Boyd Muir, chief operating officer and chief financial officer of Universal Music Group, expects “super premium” subscription tiers to begin appearing in 2025, and he expects 20% to 30% of paying music subscribers to eventually sign up.
Next year, “you’re going to see the first of these products,” Muir told the audience at the conference. Morgan StanleyThe European Technology, Media and Telecommunications Conference is taking place in Barcelona this week.
Although the term “Super-Premium” is used specifically SpotifyMuir plans to launch a new “luxury” subscription package, and other digital service providers (DSPs) are planning their own versions of subscription packages aimed at attracting superfans willing to pay more for music subscriptions in exchange for better music experience.
“We’re talking to all the platforms about what their premium product might look like. They’re all a little different. The types of things we’re talking about are early releases of music, things like big events around the music, things like chat rooms[s] Between artists and fans and collectibles,” Muir said.
Muir says Spotify’s own Super-Premium plan might actually be called “Music Pro,” seemingly confirming rumors in the media earlier this year. While many rumors have focused on Music Pro being an add-on option for high-fidelity audio for Spotify users, we learned from Spotify CEO Daniel Ek This new subscription tier may include even more content.
Super-Premium (or Music Pro, as the case may be) will be “a deluxe version of Spotify, with all the benefits of the regular Spotify version, but with more control, higher overall quality, and “some more I don’t have yet” Be prepared to talk about things,” Ek said earlier this year.
Muir made it clear that he expects similar functionality to be rolled out by most music streaming services.
“Once you enter the market, you have to make a competitive offer,” he said.
Muir expects that in terms of UMG’s revenue, the company will benefit “proportionately” from the higher prices charged in this new tier. He expected 20% and 30% of paid music subscribers will sign up within two to three years of the new tier’s launch.
“We do a lot of consumer research on this because it’s very important to us. And… all the platforms are doing their own research, and it’s all conflicting with each other. [in] scope [of] Between 20% and 30% of existing subscribers today,” he said.
It is worth noting that he said this is the proportion of listeners who are willing to pay twice As much as a subscription offers additional benefits. Although Spotify’s Ek said the Super-Premium tier will cost a lot $5 More per month than the premium level (or $16.99 Monthly in the U.S. at current prices), Muir’s assessment shows price points closer to $22 or $24 Monthly costs for these luxury levels are possible in the United States.
Here are three more things we learned from Boyd Muir at the Morgan Stanley conference:
UMG has 1,300 direct-to-consumer stores – huge profits
UMG doesn’t just rely on music streaming services to make money for their super fans. At the company’s most recent Capital Markets Day event last September, the company’s leadership highlighted its growing focus on direct-to-consumer (D2C) operations.
So far, the strategy has proven very successful. Executive Vice President, Digital Strategy, UMG Michael Nashindicating that the company’s D2C business has seen 33% compound annual growth rate (CAGR), making it one of UMG’s fastest growing business units.
Muir expanded on this point during this week’s Morgan Stanley conference, reporting that UMG has now 1,300 D2C stores, such as taylorswift.com, target music fans directly.
“We’ve been quietly building this as a revenue stream for a few years,” Muir said.
“As we build products and connect fans to artists and products, the demand is staggering.”
Boyd Muir, Universal Music Group
He noted that the customer base of these stores has grown to 50 million Headcount, measured as the number of people who have opted in to receive communications from UMG.
And since “there’s no such thing as liking one artist,” there’s a lot of potential for consumers to switch from one store to another.
D2C business is not only growing rapidly, but also has high profit margins. Although the profit from the tour is 8% arrive 10%the profit margin of music retailing is about 15%D2C profit scope is wider 25%Muir said.
But he pointed out that as the D2C business grows, these profits may not remain at such high levels because in the early stages, D2C has sold some “very high-priced products with very high demand.”
Nonetheless, he expects demand in the D2C space to remain strong.
“As we build products and connect fans to artists and products, the demand is staggering.”
The shift toward artist-focused payment models isn’t happening as quickly as Universal Music Group had hoped
Universal Music Group is undoubtedly the music industry’s leading company in driving changes in the payment model for streaming services.
Chairman and CEO, Universal Music Group Sir Lucian Grange is credited with creating “Artist-centered” to describe a new payment model – Broadly speaking – There is a greater emphasis on artists with the largest and most loyal fan bases and doing their best to bring listeners to music streaming services.
The artist-centric approach marks a significant departure from the scale-up model that DSPs have traditionally used to calculate royalties. Under the pro-rata model, each track of a song counts equally toward the royalty payout, regardless of whether the song comes from a popular artist with a loyal fan base or from a fraudulent track composed of noise or copyright-infringing material.
About a year ago, UMG took its first steps towards an artist-centric model by signing a deal with the France-based streaming service Diesel Start implementing an artist-centric payment model where artists will receive a larger share of royalties if they have a certain minimum number of listeners or are actively searched by listeners. Warner Music Group This was followed by an artist-centric model signing with Deezer, with royalties in France.
While UMG and others believe an artist-centric model could help stem the tide of streaming scams, some — e.g. believe CEO Denis Radgallery – Criticize this model to the detriment of new artists by making it harder for them to start making money from streaming.
“Fraud is a very real issue. For the benefit of our artists and songwriters, we will work very aggressively with all platforms to eliminate fraud to at least the greatest extent possible.
Boyd Muir, Universal Music Group
However, since the Deezer deal, we’ve seen little progress on the artist-focused model. (One exception may be Spotify’s changes to its payment model, which could be seen as a shift to a “semi-artist-centric” model, and its implementation at the beginning of this year of a new rule that requires a track to receive at least 1,000 Programs aired within the past 12 months are eligible for royalty payments.
At the Morgan Stanley conference, Muir acknowledged that the shift toward artist-centricity wasn’t happening as quickly as Universal Music Group had hoped.
“Do we want it to happen faster? Yes, we do because everything we do wants to happen as quickly as possible,” he said.
“Fraud is a very real issue. For the benefit of our artists and songwriters, we will work very aggressively with all platforms to eliminate fraud to at least the greatest extent possible.
Muir continued: “There are a lot of bad actors who need to be held accountable for their actions… This is something that all platforms are… nervous about, reputationally, when their subscribers are… [trying to] listen Lady Gaga But finding out it’s Gaaga and not the truly wonderful Lady Gaga herself? This is not a good customer experience.
Morgan Stanley analyst questions Ed Young Muir said UMG is seeing “resistance” among some DSPs moving toward an artist-centric model.
“I think there’s still some denial. “That doesn’t happen on our platform. “so [our] The effort is, ‘Okay, I’m sorry, but this is Lady Gaaga. You are this legendary platform and your reputation matters. Your customers matter.
“So there’s a little bit of…denial. But once the facts are out, there will be action – action will be taken.
UMG aims to overtake Sony to become the world’s largest music publisher
While Universal Music Group may be the world’s largest music label, it is not the world’s largest music publisher (i.e., the owner of recorded music).
This distinction belongs to sony musicwhose Sony Music Publishing The department owns some 5.5 million As of 2022, the number of songs accounts for more than half of all titles owned by the big three (Sony, Universal, and Warner).
“We don’t like this,” Muir said at the Morgan Stanley conference.
He said Universal Music Group has been closing in on Sony in terms of song ownership, and said the publishing team has “captured market share” and is “very close to Sony in terms of leadership.” I wouldn’t underestimate their ambition.
While Muir did not provide any specific figures, he said he was “certain that they [Sony] Can feel us coming.
Perhaps UMG’s pursuit of them has something to do with Sony’s high-profile acquisition spree this year, which saw the company snap up half of America’s publishing and master catalogues. Michael Jackson $750 million, $1.27 billion spent on recording and publishing rights Queenmusic. (Sony’s $400 million Buy pink floydThe catalog does not include publication rights.
On the publishing side, “hopefully we can continue to drive and outpace market growth,” Muir said.global music business
