Business news labels and editors
By Chris Cooke | Posted on Thursday, October 28, 2021
Universal Music released its quarterly financial report yesterday. It was pretty much the same as every other quarterly financial report from the majors these days – you know, “woo, look at us, we’re doing so well on the streaming boom, aren’t we- are we not smart? “
Except that this was Universal Music’s first financial report as a stand-alone, directly traded company, which heightened interest in what the major had to say. It also meant that we got a bit more information about what’s going on at the music company compared to when its stats were rolled up into a parent company’s quarterly reports.
In summary, “woo, look at us, we’re doing so well on the streaming boom, aren’t we smart?” »The turnover for the third quarter of 2021 is up 16.1% over one year to 2.15 billion euros. Meanwhile, total profit (before taxes and interest and all that jazz) was up 12.1% year-over-year to € 426 million. How very clever.
In terms of breakdown, recorded music revenues are up 15.5% year on year to 1.71 billion euros. Subscription streaming continues to fuel this growth, although – echoing Spotify’s latest financial statement – Universal has also reported that revenue from ad-supported streaming is growing decently. And physical revenue was also up 8.9%, thanks to the ongoing vinyl revival and some good times straight to fans.
Universal’s music publishing business also had a good quarter, with revenues up 19.8% to € 363 million, despite the song side of the industry being much more affected by the COVID pandemic. The major said increased digital revenue, the timing of some of the company’s royalty distributions, and recent catalog expansions from Universal Music Publishing have all contributed to that growth.
The secret to all this success? Well, in his statement to investors, Universal Music boss Lucian Grainge said it started with all of the great music created by the talented artists and songwriters that the mainstream work with. But it also took the hard work and investment of companies like, you know, Universal Music.
After all, Grainge added, with 60,000 new tracks uploaded to Spotify every day, smart marketing is key to standing out from all the noise. Just like the clever marketing undertaken by the many Universal labels. Which is true, of course, especially when it comes to new artists and new releases Universal is launching into the world.
Although, when it comes to the vast catalog that is now the foundation of companies like Universal – it has “the most comprehensive and broadest catalog in the world,” Grainge boasted yesterday – perhaps the secret to all this success is a little different.
Perhaps with the very large catalog, all of this success has really been achieved by the great music created by talented artists and songwriters the major works, and Universal Music sitting on the sidelines waiting for a company like Spotify is coming with a business model that turns all that old music into cash.
Certainly, labels have had to authorize streaming services, digitize their recordings and reinvent the way they market their catalogs. But really, the surge in the value of early music is a happy quirk of a business model created within the digital sector, and where the logistical and transactional barriers of catalog mining are removed.
Which, of course, means that while all of these growth numbers should appeal to investment types, they will only increase the calls within parts of the wider music community for a larger chunk of this growing value of catalog records be shared with the talented artists who created them, most of whom are stuck in bad record deals by paying physical era royalties and applying physical era deductions.
Not that Universal Music has shown any willingness to move in any way in this area to date, although its main rival has made a few moves to appear more friendly with the artists. Although it has just signed up as the first corporate sponsor of WIPO’s new Creators Initiative which “aims to ensure that creators around the world are recognized and fairly rewarded for their work by increasing knowledge and awareness of their intellectual property rights ”. So that’s cool.
Presumably, this won’t include too many guides or videos explaining proposed copyright reforms that would allow artists to seize a larger share of the funds generated by their newly lucrative catalog recordings. But whatever, look at all this revenue growth and all these nice profits. Well done Universal Music! Look at you, you’re doing so well on the back of the streaming boom, aren’t you smart?