After a couple of sub-optimal quarters, Warner Music Group posted strong results on Tuesday morning, giving the company’s stock a healthy 5% bump following the announcement. The company’s stock rose as high as $33.29.
Revenue for the quarter, which ended June 30, was up 9 percent (10 percent in constant currency) to $1.56 billion, powered by a 7.8 percent bump in recorded music and a 5.6 percent increase in digital revenue, which includes a 6.3 percent boost in streaming revenue. Music publishing revenue was up a big 15.5 percent.
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Ed Sheeran, Linkin Park and Melanie Martinez were among the quarter’s top releases, according to the announcement.
“Our third-quarter results were driven by a wide diversity of music, and our strength came from many different territories, labels, and revenue lines,” said CEO Robert Kyncl. “We succeeded with artists and songwriters across the spectrum of genres and generations, with both new releases and catalog projects.”
He also noted the company’s recent deal with TikTok — which remains among the strongest sources for music — and praised the recent rise in subscription prices from streaming services.
“Last month, Tidal, YouTube and Spotify all followed Apple, Amazon and Deezer by upping their prices,” he said. “This is the fiscally responsible thing to do – for themselves and for the creative community. I’d like to thank them all for taking this important step.
“Back in March, I said that if we just adjusted for inflation since 2011 – the year that music streaming was introduced in the U.S. – the price of a monthly music subscription in the US should be $13.25 today. I’d like to point out that in 2011, the price of the Standard Netflix plan was $7.99. It has since increased to $15.49 today. If the monthly price of a music subscription had gone up by the same proportion, it would have increased from $9.99 – where it was in 2011 – to $19.37 today. Let’s remember that music subscription services give you access to all the music ever released, and a continuously growing library, for roughly the price of a single CD.”
He also spoke at length about the importance of a positive business model around AI.
“As we turn to AI, I’d like to point out, we have a long history of working together with distribution platforms to establish licensing models that drive growth and innovation. For the last 15 years, music companies and distribution platforms have partnered to grow User Generated Content as a multi-billion-dollar revenue stream for artists and songwriters. Today, there are obvious similarities with AI.
“Working with our artists and songwriters, we are leaning in, moving fast, and working with a network of partners, including both generative AI engines and distribution platforms,” he concluded. “AI is unquestionably one of the most transformative forces in human history. Nonetheless, this technology shift is more familiar terrain than first meets the eye. Like many technologies before, it presents massive opportunities for human creativity and innovation.”
Chief financial officer Eric Levin noted “solid growth across key metrics which give us increased confidence in our full-year margin and operating cash flow targets. Concluded the executive: “The market’s adoption of subscription price increases, combined with the ongoing evolution of our key partnerships, gives us tremendous optimism for the future of streaming growth.”
Kyncl added to the outlook, saying: “We expect our momentum to build, led by our extraordinary music and inventive campaigns, as well as improving macro and industry trends. We continue to invest in new creative talent, and evolve our expertise and resources, while collaborating with partners across the entertainment economy to drive long-term success.”
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