warner music group
Page: 8
YouTube executive Tim Matusch has joined Warner Music Group (WMG) as executive vp of strategy & operations. The news was announced in a company memo sent last week by CEO Robert Kyncl, who worked alongside Matusch at YouTube before stepping down as chief business officer at the company to join WMG.
Matusch most recently served as managing director of strategy and business operations at YouTube, a role he held for more than two years. Prior to that, he served in senior consulting roles at Boston Consulting Group and Oliver Wyman, where he spent more than 12 years and eventually rose to partner. He also worked in senior operating roles at AOL, including general manager at AOL.com and AOL Products. He graduated from Eton College in 1996 and earned his master’s at the University of Oxford in 2001.
In the memo sent to WMG staff and obtained by Billboard, Kyncl noted that Matusch will be working closely with the greater WMG leadership team “to help define, facilitate, and execute our 5–10 year vision” while also playing a key part in “evolving” the label’s “cross-company plans, including deploying business intelligence to strengthen our decision-making, developing and tracking a set of critical KPIs, and ensuring everyone is on the same page as we build our future together.”
Acknowledging that strategy & operations is “a new function” at WMG, Kyncl continued that he’s “a firm believer in tapping into, growing, and unleashing the expertise within the company itself. That way, we’re more directly investing in ourselves, and compounding our knowledge and skills over time. It results in well organized, better informed, more realistic plans.”
Kyncl added that he worked with Matusch “across a wide variety of projects” at YouTube and has “been consistently impressed by what his team has delivered and how they did it – in a very collaborative fashion – which is particularly important to me.”
Kyncl officially assumed the role of CEO at WMG on Jan. 1, though he’ll share CEO duties with outgoing chief executive Stephen Cooper for the remainder of the month. Matusch is the first major hire announced under Kyncl’s tenure.
With 2022 now officially in the books, the U.S. market share report is in: with Bad Bunny, Lil Nas X and Harry Styles leading the way, it was a banner year for Sony Music, as it gained in both overall market share and, more drastically, in current market share on the leading Universal Music Group, narrowing the gap among releases less than 18 months old to 6.58% in 2022 — a chasm that stood at 13.7% at the end of 2021.
But there was good news for UMG, too, as Republic Records rode a red-hot fourth quarter — led by Taylor Swift’s Midnights, the No. 2 album of all of 2022 despite only being released in October — to rank No. 1 among labels in current market share for the entirety of 2022, coming in at 10.38%. That makes it the only label to top double digits in the final ranking of the year. And UMG maintained a double-digit lead in overall market share over second-place Sony, leading 37.54% to 26.87% despite the latter’s gains throughout the year. Interscope Geffen A&M finished the year as the No. 1 label in overall market share once again, coming in at 9.63%, though it was down from the 10.08% share it held at the end of 2021.
Sony’s overall market share grew 0.76% year over year — up to 26.87% in 2022 from 26.11% in 2021 — marking a big stride forward for the music group. That gain was largely at the expense of Universal Music Group, which dropped 0.66% year over year, from 38.20% in 2021 to 37.54% at the end of 2022. Meanwhile, Warner Music Group’s market share grew from 16.06% in 2021 to 19.05% in 2022, though that is not an apples-to-apples comparison; this year, Warner-owned distributor ADA — which distributes dozens of independent labels — was factored into WMG’s market share, adding 2.96% to its total and accounting for almost all of Warner’s jump. (The move more accurately aligns Warner’s distributed market share with the other majors, which also include their distribution wings in their totals.) That switch also explains the commensurate dip for the indie sector, which fell from 19.63% in 2021 to 16.54% in 2022.
In current market share, Universal fell more than 4%, from 37.89% in 2021 to 33.57% in 2022, with all three other major players picking up that slack, led by Sony, which ballooned significantly almost 3 percentage points to 26.99% in 2022 — up from 24.19% in 2021. Warner — even taking into account the 3.32% in current share added by ADA — was also up, from 14.42% in 2021 to 18.30% in 2022 (an increase of 0.56% beyond the ADA bump), while the indie sector went from 23.50% last year to 21.14% in 2022, which is up 0.96% year over year when taking into account the loss of the ADA labels. Universal did, however, raise its catalog percentage from 38.33% in 2021 to 38.94% in 2022, while the other three all fell slightly.
Following Interscope in overall market share, Atlantic remained in second, at 8.89%, although it, too, was down slightly from 2021, when it posted a 9.17% overall share of the market. Republic ended the year in third — the only label in the top five to grow its overall market share year over year — with an 8.44% mark, up from 8.28% through the end of 2021, while Columbia (6.98%) and Capitol Music Group (6.40%) rounded out the top five. (A note on these labels: Interscope’s market share includes Verve [0.85%]; Atlantic’s includes the now-combined 300 Elektra Entertainment Group [2.35%], which would have been good enough for ninth place on its own; Republic’s includes Island [1.51%], Cash Money [0.71%], Big Loud, Imperial and Mercury; Columbia includes some indie labels from distributor RED; and Capitol includes Virgin [1.78%], Motown/Quality Control [1.05%], Capitol Christian Music Group [0.61%], Astralwerks and Blue Note.)
In sixth, Warner Records — which includes Rhino, Warner Latin and a chunk of Warner Nashville in its market share — grew year over year, from 6.16% in 2021 to 6.35% in 2022, having steadily increased its share each quarter of the year. RCA, whose market share stands alone, did the same; the label came in seventh, growing in each quarter to a finish of 5.12% — up from 4.89% in 2021 — wrapping the year strongly with the four-week No. 1 run of SZA’s S.O.S. In eighth, Epic Records also picked up market share, rising to 2.63% in 2022 from a 2.38% share in 2021. Def Jam, in ninth, faltered to 2.07%, down from 2.25% in 2021; while Sony Nashville jumped into 10th, leapfrogging UMG Nashville by growing its market share from 1.99% to 2.04% year over year.
UMG Nashville dropped to 11th, slipping from 2.04% in 2021 to 1.85% in 2022, while Concord jumped from 13th (1.68%) in 2021 to 12th (1.73%) in 2022. Disney — with its early-year Encanto boost — was up to 1.60% in 2022 from 1.40% the year before, good for 13th, while Universal Latin (1.47%) and Sony Latin (1.24%) rounded out the top 15, both up from the year prior as well.
Republic had a big fourth quarter (9.57%), with four major releases — Stray Kids’ Maxident, Swift’s Midnights, Drake and 21 Savage’s Her Loss and Metro Boomin’s Heroes & Villains, all of which debuted at No. 1 on the Billboard 200 — collectively topping the Billboard 200 for eight weeks. That helped boost its current market share from 8.77% through the first three quarters of the year to 10.38% by year’s end, with that late push taking it to No. 1 among all labels in terms of current market share in 2022.
Atlantic, in second place in current share, essentially maintained its level from last year, coming in at 9.15% (from 9.16% in 2021), though it moved up one spot from third place; while Interscope dropped sharply, from a stellar 11.05% in 2021 to 8.72% in 2022, falling from first to third. Columbia and Capitol, in fourth and fifth, respectively, both fell in share, the former from 6.83% to 6.67% and the latter from 5.64% to 4.97%; while Warner and RCA, in sixth and seventh, both grew in share, the former from 4.48% to 4.86% and the latter from 4.37% to 4.65%.
Outside the top seven labels, there was a bigger shakeup in current market share. Epic Records moved up to eighth place, gaining from a 2.04% current share in 2021 to 2.23% in 2022, while Sony Nashville jumped up to ninth, growing to 1.89% from 1.59% in 2021. Alamo made the biggest leap, all the way up to 10th in current share in 2021 at 1.56% in its first full year as a standalone Sony Music label; in 2021, its share was split between UMG and Sony as it was sold midway through the year, making an apples-to-apples comparison difficult. BMG, in 11th, held steady at 1.42%, while Disney, perhaps unsurprisingly, surged into 12th, up to 1.36% year over year from 0.52% in 2021. Def Jam, however, saw its current share sink from 2.21% in 2021 to 1.27% in 2022, finishing 13th, while Sony Latin (1.24%) and UMG Nashville (1.23%) rounded out the top 15.
As is generally the case, catalog market share tracked similarly to overall market share, as older titles generally perform consistently as a percentage of the market year over year. But both UMG and the indie sector grew year over year, while Sony and Warner, the latter accounting for the ADA switch, were both down slightly as well.
Former Atlantic Records employee Dorothy Carvello lost her bid for a seat on Warner Music Group’s board of directors last month after failing to comply with certain requirements in the company’s bylaws, spokespeople for Carvello and the record label said on Tuesday (Jan. 3).
Under a new rule passed by the U.S. Securities and Exchange Commission last year that makes it easier for minority shareholders to wage campaigns for board seats, Carvello sought to nominate herself for a seat on WMG’s board, to be voted on at the next shareholder meeting. The activist and author, who alleged in her memoir, Anything for a Hit: An A&R Woman’s Story of Surviving the Music Industry, that she was subjected to sexual abuse and misconduct while working at Atlantic from 1987 to 1990, plans to run again next year, according to her spokesperson.
Carvello’s odds of being elected by WMG investors to a seat on the company’s board were slim because a sizeable chunk of the record label is owned by WMG vice-chair Leonard Blavatnik, the Financial Times reported earlier on Tuesday. Still, Carvello’s novel attempt could set the stage for future bids by activists aiming to bring attention to causes not often discussed in the staid corporate arenas of annual shareholder meetings.
“While this is an unfortunate attempt by the corporation to block an important mission, she will continue to seek to have her name placed on the ballot next year,” a spokesperson for Dorothy Carvello wrote in an email.
Carvello submitted her nomination notice to WMG in early December, but it failed to meet certain requirements in the company’s bylaws, including that Carvello be a registered shareholder, a spokesperson for WMG wrote in a statement. Because Carvello bought her WMG shares through the online brokerage Robinhood, the brokerage’s name was on the shares, not Carvello’s.
WMG said it gave Carvello additional time to resolve the issues but the documents ultimately did not fulfill company requirements.
“We value the input of all shareholders, and anyone desiring to nominate director candidates must satisfy the standard requirements of WMG’s Bylaws, including being a registered shareholder,” WMG said in the statement.
Requiring that investors be registered shareholders to submit proposals or board nominations at annual meetings is a common corporate rule. However, it presents a complication for retail investors who most frequently purchase stocks through brokerages.
Carvello has gained attention in recent months for a letter sent by her lawyer to WMG board members requesting records relating to the company’s investigations into previously-reported sexual misconduct claims and royalties accounting at the label. And last month, Carvello filed a lawsuit against Atlantic Records and the estate of its late co-founder Ahmet Ertegun, along with WMG and two former Atlantic executives, alleging she was “horrifically sexually assaulted” by Ertegun and Morris and that Atlantic, WMG and Jason Flom (whom the suit says was an Atlantic vp at the time) enabled the abuse.
In its statement, WMG said its board and management “have made significant enhancements to our policies and procedures and take any allegations of misconduct seriously and are consistently working toward eliminating all forms of discrimination and harassment.”
Music companies’ quarterly results in October and November were a bright spot amid a mostly bleak earnings season. High inflation, rising interest rates and the chance of a recession presented a triple-whammy to most sectors — particularly tech and retail — but in the music industry, those macroeconomic threats weren’t enough to dampen consumer demand and investors’ confidence.
“While the broader economy is facing challenges, the music industry as a whole remains healthy,” says Golnar Khosrowshahi, founder and CEO of Reservoir Media, which raised its full-fiscal-year forecast by 11% for both revenue and adjusted earnings before interest, tax, depreciation and amortization (EBITDA).
So what worked in music companies’ favor? In short, more people are going to concerts and buying streaming subscriptions, and revenues from those sectors helped bolster quarterly results for nearly every publicly listed music company.
Diversifiction = Fortification
The major labels, which have a piece of the market in nearly every segment of the music industry, all reported quarterly revenue gains over the third quarter last year, ranging from 16% at Warner Music Group to 6% at Sony Music Entertainment. On Universal Music Group’s third-quarter call, chairman/CEO Lucian Grainge attributed the company’s 13.3% third-quarter revenue gains to UMG’s diversification strategy. While ad-supported streaming revenue slowed significantly, only growing 5.2% (from last year’s 15.6% growth), licensing and other revenues rose by 30% due to an $84.2 million increase in touring revenue from Latin American, European and Asian markets where UMG is in that business. Merchandising and other revenue related to those tours grew by over 100% to almost $199 million. “We are better positioned to navigate the inevitable ebbs and flows of revenue of any particular business, as well as to weather any macroeconomic headwinds,” said Grainge.
Live’s Alive Again
Live Nation Entertainment had its biggest summer concert season ever, reporting that more than 44 million fans attended 11,000 events in the third quarter, as attendance for stadium shows tripled to nearly 9 million. Companywide, Live Nation reported $6.2 billion in quarterly revenue, up nearly 67% from the last-comparable quarter, which for it was the third quarter of 2019.
Streaming’s Still Strong
On a call with investors, an analyst asked Sony deputy president/CFO Hiroki Totoki what risks Sony Music Entertainment faces. His reply: “Streaming is very successful, and we don’t really have that much of a concern.” Spotify’s third-quarter results confirm that. Revenue rose 12% to roughly $3.2 billion at a constant currency, on a 13% uptick in subscription revenue from more than 195 million subscribers — 1 million more than the company targeted.
French streaming company Deezer also reported double-digit revenue growth, although it attributed the increase in part to a one-euro price hike the company instituted in France earlier this year. Deezer’s revenues rose nearly 14% to $112.5 million at the Sept. 30, 2022, exchange rate.
Price hikes, coming at a time consumers’ costs are rising across the spectrum, are the final thing working for music industry companies. After Apple said it would raise its standard individual streaming plan price by $1 to $10.99 in the U.S. and Spotify signaled it was also considering a price increase, major labels and other streaming company executives all said they expect trickle-down benefits.
It’s also worth noting that although Totoki said on the call that Sony is “taking steps to prepare for further deterioration… in each of our businesses,” the company raised its revenue and operating income targets for the full fiscal year by $9.8 billion and $1.9 billion, respectively (at Sony’s assumed exchange rate for the second half of the fiscal year).
Just days after Atlantic Records and the estate of its late co-founder Ahmet Ertegun were hit with a sexual assault lawsuit filed by a former employee, the entities are now facing a second complaint detailing similar allegations of abuse –– only this one casts a wider net.
On Sunday (Dec. 4), Dorothy Carvello – a former A&R executive with the label and author of music-industry expose Anything for a Hit – filed suit against Atlantic, the label’s parent company Warner Music Group, Ertegun’s estate, former Atlantic co-CEO & co-chairman Doug Morris and former chairman and CEO Jason Flom. In the exhaustive complaint, Carvello alleges she was “horrifically sexually assaulted” by Ertegun and Morris and that Atlantic, WMG and Flom (then an Atlantic vp) enabled the abuse.
“During her employment at Atlantic Records from 1987 through 1990, Ms. Carvello was subjected to persistent and pervasive nonconsensual and forcible sexual contact, degrading sexual innuendo and insults, and outrageous ‘tasks’ for the sexual gratification of executives at Atlantic Records,” reads the complaint, which was filed in New York Supreme Court. “These injuries inflicted and abetted by Defendants include several sexual assaults and batteries, among other sexual misconduct, harassment, and discrimination, as well as intentional and negligent infliction of emotional distress.”
The complaint goes on to claim that her treatment at the hands of Ertegun (who died in 2006) and Morris was enabled by the other defendants, who went about “creating, maintaining, and perpetuating the toxic workplace culture in which such sexual assault was permitted, thereby inflicting extensive emotional distress as well.”
Carvello’s lawsuit was made possible by New York’s Adult Survivors Act (ASA), which created a one-year period beginning Nov. 24, 2022, allowing alleged victims of abuse to take legal action against their perpetrators in the state even if the statute of limitations on their claims had expired. Jan Roeg. the former Atlantic talent scout who filed the sexual misconduct suit against Atlantic and Ertegun’s estate last week. took action under the same law. More music industry cases are also expected to be filed under the ASA over the next year.
The claims by Carvello are not new, though this is the first she’s sued over her allegations. In her memoir Anything for a Hit (now being adapted for a docuseries), the former executive detailed how, while working as Ertegun’s assistant and later as Atlantic’s first female A&R executive, she was allegedly frequently sexually abused and harassed by Ertegun.
The new lawsuit covers much of the same ground, charging that Ertegun, along with Morris and other Atlantic executives, “treated the company, its corporate headquarters, recording studios, and—even its corporate helicopter—as places to indulge their sexual desires. Employees like Ms. Carvello were the collateral damage of this toxic workplace culture.” It goes on to allege that when Ertegun and Morris’ abusive behavior was reported within the company, victims were “routinely paid settlements with corporate funds in exchange for signed non-disclosure agreements.”
Carvello, who was hired by Atlantic in April 1987 at age 24, first worked as Ertegun’s secretary but claims she also provided significant assistance to Morris during that time. After bringing Skid Row to Atlantic, Carvello was promoted to an A&R role.
Throughout her time there, Carvello claims that she and other female employees “were routinely exposed to Mr. Ertegun masturbating, including during work as he dictated correspondence to Ms. Carvello.” Among other claims, she also alleges Ertegun stored sex toys in her office cabinet without her consent; that Ertegun and other executives watched pornography in the office, including in meetings; and that Ertegun once directed Carvello to pick up used sex toys in his office and wash them.
The complaint goes on to allege a number of other abusive incidents involving Ertegun, including a claim that he “sexually attacked” her in a nightclub in Allentown, Pa., during a Skid Row concert and again during a subsequent helicopter ride back to New York City.
In the course of these alleged ncidents, Carvello says that Ertegun “grabbed and squeezed” her breasts, “clawed at the bike shorts she was wearing under her skirt and pulled them down to access her underwear, scratched the left side of her abdomen and caused her to bleed, violently attempted to remove her underwear, bruised her, and exposed her vagina to all and sundry.” She further alleges that while begging for help from Flom and others present during the attacks, “they simply looked on and laughed.” Ertegun additionally claims that Ertegun once fractured her forearm after slamming it forcefully onto a table.
Carvello also claims harassment and abuse at the hands of Morris, who was running the label with Ertegun at the time. While working as his de facto secretary, she claims Morris would “forcibly kiss” her on the face and touch her inappropriately on a daily basis while “constantly” commenting on her body and appearance. She also claims that on multiple occasions, both Morris and Ertegun would suggest that Atlantic would pay for her to get breast augmentation surgery.
In addition to claims that Flom enabled Ertegun and Morris’ abuse, Carvello accuses the then-vp of harassing her during a meeting, saying he requested, in front of other executives, that she sit on his lap. According to the lawsuit, she says this incident led her to write a memo to Morris complaining about the “blatant sexual abuse” at Atlantic headquarters in September 1990 and asking him what he was planning to do about it. One day later, she alleges, she was fired.
Though she was subsequently hired at WMG imprint Giant Records, Carvello claims Morris “was not done retaliating” against her and had her fired from Giant as well. “Her loss of two consecutive jobs and the damage to her reputation was permanent,” the complaint reads. “But for Mr. Morris’ vengeful and retaliatory actions, Ms. Carvello would still be working in the music industry, and likely would be working under the WMG umbrella with [now-CEO and chairman Craig] Kallman,” who Carvello claims she was instrumental in bringing to the label in the early 1990s.
Later in the complaint, Carvello alleges that in February 1998, while unexpectedly seated next to Ertegun at Clive Davis’ annual “Grammy Eve” party at the Beverly Hills Hotel, the executive continued his pattern of abuse. During that incident, Carvello alleges Ertegun “shoved his hand between” her legs and “forcibly pulled and ripped at her underwear, injuring” her vagina. After allegedly fighting him off and threatening him “in full view of the dinner guests” at the event, Carvello claims Ertegun “sought her out again” at the same event and told her to meet him at his hotel, The Peninsula.
Carvello is suing on seven counts: battery constituting forcible touching (against the Ertegun estate, Morris, WMG and Atlantic); battery constituting sexual abuse (against the Ertegun estate, Morris, WMG and Atlantic); attempted battery constituting forcible touching (against Flom, WMG and Atlantic); battery constituting sexually motivated felony (against the Ertegun estate, WMG and Atlantic); and, against all defendants, criminal and civil conspiracy, intentional infliction of emotional distress and negligent infliction of emotional distress. She is asking for monetary compensation as well as exemplary and punitive damages “in an amount to be determined at trial.”
In a statement to Billboard, a Warner Music Group spokesperson said that the company and Atlantic “take allegations of misconduct very seriously,” while stressing that Carvello’s allegations stem from an era decades in the label’s past.
“These allegations date back 35 years, to before WMG was a standalone company,” the statement reads. “We are speaking with people who were there at the time, taking into consideration that many key individuals are deceased or into their 80s and 90s. To ensure a safe, equitable, and inclusive working environment, we have a comprehensive Code of Conduct, and mandatory workplace training, to which all of our employees must adhere. We regularly evaluate how we can evolve our policies to ensure our work environment is free from discrimination and harassment.”
Representatives for Morris and Flom did not immediately respond to Billboard’s requests for comment. A representative for Ertegun’s estate could not be located for comment.
Over the past several years, Carvello has been a relentless voice calling for accountability in the music industry over what she alleges are longstanding patterns of abuse and attempts to silence victims. In October 2021, she revealed she had purchased shares in all three major record companies — UMG, WMG and Sony Music Entertainment’s parent company, Sony Inc.) — with the intent of becoming an activist shareholder “to bring more transparency to the music industry,” she told Billboard at the time.
This past September, Carvello stepped up her efforts by sending a letter to board members at WMG requesting records relating to the company’s investigations into previously reported sexual misconduct claims and royalties accounting. She noted at the time that she intends to ask questions of the other labels as well, though there are differing regulations and laws that pertain to Universal and Sony, given that the former is a publicly-traded company in Amsterdam and Sony is incorporated in Japan; only WMG is a publicly-traded company in the U.S.
In the years since her ill-fated stints at Atlantic and Giant Records, Carvello has worked as an independent public relations consultant, including for some major label executives, though — responding to a perception by some label insiders that this represents a conflict of interest given her activist work– she claims she was paid out of the executives’ own pockets and not by the record labels themselves. In April, she founded the Face the Music Now Foundation, an organization “established to highlight sexual abuse and harassment in the music industry, demand accountability and change, and pave the way for survivors to tell their stories and reclaim their lives,” according to a press release.
The Ledger is a weekly newsletter about the economics of the music business sent to Billboard Pro subscribers. An abbreviated version of the newsletter is published online.
After a miserable year for music stocks — and stocks in general — 2022 could end on a string of positive notes.
As rising interest rates have hammered stocks and erased big gains made during the pandemic, the Billboard Global Music Index, a float-adjusted group of 20 publicly traded music companies, is down 36.1% in 2022, and shares of vital companies such as Spotify and Warner Music Group are down 65.7% and 20.5%, respectively.
But in recent weeks, the momentum has reversed dramatically. The Billboard Global Music Index is up 12.6% over the last two weeks and 14.6% in the five weeks since Oct. 28.
Since Oct. 28, the week when music companies began to release third-quarter financial results, the stocks of major labels rose an average of 23.1%. Indie music companies — Reservoir Media, Believe, Hipgnosis Songs Fund and Round Hill Music Royal Fund — rose an average of 8.2% over that time period. K-pop companies from South Korea averaged a 16.1% improvement.
Part of music stocks’ rebound can be attributed to overall market sentiment. Stocks have improved in recent weeks — the New York Stock Exchange composite index is up 6.6% in the last five weeks and the S&P 500 is up 4.4% over that time. This week, stocks surged on Wednesday (Nov. 30) after Federal Reserve chairman Jerome Powell said upcoming interest rate hikes will be smaller following “promising developments” in the Fed’s efforts to slow inflation. Stocks gave back some of those gains on Friday, however, after a solid U.S. jobs report showed a combination of strong hourly earnings and lower labor force participation. Higher wages erode corporations’ profits and persistent inflation could mean more rate hikes by the Federal Reserve.
But music companies have outperformed the broader stock markets thanks to solid third-quarter earnings results that met and occasionally exceeded expectations. In addition, many companies increased their fourth-quarter guidance when they announced third-quarter results. That tends to increase share prices as investors adjust upward their expectations for future performance.
Among the best performers of late has been Warner Music Group, whose shares improved 31.1% in the last five weeks. Last week, Warner beat analysts’ expectations for both revenue and earnings per share in the fiscal fourth quarter ended Sept. 30 and announced on Nov. 22. It posted revenue of $1.5 billion, up 16% year-over-year at constant currency (+9% as reported). Adjusted earnings before interest, taxes, amortization and depreciation grew by 16% to $276 million.
Shares of Universal Music Group have risen 16.1% since Oct. 28. The day prior, UMG’s third-quarter earnings showed a 13.3% jump in revenue at constant currency. Sony Corp., the parent company of Sony Music Group, climbed 23.7% over the same period. Sony Music’s quarterly earnings, released on Nov. 1, showed 5.9% year-over-year revenue growth. Sony’s music division accounts for just 11.4% of the company’s consolidated revenue and 16.7% of its operating income while UMG and WMG are pure-play music companies.
Smaller labels and publishing companies have improved, too. Reservoir Media shares have climbed 14.9% over the five weeks, while shares of Believe rose 19.1% over five weeks but stumbled 7.8% in the last two weeks. Both companies raised guidance for their fourth quarter results. Korean music companies have also fared well: the shares of four K-pop-focused companies — HYBE, SM Entertainment, YG Entertainment and JYP Entertainment — rose an average of 16.1% in the last five weeks.
Labels’ and publishers’ financial results were augmented by positive news that suggests even stronger streaming revenue in 2023. According to WMG CEO Stephen Cooper during the company’s Nov. 22 earnings call, announcements of price increases by Apple Music [on Oct. 24] and Deezer “in the current economic environment shows that music subscription services offer amazing value to consumers. Music remains undervalued, but we’re optimistic that there will be other increases to come.”
Cooper was also encouraged by subscriber growth reported by streaming companies. Spotify exceeded expectations in the third quarter by adding seven million subscribers — 1 million more than its guidance. YouTube announced on Nov. 11 it had reached 80 million subscribers of YouTube Music and Premium just 14 months after surpassing the 50-million mark. “Developed markets continue to grow in the double digits while emerging markets are growing at higher percentages,” said Cooper. “With global smartphone penetration expected to increase meaningfully in the coming years, our conviction in streaming growth remains strong.”
While labels and publishers have surged, streaming companies have been mixed. On average, streaming companies’ stocks rose 24.4% over the last five weeks. The biggest gains came from much smaller Tencent Music Group and Cloud Music, up 101.6% and 28.4%, respectively — but both have relatively small floats and remain majority owned by Tencent and NetEase, respectively. Even smaller yet are Anghami (-3.1%) and Deezer (-1.5%). Spotify, one of the largest companies in the index, declined 3.7%.
Companies in the live and ticketing space haven’t fared as well as others, however. Live Nation shares are down 7.7% in the last five weeks, due mainly to a 7.5% drop following its third-quarter earnings release and a 10.3% decline on Nov. 18 following reports that the company was being investigated by the Department of Justice after its controversial presale for Taylor Swift’s upcoming tour. The latter was a short-lived dip, however, and Live Nation shares have reclaimed that lost ground and more by rising 11.6% in the last two weeks. Over five weeks, MSG Entertainment shares rose just 2% and Vivid Seats shares are off 1.2%. On the other hand, shares of German concert promoter CTS Eventim rose 27.7% over five weeks after posting strong third-quarter results and sounding more confident about full-year results than comments it made in its second-quarter earnings release.
Four radio companies — iHeartMedia, Cumulus Media, Audacy and Townsquare Media — have fared the worst, falling an average of 6.8% since Oct. 28. IHeartMedia, the largest radio company and a member of the Billboard Global Stock Index, fell 9% over that time.
Try using some of your favorite songs on the short-form video app Triller, and you’ll be hard pressed to find what you’re looking for.
On Thursday, the music catalogs for Universal Music Group, Warner Music Group, Sony Music and Merlin — which provides digital licensing to many top independent labels and distributors — were removed from the platform.
A Triller spokesperson says the platform is “reassessing each of our label deals as they come due as our catalogue music usage is a small fraction of our overall business with creators.
“Some labels are more used than others and if we can make financial arrangements which make sense for the platform, on a label by label basis, we will. In other cases the usage does not justify the cost.”
The news follows a lawsuit filed by Sony Music Entertainment in August, claiming Triller had “historically failed to make payments in a timely manner” but that this issue got even worse in March 2022 when Triller “failed to make any monthly payments required under the Agreement, totaling millions of dollars.”
A source at one of the other major music companies says similar breach of contract and failure to make payments, including “millions and millions in past due royalties,” was behind Triller’s decision to pull these catalogs. The Triller spokesperson, however, called that claim “false and grossly inaccurate.”
Representatives for Universal, Warner, Sony and Merlin declined to comment.
In a Thursday morning email, Merlin’s senior director of business and legal affairs alerted members that Triller had “commenced the takedown of Merlin content.” He continued, writing “at this stage we do not believe that Merlin is the only licensor/content provider to have had content taken down. The term of our current agreement with Triller has now expired. We will update members as soon as we can regarding renewal discussions.”
Merlin members include Secretly Group, Mom + Pop, Monstercat, Symphonic, Ninja Tune, Beggars Group, FUGA, ONErpm, Domino, SubPop, Vydia and more. The Triller spokesperson told Billboard when asked about the Merlin email, “We are in active conversations with Merlin and expect to renew our relationship and continue our friendly and successful partnership.”
“As Triller has grown and expanded its portfolio of services for creators as an open-garden platform, we are recalibrating some of our partnerships with a focus towards showcasing talent and maximizing their monetization,” that statement continued.
A glance at Triller’s Discover Music page shows that there are now few official music options available after the takedowns, and the promoted new releases and top picks are largely artists with no label affiliation. The only traces left of some label-signed artists are available through searching “OG Sounds,” which are typically user-created soundtracks like remixes that sometimes contain copyrighted material, or if a signed artist collaborated as a feature on a song released independently.
The public rift between Triller and the music business dates back to about 2020, when chairman and CEO of the National Music Publishers’ Association (NMPA) David Israelite criticized the app in an Instagram post, saying Triller needed to fully license its members works. “It’s a simple proposition – license songs before you use them,” he wrote.
In November of that year, Wixen Music Publishing filed a 15-page lawsuit against Triller, suing the company for $50 million dollars, stating in the complaint that Wixen felt encouraged when Triller’s CEO appeared to agree with the NMPA’s criticism that summer, but then, after months with no agreement reached, Wixen opted to file the lawsuit.
In the indictment, Wixen alleged Triller had “brazenly disregarded copyright law and committed willful and ongoing copyright infringement,” of its more than 1,000 song catalog. The lawsuit was dismissed in February 2021.
Eventually, in March 2021, Triller came to an agreement with the NMPA on behalf of its members.
Also in early 2021, Universal Music abruptly pulled its catalog from Triller, saying the app “shamefully withheld” artist payments. A source familiar with the matter told Billboard at the time that the payments UMG claims Triller is withholding went back several months. Three months later, the two companies announced a new, worldwide licensing agreement, spanning recorded music and publishing and restoring the UMG catalog to the app.
This August, Timbaland and Swizz Beatz also sued Triller for failing to make payments due on the sale of their popular Verzuz livestream series the year prior. They claimed the platform still owed them $28 million from the deal 18 months later. That lawsuit was settled in September.
Outside of music, there have been other claims against Triller for allegedly failing to make owed payments. Boxing journalist Dan Rafael reported that Triller had not fully paid several fighters and crew members from a May 2022 fight. In August, the Washington Post reported that Triller “promised millions to Black creators” to use the app as part of a paid influencer program, but “nearly a year after…its payments to many creators have been erratic — and in some cases, nonexistent.” In September, it was also sued by a smartphone app consulting firm that said it was owed more than $132,000 in unpaid fees.
Over the past two years, Triller has repeatedly announced plans to go public but has so far failed to do so — initially through the formerly-popular ‘SPAC’ merger process, and then in June this year filed paperwork with the U.S. Securities and Exchange Commission indicating that it plans to take a more traditional IPO route. In late September, the company announced it had secured $310 million from Luxembourg-based private alternative investment group for a 36-month term following a public listing of Triller’s common stock and would aim for a public listing by early in the fourth fiscal quarter (October-December).
MILAN — Warner Music Group has hired Pico Cibelli, a Sony Music Italy executive involved in the global breakthrough of rock band Måneskin, to helm its Italian label.
Cibelli, who will be based in Milan, will take over as president of Warner Music Italy, which Marco Alboni led for nine years. Cibelli will start in the role “in the near future” and report to Simon Robson, president of international, recorded music for Warner Music Group, the label said in a press release.
Cibelli spent more than a decade at Sony Music Italy, where he worked in A&R and helped develop the company’s frontline domestic artists. According to Italian media reports, Cibelli’s early involvement with breaking Måneskin could have played a major role in Warner’s decision. While at Sony, he was instrumental in hiring A&R Fabrizio Ferraguzzo, who has acted as Måneskin’s manager since June 2021.
Before joining Sony in 2011, Cibelli spent 10 years at Universal Music Group, first as television marketing manager and dance music A&R, then as A&R manager. Cibelli previously worked in an independent, family-run record store; as a DJ/producer; and later as an executive at local independent distributors Dig It International and Self Distribuzione.
The announcement of Cibelli’s appointment comes in a week when Warner artists hold two spots on Italy’s Top 10 album charts: Trenches Baby by Milan-based trapper Rondodasosa, whom Alboni signed, and The Beatles Songbook from veteran singer Mina.
“The success of artists such as Måneskin,” Cibelli said in a Warner Music press release, “has shown that Italian artists can take the world by storm, something we’ll see more of in the years ahead.”
Robson, in a statement, said that Cibelli “has a proven track record of developing artists and maximizing their potential.”
As a source of domestic talent, Italy is one of the strongest markets in the world. In 2021, Italian acts accounted for 76 % of the annual Album Top 100 compiled by FIMI, the local federation for the recorded music industry with which major companies and some local independent labels are affiliated. The Italian music market regained the No. 10 spot in the world in 2021, according to FIMI, showing an 18.33% increase from 2020 and a turnover of 153 million euros ($170.8 million) in the first half of 2022, with digital sales accounting for 83% (revenues from subscription streaming rose by 13.7%).
Alboni has not indicated where he is heading next, saying only on his LinkedIn page that he will soon start a new job as a music industry executive. He has worked as an artist manager and had prior stints with EMI Music Italy, PolyGram and Virgin Music Italy before being appointed Warner Italy’s chairman and CEO in 2013 when WMG acquired EMI Music Italy.
Warner Music Group’s double-digit fourth quarter revenue growth served as the capstone in chief executive Stephen Cooper‘s long-term growth strategy, and is a signal more growth to come, Cooper said on Tuesday.
YouTube’s former chief business officer, Robert Kyncl, will replace Cooper as WMG’s new CEO on Jan. 1, though Kyncl will share the top duties with Cooper for his first month.
Cooper’s 12-year-tenure at WMG has been marked by an early embrace of digital streaming, major expansion into markets in Asia, the Middle East and Africa, and taking the company public roughly two-and-a-half years ago, among other things.
“I’m very proud of the progress we’ve made over the past 10 years,” Cooper said on a call with analysts Tuesday. “As I look out on the next 10 years, I believe we’re at the doorstep of a new golden age of music. As the ecosystem becomes more complex and exciting new business models emerge, our role as the connective tissue between artists and fans will only become more prominent and important.”
WMG reported quarterly revenues rose 16% at constant currency to $1.5 billion in the fiscal fourth quarter ended Sept. 30, with solid growth across all business lines, including a 39% and a 48% jump in digital and performance revenues respectively. Investors welcomed the news, pushing Warner’s stock up 15.2% to $31.08 as of 10:30 a.m. in New York.
Cooper said he sees the company’s future momentum coming from continued growth in the number and price of streaming subscriptions, penetrating deeper into new emerging markets and investing more in new digital technologies.
WMG now has partnerships with more than 200 streaming services and operates in 70 countries around the world. While executives decline to put a number on how much WMG may make from recent subscription price hikes by Apple Music and Deezer, they said they expect it to result in other streaming companies raising prices.
“I’ve consistently told you that streaming revenue would continue to have significant runway, that we would have price increases and ongoing subscriber growth, and that emerging platforms would continue to expand,” Cooper said. “We’re now seeing all these come to fruition.”
WMG’s annualized revenue from emerging streaming platforms, include deals like the recent one reached with Meta, topped $370 million this quarter, Cooper said.
The fourth quarter saw big releases Lizzo, whose album Special was her first to hit No. 1 on Billboard’s Top Album Sales chart, as well strong carry-over sucess from some of WMG’s superstars like Ed Sheeran, Dua Lipa and Silk Sonic.
The company’s pipeline remains strong, Cooper said, with first quarter releases expected from Paramore, Aya Nakamura, Cardi B, Roddy Ricch and others.
However, Cooper said he expects the outsized monetary impact of hit singles and albums to continue to decrease in the coming years as the company works with talent in more geographic markets and diversifies its revenue streams.
“As we’ve broadened and deepened our artist roster and prioritized a global approach to domestic music, our revenue composition has evolved,” Cooper said. “A decade ago, our top 5 artists generated over 15% of our recorded music physical and digital revenue. In 2022, they generated just over 5%.”
One new geographic market where Cooper said WMG plans to expand is in Eastern Europe. In recent months, WMG invested in the Polish concert and festival promoter BIG Idea, the Serbian record company Mascom Records, and participated in launching OUT OF ORDER, a new label for Eastern European artists.
Warner Music Group, helped by digital revenue growth across recorded music and publishing, reported quarterly revenues rose 16% at constant currency (9% as reported) to $1.5 billion in the fiscal fourth quarter ended Sept. 30, the company announced Tuesday (Nov. 22). Adjusted earnings before interest, taxes, amortization and depreciation (EBITDA) grew by 16% to $276 million.
In his final quarterly earnings after 12 years as Warner Music’s chief executive, Steve Cooper said, “Against the backdrop of a challenging macro environment, we once again proved music’s resilience, with new commercial opportunities emerging all the time. We’re very well positioned for long-term creative success, and continued top and bottom line growth. We’re excited to have Robert Kyncl joining next year as WMG’s new CEO, as we enter the next dynamic phase of our evolution.”
WMG’s share price edged slightly lower in pre-market trading, down 0.88% to $26.98 on Tuesday at 8:19 a.m. New York time. Warner Music executives will discuss the company’s quarterly and full year results on a call with analysts at 8:30 a.m. ET.
Digital revenue grew 12.3% at constant currency or 6.8% as reported to $989 million, including a $38 million settlement related to certain copyright infringement cases. Total streaming revenue increased by 8.9% at constant currency (3.5% as reported) due primarily to driven by music publishing streaming revenue, which rose by 37.0% at constant currency (or 29.8% as reported).
Recorded music streaming revenue increased by 4.7% at constant currency, but decreased by 0.4% as reported. Digital’s share of total revenue comprised 66.1%, compared to 67.3% in the prior-year quarter, due to the double-digit growth of recorded music artist services and expanded-rights and licensing revenue.
Music publishing revenue improved 32.3% at a constant currency (23.9% as reported) to $254 million on the strength of digital and performance revenue. Digital revenues jumped 39.5% at constant currency (32.5% as reported) to $159 million. Streaming revenue increased 37.0% in constant currency (29.8% as reported) helped by streaming services and new digital deals.
In WMG’s recorded music segment, revenues rose 13.1% at constant currency (6.1% as reported) to $1.25 billion. Expanded rights revenue improved 33% to $204 million at constant currency (21.4% as reported) due to an increase in concert promotion revenue following the disruption of the touring business in 2021.
Physical revenue of $123 million was up 6% at constant currency but down 3.1% as reported, primarily due to volatility in exchange rates that offset higher vinyl sales and strong sales in Japan. Digital revenues of $830 million rose 8.1% in constant currency (up 2.9% as reported), and now represents 66.7% of total recorded music revenue compared to 68.9% in the prior-year quarter.
Music publishing contributed nearly 17% of overall company revenues in the quarter, up slightly from the year-ago quarter when music publishing made up 15% of overall revenues. Recorded music revenue contributed 83% of overall revenues in the quarter, down slightly from the year-ago quarter when recorded music revenues comprised 85% of overall company revenues.