Higher prices for music streaming platforms, which kick off with Apple Music’s recently unveiled price hike, have been welcomed by publicly traded label giant Universal Music Group, which reported its third-quarter results Thursday.
“She [Apple] strongly believe in the value of music and by implementing these price changes, artists and songwriters will earn more for streaming their music,” Michael Nash, executive vp of digital strategy at UMG, told analysts after the release of the financial results. .
During the last quarter, UMG reported total revenues were up 13.3 percent to $2.65 billion, while streaming and subscription revenues were up 7.7 percent.
UMG artists share in the royalties when their music is played on Apple Music, Spotify and other music streaming sites. Apple Music has announced that it will increase the price of its single subscription by $1 per month to $10.99, its family subscription by $2 per month to $16.99 per month, and its annual subscription to $109 per year, a increase of $10, in part due to higher music licensing fees.
Nash argued that the value proposition for music streaming services is “extremely compelling,” even adding that Apple Music makes its own pricing decisions for consumers independently.
While analysts searched for signposts pointing to the future of the global music business, UMG executives also responded to rival music streaming giant Spotify, which reported 195 million paid subscribers in the third quarter of 2022, up from 188 million paid or premium subscribers in the previous year. quarter. and beyond expectations.
“We are encouraged to see them achieve growth, it’s a great sign for the industry,” Nash said of the Spotify results, which were revealed on Tuesday. At the same time, he added that Spotify was only part of the music label’s total subscription revenues worldwide.
During the analyst talk, UMG executives ignored speculation that the market share of streaming music from music label giants, including Sony and Warner Music Group, was declining as they maintained that market reach remained stable as a large number of much smaller music makers released their product. more and more online. only for a small audience. The music giant said the top-selling artists in the quarter were BTS, BLACKPINK, Ado, INI and Morgan Wallen.
Representing top artists such as The Weeknd, Taylor Swift and Drake, UMG was also hit in the third quarter by a broader downturn in digital advertising in the industry amid recession and inflationary pressures on consumers. But Lucian Grainge UMG’s chairman and CEO said in prepared remarks that the “slower growth” in ad-supported streaming revenue during the last financial quarter was offset by growth in other revenue streams, including subscriptions, live touring and merchandising.
Despite that stumbling block, Boyd Muir, UMG’s executive vp, CFO and president of operations, added during the analyst talk that digital advertising had a long runway for the music label. “We are confident in the medium and long-term growth of our ad-supported business as we appropriately adapt certain deals in the social space and bring new digital partners on board,” Muir told analysts.