised flags at two influential shareholder advisory groups, Institutional Shareholder Services and Glass Lewis, which both recommended that Live Nation shareholders vote “no” in an advisory “say on pay” vote during the company’s annual meeting on June 9. Shareholders did just that, voting against executives’ pay packages by a 53-to-47 margin.
Failed “say on pay” votes are rare amongst United States corporations. Through Aug. 17, just 2.1% of Russell 3000 companies and 2.3% of S&P 500 companies have received less than 50% votes on executive compensation, according to executive compensation consultancy Semler Brossy. (Live Nation is in both indexes.) About 93% of companies received at least 70% shareholder approval.
ISS was concerned that the stock grants given to Rapino and Berchtold were “multiple times larger” than total CEO pay in peer group companies and were not adequately linked to achieving sustained higher stock prices. Additionally, ISS thought Live Nation did not adequately explain the rationale behind the grants.
To determine what Rapino, Berchtold and other executives should earn, Live Nation’s compensation committee referenced high-earning executives from Netflix, Universal Music Group, SiriusXM, Spotify, Endeavor Group Holdings, Fox Corporation, Warner Bros. Discovery, Inc. and Paramount Global. Netflix co-CEOs Reed Hastings and Ted Sarandos were paid $51.1 million and $50.3 million, respectively, in 2022. Warner Bros. Discovery CEO David Zaslov made $39.3 million in 2022 — including a $21.8 million cash bonus — a year after his pay totaled $246.6 million, including $202.9 million in stock option awards that will vest over his six-year employment contract. Endeavor CEO Ari Emanuel and executive chairman Patrick Whitesell received pay packages worth $308.2 million and $123.1 million, respectively, in 2021 thanks to equity awards tied to the company’s IPO that year (the received more modest pay of $19 million and $12.2 million in 2022).
Some companies in the peer group didn’t fare well in “say on pay” votes in 2023, though. Netflix, got only 29% shareholder approval in this year’s say-on-pay advisory vote after Hastings’ and Sarandos’ compensations both increased from higher stock option awards while the company’s stock price, riding high as COVID-19 lockdowns drove investors to streaming stocks, fell 51% in 2022. Warner Bros. Discovery’s 2022 compensation squeaked by with 51% shareholder approval.
Minutes from UMG’s 2023 annual general meeting in May suggest many of its shareholders also didn’t approve of Grainge’s compensation. UMG’s 2022 compensation was approved by just 59% of shareholders, and the company’s four largest shareholders own 58.1% of outstanding shares, meaning virtually no minority shareholders voted in favor.
UMG shareholders’ votes could be meaningfully different next year. Anna Jones, chairman of the music company’s remuneration committee, said during the annual meeting that in 2024, shareholders will vote on a pay package related to Grainge’s new employment agreement that takes minority shareholders’ concerns from the 2022 annual meeting into consideration. Grainge’s contract lowers his cash compensation, and more than half of his total compensation will come from stock and performance-based stock options.
Other companies in Live Nation’s peer group received near unanimous shareholder approval. SiriusXM’s 2022 executive compensation received 98.5% approval at the company’s annual meeting. Paramount Global’s executive compensation was approved by 96.4% of its shareholders. Endeavor didn’t have a “say on pay” vote in 2023, but a year ago, it’s sizable 2021 compensation packages were approved by 99% of voting shareholders.
As the radio industry came back from pandemic-era doldrums, two iHeartMedia executives — Bob Pittman, CEO, and Richard Bressler, president, CFO and COO — were among the top 10 best-paid executives in the music industry. It was new employment contracts, not iHeartMedia’s financial performance, that put them into the top 10, however. Both executives received performance stock awards — $6.5 million for Pittman and $6 million for Bressler — for signing new four-year employment contracts in 2022. Those shares will be earned over a five-year period based on the performance of the stock’s shareholder return. Neither Pittman nor Bressler received a payout from the annual incentive plan, however: iHeartMedia missed the financial targets that would have paid them millions of dollars apiece. Still, with salaries and other stock awards, Pittman and Bressler received pay packages valued at $16.3 million and $15.5 million, respectively.
Spotify co-founders Daniel Ek and Martin Lorentzon once again topped the list of largest stockholdings in public music companies. Ek’s 15.9% stake is worth nearly $4.8 billion while Lorentzon’s 11.2% stake has a market value of nearly $3.4 billion. Both Ek and Lorentzon have benefitted from Spotify’s share price more than doubling so far in 2023. In September 2022, the inaugural Money Makers list had Ek’s stake at $3.6 billion and Lorentzon’s shares at $2.3 billion.
The billionaire club also includes No. 3 HYBE chairman Bang Si-hyuk, whose 31.8% of outstanding shares are worth $2.54 billion, and No. 4 CTS Eventim CEO Klaus-Peter Schulenberg, whose 38.8% stake — held indirectly through his KPS Foundation non-profit — is worth $2.25 billion. They, too, have benefitted from higher share prices in 2023. Last year, Bang’s stake was worth $1.7 billion and Schulenberg’s shares were valued at $2.1 billion.
These top four shareholders and three others in the top 10 have one important thing in common — they are company founders. At No. 5, Park Jin-young, founder of K-pop company JYP Entertainment, owns a $559 million stake in the label and agency he launched in 1997. Another K-pop mogul, No. 8 Hyunsuk Yang, chairman of YG Entertainment, owns shares worth $199 million in the company he founded in 1996. And No. 9 Denis Ladegaillerie, CEO of 18-year-old French music company Believe, has a 12.5% stake worth $112.7 million.
Live Nation’s Rapino again landed in the top 10 for amassing a stockholding over a lengthy career, during which he has helped significantly increase his company’s value. Rapino, the only CEO Live Nation has ever known, took the helm in 2005 just months before the company was spun off from Clear Channel Entertainment with a market capitalization of $692 million. Since then, Live Nation’s market capitalization has grown at over 20% compound annual growth rate to $19.1 billion. Rapino’s 3.46 million shares represent a 1.5% stake worth $291 million.
Selling a company that one founded is another way onto the list. Scooter Braun, CEO of HYBE America, has a 0.9% stake in HYBE worth $69.8 million. That’s good for No. 10 on the list of executive stock ownership. Braun, HYBE’s second-largest individual shareholder behind chairman Bang, sold his company, Ithaca Holdings — including SB Projects and Big Machine Label Group — to HYBE in 2021 for $1.1 billion.
These rankings are based on publicly available financial statements and filings — such as proxy statements, annual reports and Form 4 filings that reveal employees’ recent stock transactions — that publicly traded companies are required by law to file for transparency to investors. So, the list includes executives from Live Nation but not its largest competitor, the privately held AEG Live.
Some major music companies are excluded because they are not standalone entities. Conglomerates that break out the financial performance of their music companies — e.g., Sony Corp. (owner of Sony Music Entertainment) and Bertelsmann (owner of BMG) — don’t disclose compensation details for heads of record labels and music publishers. Important digital platforms such as Apple Music and Amazon Music are relatively small parts of much larger corporations.
The Money Makers executive compensation table includes only the named executive officers: the CEO, the CFO and the next most highly paid executives. While securities laws vary by country, they generally require public companies to named executive officers’ salary, bonuses, stock awards and stock option grants and the value of benefits such as private airplane access and security.
And while Billboard tracked the compensation of every named executive for publicly traded music companies, the top 10 reflects two facts: The largest companies tend to have the largest pay packages and companies within the United States tend to pay better than companies in other countries.
The list of stock ownership is also taken from public disclosures. The amounts include common stock owned directly or indirectly by the executive. The list does not include former executives — such as former Warner Music Group CEO Stephen Cooper — who are no longer employed at the company and no longer required to disclose stock transactions.
Consumers and the marketers who sell to them agree: They “hear from too many influencers — and not enough real people — in marketing.” That’s according to an iHeartMedia study the company unveiled Wednesday (Sept. 13) that explores the gap between marketers and their audiences and tries to identify biases and blind spots.
Though the wording is a little bit confusing — most influencers are still real people, with a few exceptions, i.e. Lil Miquela — this conclusion aligns with what many music marketers have been saying for over a year. In essence: Throwing bags of money at popular TikTok accounts and hoping this will magically lead to music discovery and drive streams is not an effective or efficient approach.
Marketing spends “started becoming less effective when people and brands were really looking at people’s influence based upon follower count,” says Coltrane Curtis, founder of the marketing agency Team Epiphany. Curtis has been an active proponent of the notion that “the pay-to-play model is ineffective, oversaturated and counterintuitive.” “Influence is about trust,” he adds. “When you start seeing everyone paying for it, you feel duped and taken advantage of.”
Last year, the music consulting agency ContraBrand analyzed TikTok’s top 200 from the first half of 2022. The company determined that “paid-for tactics, such as influencers and ads, accounted for success in under 12% of the platform’s viral tracks.” In 2020, as industry after industry awoke to TikTok’s power as an advertising tool and started pouring money into the platform, “you would literally have an influencer’s rate to post go from $500 to $1,500 in a day,” ContraBrand co-founders Sean Taylor and Jacorey Barkley told Billboard last year. “That was happening day in, day out. Influencer campaigns have become both less accessible and less effective.”
iHeart laid out its new study — and gently prodded marketers to think about spending more on podcast advertising (a sector in which the company is highly invested) — during a chat between Conal Byrne, CEO of the company’s digital audio group, and author and podcast host Malcolm Gladwell in Manhattan.
The conclusions of the study echoed many of the think pieces written after Donald Trump won the 2016 presidential election: Coastal cities are out of touch with large swathes of the country. In this case, the focus was on marketers themselves, who spend time in their own “bubbles,” never taking the time to notice that others might not share their passions and priorities.
This point was driven home through a barrage of statistics. While all the marketers surveyed were familiar with NFTs, 40% of consumers had never heard of them. Marketers have the hots for artificial intelligence — 66% “are excited about the potential” the tech “will unlock for society” — but consumers are tepid about the robot-driven future, with only 39% excited. Marketers are apparently “motivated by fortune, fame and fear;” “consumers are motivated by friends and family.”
The study did not address itself to the music industry. But in her opening remarks, Gayle Troberman, iHeart’s chief marketing officer, sounded much like a major label executive. There is “more competition than ever before… for consumer attention,” she said. “We’ve never had more data, and yet, it’s never been harder to win.”
Warner Music Group’s share price didn’t improve much this week, but its 5.6% gain nevertheless led the 21 music stocks in the Billboard Global Music Index.
On Tuesday (Aug. 8), Warner Music Group (WMG) reported that its quarterly revenue increased 9% year over year in the fiscal quarter ended June 30. That was music to investors’ ears after WMG’s revenue grew just 1.7% in the previous quarter, but it wasn’t exactly a surprise: WMG executives had previously told investors that the company’s new release schedule was weighted in the back half of its fiscal year and that its financials would pick up accordingly. And a Billboard analysis of Luminate data found that the company’s U.S. market share had started to improve by early May.
Only four of the Billboard Global Music Index’s 21 stocks finished the week in positive territory. Sphere Entertainment Co., the company behind the state-of-the-art Las Vegas venue set to open in September, improved 5.5% to $39.77 and German promoter CTS Eventim gained 4.8% to 61.80 euros ($67.76). Elsewhere, Hipgnosis Songs Fund rose 3.9% to 79.8 pence ($1.01).
This was the third consecutive week the index declined in value after reaching an all-time high in the week ended July 21.
LiveOne shares dropped 4% this week despite the company raising guidance on its fiscal 2024 revenue and adjusted EBITDA. In the fiscal quarter ended June 30, the company — which is behind music streaming platform Slacker and podcast brand PodcastOne — posted revenue of $25.7 million, up 24% year over year, and adjusted EBITDA of $4.9 million, up 46% year over year.
iHeartMedia shares fell 24.9% to $3.38 this week after the company warned of continued softness in advertising. The U.S. radio giant posted second quarter revenue of $920 million, down 3.6% year over year. Other radio companies also declined. Cumulus Media fell 5.9% to $4.96, while Townsquare Media — not a member of the Billboard Global Music Index — fell 19.7% on Wednesday following the company’s second-quarter earnings results but recaptured some of the losses on Thursday and Friday to finish the week down 7.2% at $10.50.
French streaming company Deezer fell 9.4% to 2.12 euros ($2.32) this week and has lost 16% since reporting mid-year earnings on Aug. 3. The company lowered its forecast for full-year revenue growth slightly to a range of 7% to 10%, down from a more than 10% increase. Although the company’s decision to raise its price in 2022 helped its average revenue per user to increase 8.3%, its subscribers declined by 100,000 to 9.3 million from the prior-year period.
In related news, Disney shares rose 4.9% after the company’s second quarter beat earnings expectations, even as it revealed that its Disney+ subscriber count fell 7.4% to 146.1 million in the second quarter. Starting in October, Disney will raise the prices for both ad-free and ad-supported tiers of Disney+ and Hulu by at least 20%. Following the price increases, ad-free Disney+ will cost $13.99 per month and ad-free Hulu will cost $17.99 per month.
Music services have been far more hesitant than streaming video-on-demand services to raise prices. Spotify just increased its individual plan price in the United States — by $1 to $10.99 — for the first time since launching in 2011. By contrast, Hulu last raised its prices in October 2022 and has increased its the price of its ad-free tier by 39% in less than a year.
Music stocks’ decline mirrored stocks’ broad declines this week. In the United States, the S&P 500 and the Nasdaq composite fell 0.3% and 1.9%, respectively. In the United Kingdom, the FTSE 100 was down 0.5%. South Korea’s KOSPI composite index declined 0.4%. News that the U.S. producer price index, a gauge of wholesale prices, rose 3% in July — the biggest one-month gain since January — was a factor in U.S. stock prices falling Friday.
Seeing is believing for some investors in Sphere Entertainment Co., the developer of the new state-of-the-art venue, The Sphere, in Las Vegas. Shares of Sphere Entertainment soared 22.7% this week after the world saw the first videos of the dazzling display created by the 580,000 square feet of programmable LED “pucks” on Exosphere, the exterior […]