After trending down, down, down over the last 16 years, recorded music revenues have been on the rise. Universal Music Group’s earnings release on Thursday was further proof the bottom is in the rear-view mirror.
Universal Music Group, the world’s largest recorded music and music publishing company, had double-digit revenue growth in 2017, following the trend also seen in Sony Music’s and Warner Music Group’s latest quarter. Now, with Spotify past 70 million subscribers and Apple Music with more than 36 million customers, streaming services are producing gains that more than cover declines in digital downloads and CD sales.
In 2017 UMG’s revenue across all divisions was €5.7 billion ($7.1 billion), up 10 percent (at constant currency or 7.7 percent without adjusting for currency fluctuations). Recorded music revenues grew by 11 percent while the music publishing division posted 10 percent growth. UMG’s merchandising and “other” revenues were down 7 percent because of lower touring activity. Earnings (before interest, depreciation, taxes and amortization) across all of UMG’s divisions was up 16 percent to $1 billion.
The earnings release singled out new releases by Taylor Swift, Kendrick Lamar, and Drake. A handful of 2016 releases also sold well in 2017: The Weeknd’s Starboy, the “Despacito” single from Luis Fonsi and the 50th Anniversary edition of Sgt. Pepper’s Lonely Hearts Club Band by the Beatles, and the soundtracks to “Moana” and “La La Land.”
UMG’s results were in line with trends seen in digital music. In the U.S. the number of audio streams grew over 50 percent and total recorded music consumption — as best can be squeezed into a single metric — rose 13 percent, according to BuzzAngle. Of course, these figures include little money from AM/FM radio because stations pay only for digital streams, not over-the-air spins.
The picture has improved thanks to streaming growth and the $1.9 billion acquisition of EMI’s recorded group in September 2012. With digital sales unchanged, UMG’s total revenue had crept up to €4.6 billion in 2014 from €4.5 billion in 2012, the year UMG acquired EMI Music’s recorded music assets. By then streaming services had started to go mainstream, and revenue rose to €5.1 billion in 2015 and again to €5.3 billion in 2016.
UMG’s parent company, Vivendi SA, grew revenue 15 percent to $15.5 billion in the calendar year. Vivendi is a French conglomerate with assets across media types: Canal+ Group television division; global advertising company Havas; mobile video game publisher Gameloft; Vivendi Village, an incubator that includes companies in ticketing, festivals and sports; and some other, smaller initiatives.
Record companies and music publishers around the world are experiencing growth spurts. Sony Music’s latest earnings also showed healthy, streaming-led growth; its earnings in the previous three quarters were up 22 percent to $1.93 billion. WMG’s revenue in the latest quarter jumped 14 percent $1.05 billion. Note the reporting periods given for the three music companies differ because each has a different fiscal year. UMG is the only one of the three majors to use a calendar year as its fiscal year.