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Universal Music

Universal Music Group (UMG) announced on Tuesday (May 20) that it will move its East Coast headquarters to Penn 2, a recently redeveloped building that sits on top of the transportation hub Penn Station.  “Located in the heart of Midtown Manhattan and literally adjacent to Madison Square Garden, one of music’s most storied venues where […]

Companies frequently urge investors not to read too much into any one quarter’s results. After all, even large, diversified businesses don’t always take a neat, linear path to consistent annual gains, and any single reporting period can contain oddities that skew the results favorably or unfavorably. But most public companies report results every quarter and, for better or worse, we onlookers read as much into the results as possible.
With that caveat in mind, here are some takeaways from the earnings releases through Thursday (May 15). Note that while most music companies, including the largest ones, have already issued earnings, there are a couple more to come: CTS Eventim will release some first-quarter figures on May 22 and Reservoir Media reports on May 28.

1. Some Margins Improved from Cost Savings

Music companies — like employers across the spectrum — have thinned their headcounts to retool, refocus and ultimately cut down on expenses. Q1 results showed some notable improvements in companies’ bottom lines.

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Spotify started seeing bottom-line growth in 2024 after cutting about a quarter of its headcount in 2023. The Stockholm-based music and podcast giant’s operating margin rose to 12.1% from 4.6% in the first quarter of 2024 — an improvement of 341 million euros ($380 million) — while gross margin (gross profit as a percentage of revenue) rose to 31.6% from 27.6%. Gross margin is a good proxy for what Spotify keeps after paying for content costs (it also includes some smaller expenses such as credit card transaction fees and hosting costs). After keeping prices flat for more than a decade, gross profit improved after Spotify began raising prices in 2023.

Operating profit, not gross profit, shows the impact of layoffs (salary expenses are deducted from gross profit to calculate operating profit). Spotify’s operating profit, as a percentage of revenue, improved to 12.1% from 4.6% in the first quarter of 2024. That’s a huge improvement in 12 months, but it’s more remarkable considering the company’s operating profit percentage was negative 5.1% in the first quarter of 2023. CEO Daniel Ek’s controversial decision to make Spotify “relentlessly resourceful” by eliminating thousands of jobs has paid dividends for the company.

Lower expenses also helped the Sphere venue in Las Vegas show improvement in operating margin. Sphere’s sales, general and administrative expenses fell 12% as the company identified costs to reduce, including corporate support functions, Sphere Entertainment Co. CFO Robert Langer said during the May 8 earnings call. That helped offset a 12.8% decline in revenue due to fewer events being hosted by the one-of-a-kind venue. The opposing growth rates cancelled each other out, and Sphere’s operating income was flat in the quarter. Investors apparently liked Sphere’s ability to reduce costs: The share price of its parent company, Sphere Entertainment Co., surged 6% the day of the earnings release.

Over at Universal Music Group (UMG), which embarked on a cost savings plan in early 2024, the company’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin was flat at 22.8%. Though the company’s global head count rose slightly to 10,346 on Dec. 31, 2024, from 10,290 on Dec. 31, 2023, according to its annual reports, the amount spent on salaries and benefits fell 14% to 1.79 billion euros ($1.94 billion) in 2024.

As for the other two majors, Sony’s operating margin improved to 18.0% from 16.9%, while the operating income before depreciation and amortization (OIBDA) margin at Warner Music Group (WMG) fell to 20.4% from 20.9%, due primarily to a change in revenue mix (meaning there was a higher proportion of low-margin physical sales compared to the prior-year period), though it was partially offset by savings from restructuring. WMG’s operating margin jumped to 11.3% from 8.0% due in part to a decrease in restructuring charges incurred in the prior year.

2. Subscriptions Lead the Way

Two companies had impressive subscriber gains in the quarter.

Spotify’s Premium revenue was up 16% year-over-year, and average revenue per user (ARPU) was up 4%. Subscription revenue was 90% of Spotify’s total revenue, the highest mark since Q3 2020 when advertising dried up — and subscription revenue exploded — at the onset of the pandemic. In fact, subscriptions have been Spotify’s workhorse in recent years, with subscription revenue growing 39.0% over the past two years compared to 27.4% for advertising revenue. After two rounds of price increases in the U.S. and U.K., plus hikes in many other countries, ARPU grew 9.5% in that two-year span.

Meanwhile, at Tencent Music Entertainment (TME), subscription revenue was up 16.6% and ARPU was up 7.5%. TME did not provide an updated subscriber count for its Super VIP tier — it’s still listed at 10 million-plus — but the company did disclose that high-quality audio and other perks are driving Super VIP conversions. Given that Super VIP costs five times the normal subscription price, it makes sense that it was the primary driver of the 7.5% jump in ARPU.

This is a case of the spoils going to the two largest music subscription services by subscriber count. MIDiA Research’s music subscription market shares for Q4 2024 put Spotify at No. 1 with 32% and TME at No. 2 with 15%. Spotify finished Q1 with 268 million paying customers (plus another 423 million ad-free listeners), while TME had 122.9 million.

Some other subscription services have been performing well, too, although only one other publicly traded music streaming company has released detailed financial statements for Q1. A revealing comment came from UMG, which saw double-digit revenue growth from four of its top 10 streaming partners and high single-digit growth at a fifth, the company said during its April 29 earnings call. Billboard believes two of the top four partners were likely Spotify and TME. The other double-digit growth services are anyone’s guess, but it probably wasn’t Deezer — the company’s total revenue rose just 1% in Q1 as its subscriber count fell 5.4%.

3. Advertising revenue was unsurprisingly mediocre but not terrible.

With the subscription business booming, there’s less pressure on the advertising side of music streaming to deliver value for platforms and rights owners. Good thing, too, because advertising hasn’t delivered much growth lately. In the U.S., advertising-based streaming royalties’ share of total recorded music revenues fell to 10.4% in 2024 from 10.9% in 2023 and 11.4% in both 2021 and 2022.

The numbers looked better in Q1 for Spotify, whose ad revenue rose 8% year-over-year (5% at constant currency). But because Spotify’s subscription business is faring better, advertising’s share of Spotify’s total revenue fell to 10.0% from 10.7% in the prior-year period. In fact, 10.0% was the lowest share for Spotify’s advertising since the early pandemic — 8.0%, 6.9%, and 9.4% in Q1, Q2, and Q3 of 2020, respectively.

Advertising is the lifeblood of the radio business. That explains why radio companies’ stock prices have fallen sharply over the last two years. iHeartMedia revenue rose 1% on the strength of a 16% gain in digital revenue, although the multi-sector segment that houses its broadcast radio business was down 4%. U.S. tariff policy has injected uncertainty into media companies’ outlooks, but iHeartMedia CEO Bob Pittman said on Monday (May 12) that iHeartMedia was seeing “generally stable ad spend.”

The same story played out at other radio companies: Total revenue change wasn’t bad because digital gains helped compensate for losses in broadcast ad revenue. Cumulus Media’s revenue fell 6.4% as broadcast dropped nearly 11% and digital gained 6.1%. Townsquare Media’s revenue fell 1% as gains in digital advertising (up 7.6%) and subscriptions (up 4.2%) almost offset a 9.1% decline in broadcast advertising.

Strong subscription revenue helped Universal Music Group’s first quarter revenue rise 11.8% year over year (or 9.5% in constant currency) to 2.9 billion euros ($3.05 billion at the average exchange rate in the first quarter), the company announced Tuesday (April 29). Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) also rose 11.8%, to 661 […]

Shares of Spotify rose 8.0% to $365.00 this week to lead all music stocks in a week the Billboard Global Music Index reached a new high and many of its largest components posted mid- to high-single digit gains. 
The Swedish music streaming giant was boosted by a report by Pivotal Research Group that increased its price target to $510 from $460 and reiterated its “buy” rating. Spotify’s intraday high of $368.29 on Thursday set a new 52-week high for the stock and was its best mark since Feb. 21, 2021.

Spotify led the 20-company Billboard Global Music Index (BGMI) to a record high 1,873.87, up 4.1% for the week, as ten of the stocks posted gains this week, nine lost value and one was unchanged. After a 4.8% drop the week ending Sept. 6 and stagnating since March, the BGMI has gained 7.4% in the last two weeks and raised its year-to-date gain to 22.2%—more than two percentage points above the gains of the Nasdaq composite (up 19.6%) and the S&P 500 (also up 19.6%). 

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Stocks generally had a good week after the U.S. Federal Reserve announced on Wednesday a rate cut of half a percentage point, the first time the central bank lowered the overnight borrowing rate since the early days of the COVID-19 pandemic. Investors had expected the Fed’s move, though, and had priced the effect of a rate cut into stock prices. Still, the Nasdaq composite climbed 1.5% to 17,948.32 and the S&P 500 rose 1.4% to 5,702.55. South Korea’s KOSPI composite index improved 0.7% to 2,736.81 and China’s Shanghai Composite Index rose 1.2% to 2,736.81. In the United Kingdom, the FTSE 100 fell 0.5% to 8,229.99.

Warner Music Group gained 4.9% to $30.44. WMG’s Atlantic Music Group laid off about 150 people Thursday as part of a restructuring plan that began in February. The week’s intraday high of $30.88 was WMG’s highest price since reaching $32.34 on July 24. The company also announced in an SEC filing this week it secured a $1.3 billion term loan that will be used to repay an existing loan and pay associated fees and expenses.

Live Nation shares also gained 4.9% to $103.65 and brought its year-to-date improvement to 10.7%. Thursday’s intraday high of $105.42 was its highest mark since April 1 and less than $2 below its 52-week high of $107.24. The concert promoter scored a win in Portland, Ore., this week after the city council upheld an August decision to allow the development of a 3,500-capacity music venue that will be operated by Live Nation. 

Two other promoters also posted gains this week. MSG Entertainment, rose 4.6% to $42.16, while CTS Eventim improved 1.2% to 87.90 euros ($98.23). Another live entertainment company, Sphere Entertainment Co., dropped 2.7% to $41.09. 

K-pop companies’ modest decline was an improvement from their consistently steep drops in recent weeks. The four South Korean companies had an average loss of 1.2% this week. HYBE fell 2.4%, JYP Entertainment dipped 1.2%, YG Entertainment slipped 0.9% and SM Entertainment lost 0.2%. After surging in previous years, the quartet has an average year-to-date loss of 40.4%. 

Universal Music Group fell 3.6% to 22.75 euros ($25.42) following its Capital Markets Day on Tuesday. Analysts generally felt UMG set reachable financial targets and presented a believable roadmap about its strategy for the next four years. The Amsterdam-listed company laid out a strategy to achieve 8% to 10% cumulative annual growth rate (CAGR) for its subscription revenue and above 7% CAGR for total revenue.

Music streamer LiveOne had the biggest decline of the week, dropping 6.1% to $1.38. That put shares of LiveOne into the red for 2024 with a 1.4% year-to-date loss.

Universal Music Group and Spotify are in “advanced talks” over a high-priced, superfan tier of the streaming service that offers a better user experience than the standard subscription plan. The status of the negotiations were revealed by UMG CFO Boyd Muir on Tuesday during the company’s Capital Markets Day presentation in London. That a Spotify […]

Universal Music Group (UMG) and TikTok have struck a new licensing agreement which will soon bring UMG’s catalog of millions of sound recordings and songs back to TikTok after three months off the platform. Though it is unclear exactly when all of UMG’s catalog will return to the app, a press release about the new license says it will return in “due course” and the two companies are “working expeditiously” to return the music.

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UMG’s last license with TikTok expired at the end of January after negotiations soured between the two companies. UMG announced that its music would be pulled from the app starting Feb. 1 in a letter to its artists and songwriters, saying that TikTok refused to pay the “fair value” of music and that it had concerns about TikTok’s stance on AI and artist safety.

Eventually, over the course of February, millions of sound recordings and compositions in the UMG catalog were removed from TikTok, which has been known as perhaps the most effective artist promotion and marketing platform of the 2020s. This included the removal of superstars like Taylor Swift, BTS, Drake, Ariana Grande, The Weeknd, Lady Gaga, Lana Del Rey, Billie Eilish, Eminem, Nicki Minaj, Justin Bieber, Karol G and Post Malone. Its impact stretched even wider when UMG’s publishing interests were also removed from TikTok, which included many recordings released by other record companies.

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According to a press release about their new deal, UMG and TikTok will now enter a “new era of strategic collaboration” and that the deal “improves remuneration for UMG’s and artists, new promotional and engagement opportunities for their recordings and songs and industry-leading protections with respect to generative AI.”

The two companies will now collaborate to realize more monetization opportunities within TikTok’s ecommerce services, which the short-form video app has been leaning into in recent months, particularly with the launch of TikTok Shop. TikTok will also invest “significant resources into building artist-centric tools.” This will include integrating ticketing capabilities and better data and analytics.

To address UMG’s concerns about AI and artist safety, the press release says the app will strengthen safety for artists and fans and that the two companies will work together to remove unauthorized AI-generated music from the platform. Since the anonymous TikTok user Ghostwriter used the platform to release his song “Heart On My Sleeve” last year, which featured the AI voices of Drake and the Weeknd, TikTok has been a destination for AI voice parody songs, including one particularly popular original sound that paired an AI Lana Del Rey’s voice with Mitski’s “My Love Mine All Mine.”

TikTok will also “improve artist and songwriter attribution” as part of the deal, which will ultimately help UMG’s talent get paid for uses on the platform.

Lucian Grainge, Chairman and CEO, Universal Music Group, says of the deal: “This new chapter in our relationship with TikTok focuses on the value of music, the primacy of human artistry and the welfare of the creative community. We look forward to collaborating with the team at TikTok to further the interests of our artists and songwriters and drive innovation in fan engagement while advancing social music monetization.”

Shou Chew, CEO of TikTok, adds: “Music is an integral part of the TikTok ecosystem and we are pleased to have found a path forward with Universal Music Group. We are committed to working together to drive value, discovery and promotion for all of UMG’s amazing artists and songwriters, and deepen their ability to grow, connect and engage with the TikTok community.”

Ole Obermann, TikTok’s Global Head of Music Business Development, said: “We are delighted to welcome UMG and UMPG back to TikTok. We look forward to working together to forge a path that creates deeper connections between artists, creators, and fans. In particular, we will work together to make sure that AI tools are developed responsibly to enable a new era of musical creativity and fan engagement while protecting human creativity”. 

Michael Nash, Chief Digital Officer and EVP, Universal Music Group said:“Developing transformational partnerships with important innovators is critical to UMG’s commitment to promoting an environment in which artists and songwriters prosper. We’re gratified to renew our relationship with TikTok predicated on significant advancements in commercial and marketing opportunities as well as protections provided to our industry-leading roster on their platform. With the constantly evolving ways that social interaction, fan engagement, music discovery and artistic ingenuity converge on TikTok, we see great potential in our collaboration going forward.”

Universal Music Group announced on Thursday (March 28) that its artists will soon have the ability to tease unreleased music on Spotify. 
Sharing snippets of unreleased songs on social media has been one of the most popular promotional methods for artists during the TikTok era (sometimes to the chagrin of songwriters). In many instances, artists haven’t even finished writing the song that they tease. But fan enthusiasm can make these scraps of music go viral anyway, especially on TikTok, sending artists scrambling to write another verse, record a full song, and release it as soon as possible — hopefully to a rapturous reception. 

The Universal Music Group announcement is notable because it comes as the company’s stand-off with TikTok nears the end of its second month. Official recordings of UMG acts are not currently available on the app. (Same goes for many, but not all, songs that feature contributions from UMPG songwriters.) While most UMG artists continue to use the app as a social tool to communicate with their followers, their ability to promote their music on TikTok is severely limited. 

Teasing songs on Spotify represents a potential alternative for these acts. “We’re excited to broaden our relationship with Spotify through the introduction of new content offerings and collaborations that will bring deeper ‘social music’ experiences to the platform,” UMG chairman and CEO Lucian Grainge said in a statement.

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Spotify founder and CEO Daniel Ek added that “the forthcoming features will put more power in the hands of artists and their teams to help them authentically express themselves, efficiently promote their work, and better monetize their art.”

UMG did not say when its artists would be able to start sharing pre-release snippets on the platform. It’s also not clear the extent to which Spotify users will actively hunt for pre-release music on the streaming service — many prefer more passive forms of engagement. 

TikTok, in contrast, excels at engaging those who see fandom as a participatory sport — they want to comment on unreleased demos and make their own remixes. And for younger listeners especially, the app is often a popular source of music discovery.

Midia Research found that TikTok is the second biggest driver of music discovery for Gen Z after YouTube. U.S. TikTokers “are nearly twice as likely to discover music on short-form video platforms than the average user of social or social-form video platforms,” according to a Luminate study released in November. 

Spotify is then where many of these listeners go and listen to full songs they found on TikTok. To make this process even more friction-less, TikTok launched a new feature last year that allows users to quickly save music they find on the platform to Spotify and other streaming services.

But Spotify executives have been eager to tout the streamer’s ability to drive discovery on its own. “There’s a disconnect between where music is being teased and where music is actually being streamed,” Sulinna Ong, Spotify’s global head of editorial, said at the company’s Stream On event in 2023. “The most powerful time to reach fans is when they’ve chosen to engage with music, like when they open up Spotify.”

At the same event, Spotify co-president Gustav Soderstrom said that “Spotify recommendations drive close to half of all user streams.” “Each time your music gets played on a playlist like Release Radar, you receive, on average, three times more streams from that listener over the next six months,” he added. “And when a listener decides to follow you, they listen to, on average, five times more of your music.” This recommendation system sets Spotify apart from platforms that deliver “just a fleeting moment of viral fame.”

UMG also announced on Thursday that its publishing arm inked a deal with Spotify so the platform can share music videos in the U.S. Spotify music videos launched in beta for premium users in 11 countries — but not in the U.S. — earlier in March. At the time, Charlie Hellman, Spotify’s vp and head of music product, called videos “an important part of so many artists’ tool kits.

“It’s a natural fit for them to live in the same place that more than half a billion people choose to listen to music,” Hellman added in a statement.

UMG Nashville has launched Silver Wings Records, a distribution arm and independent artist services, fueled by Virgin Music Group’s global distribution network. Silver Wings Records will create custom campaign services for independent artists, offering options for developing and enhancing campaigns. Explore Explore See latest videos, charts and news See latest videos, charts and news UMGN’s […]

When Morgan Hayduk and Andrew Batey founded Beatdapp — a company which helps streaming services, labels, and distributors detect streaming fraud — at the end of 2018, they faced a major obstacle: The music industry was reluctant to acknowledge that streaming fraud was a problem. 
“It used to be verboten to speak publicly about [it],” Hayduk told Billboard last year. “It was all behind closed doors. But I don’t think you can fix a problem until you accept its existence.”

The climate has changed dramatically recently. Last year, Universal Music Group began calling for changes to the streaming model, arguing that fraud and things like white noise and rain sounds were scooping up royalty income that should be going to actual artists. And Beatdapp announced on Friday (Jan. 19) that it’s entering into a strategic collaboration with UMG as well as partnering with SoundExchange (which collects performance royalties from digital radio stations and broadcast companies like SiriusXM) and the streaming service Napster.

“We’re at a point now where there’s a consensus that we have to address the problem” of streaming fraud, says Michael Nash, chief digital officer and executive vice president for Universal Music Group. “Beatdapp have really focused on understanding the problem and working with a number of different platforms to provide a very clear perspective about the scope of the problem. Providing that kind of leadership, driven by data analysis, has been really important.”

Hayduk defines streaming fraud as the leveraging of “bots, stolen accounts or manipulated platform features” to steal streaming income. The practice “hurts everyone who makes a living in the music industry and, left unchecked, creates this promotional race to the bottom where everyone believes they have to cheat to succeed,” he told Billboard last year. 

“In an industry where it’s already hard to make something and then promote something and then get paid,” Batey added, “you should at least get paid correctly.”

As Beatdapp widens its network of partners, it gets access to more streaming data — the company was analyzing 2.2 trillion streams in 2023, up from hundreds of billions in 2022 — which in turn allows the company to improve its understanding of how fraudsters manipulate the streaming ecosystem and get better at identifying suspicious listening patterns. 

“Napster provides Beatdapp with a daily feed of all usage on Napster’s services, and Beatdapp then uses its detection filters to identify likely stream manipulation activity based on certain (high) confidence levels,” explains Matthew Eccles, the streamer’s svp and general counsel. “Napster will then ensure that the streams identified by Beatdapp are removed from royalty reports for all licensors so that the market share calculations for all labels are not affected.” 

Napster’s view is that it is helpful to engage a third party to detect stream manipulation because “it eliminates potential questions of bias when the results come back,” Eccles continues. “Third parties can help achieve consistency across the industry in relation to what is and what is not considered to be streaming fraud.”

Beatdapp also announced on Friday that it had raised an additional $17 million, money that will go towards hiring new data scientists and senior leadership and expanding into Europe and Asia. 

“With the volume [of music on streaming services] jumping the shark over value — more than 150 million tracks and more than 100,000 uploaded every day — this has created a lot of issues,” Nash notes. “That level of volume has created a context for a lot of bad actor activity.”

Tackling these issues is complicated, but cracking down on fraud is “the least controversial item on the agenda,” Nash adds. “There aren’t a lot of advocates for fraud.”

Deezer plans to implement a new streaming model with Universal Music Group later this year — a step that Deezer CEO Jeronimo Folgueira called “the most ambitious change to the economic model since the creation of music streaming and a change that will support the creation of high-quality content in the years to come.”

In an announcement on Wednesday (September 6), Deezer said it would roll out this “artist-centric” system in the French market starting in the fourth quarter of 2023. The new model aims to reward artists and songs that are driving listener engagement while also de-prioritizing white noise and other “functional” audio. “The sound of rain or a washing machine is not as valuable as a song from your favorite artist streamed in HiFi,” Folgueira declared.

As part of the new model, plays racked up by “professional artists” — which Deezer defines as acts with more than 1,000 streams per month spread across 500 unique listeners — with a “double boost.” (The announcement did not define what that “double boost” entails.) Similarly, songs that are driving listener engagement — the metrics for measuring this were also undefined — will receive the same bump.

In addition, Deezer plans to replace “non-artist noise content” — the sounds of whales or washing machines — with its own functional music, while also excluding this audio from the royalty pool so that payouts to raindrop recordings don’t come at the expense of payouts to singer-songwriters. “We are now embracing a necessary change, to better reflect the value of each piece of content and eliminate all wrong incentives,” Folgueira said in a statement. “There is no other industry where all content is valued the same.”

“With this multi-faceted approach, music by artists that attracts and engages fans will receive weighting that better recognizes its value, and the fraud and gaming, which serves only to deprive artists their due compensation, will be aggressively addressed,” added Michael Nash, UMG’s evp and chief digital officer. He also noted that the model may change in the future: “As the ever-evolving music landscape continues its rapid transformation, UMG and Deezer will rigorously address the impact of these changes as we incorporate new insights from data analysis and fine-tune the model, as appropriate.”

UMG’s quest for a new streaming ecosystem has been a major talking point for the company since January. That month, in a letter to staff, UMG chairman/CEO Lucian Grainge called for the development of “a model that will be a win for artists, fans, and labels alike, and, at the same time, also enhances the value proposition of the [streaming] platforms themselves, accelerating subscriber growth, and better monetizing fandom.”

Since then, UMG announced partnerships with both Tidal and Deezer to try to determine what that model might look like. Streamers can do “a better job of monetizing these high integrity, high intense artist-fan relationships,” Nash told financial analysts in March. “We’ve been speaking with platforms… about the enhancement of offers to the consumer that reflect the engagement with artists that are really driving the economic models of the platform.” 

Spotify CEO Daniel Ek, however, appeared less enthusiastic about implementing a major change to the streaming model during an earnings call in July. “Most studies we’ve done on this [show] that even if you change it to a user-centric or an artist-centric approach, it seldom leads to these gigantic differences that most people perceive it to do,” he said.

“But we’re always open to hearing how we can make the system [fairer] to more artists,” he added.