Warner Music Group today reported quarterly earnings that beat analysts’ revenue expectations US$1.63 billion its fourth fiscal quarter (the third calendar quarter).
But the company’s subscription streaming results offer a ray of optimism to any observer skeptical of the major music company’s streaming revenue growth trajectory through 2024.
As we reported this morning, WMG revealed today (November 21) that it had achieved its fourth consecutive quarter of double-digit year-over-year subscription streaming subscriptions in the three months to the end of September on a normalized basis increase.
The company’s subscription streaming revenue grows Annual growth of 10.6% On a standardized constant currency basis $645 mega Calendar Season 3 (WMG’s fourth season).
WMG CEO speaks on today’s company earnings call Robert Kinkel Be optimistic about the future of subscription music streaming.
“The formula for streaming growth is strong with subscriber growth and the opportunity for wholesale price increases,” he noted, adding that “there’s a lot of room for acceleration.”
Kyncl added: “Penetration in mature markets is expected to increase from around 35% today to nearly 50% by 2030, while penetration in emerging markets will grow from single digits to the low double digits over the same time period. numbers, so music user growth should remain healthy in the coming years.
“For reference, in the United States, cable TV penetration is a little over 50% and SVOD penetration is close to 50%, which highlights that even in mature markets, music penetration is very low and there is still a lot of room for development.”
Brian CastellaniWMG’s chief financial officer also envisioned more growth for WMG in the future… which he noted will happen for many years to come.
“Looking ahead, the strong momentum we experienced in the fourth quarter of 2024 will continue into 2025,” Castellani said. “Subscription streaming continues to show healthy underlying trends, and we expect [normalized] High single-digit growth in FY25 Many years of foundation”.
Elsewhere on the call, Kyncl explained in his opening remarks that Warner Music Group has “reimagined” its organization this year “based on the principles of simplicity and focus driving greater intensity and impact.”
He added: “We have done a lot of important work that has laid the foundation for our success today … and will help us be more profitable in the future.”
Kyncl said those efforts include strengthening the company’s presence in the U.S., the world’s largest recorded music market, and “transforming[ing] A simpler, flatter organizational structure…creates a faster and more direct pipeline for local talents to enter the global stage.”
“We have done a lot of important work that has laid the foundation for our success today.”
Robert Kinkel
Kyncl added: “We have restructured key business lines such as Table of contents and distribute to achieve greater global impact.
“We continue to look for ways to increase coordination between our recorded music and music publishing divisions, and we have resolved a number of infrastructure issues that will now allow our technology teams to focus more on offense.”
Kyncl also explained that Warner Music Group’s “focus on efficiency” this year has “freed up capital,” allowing Warner Music Group to “increase [its] Invest in growth opportunities.”
Kyncl added: “As we previously committed, we have increased our A&R investment by approximately 11% In fiscal 2024, we will continue to sign new artists and songwriters and acquire intellectual property and catalog while driving our digital transformation.
As part of its investment strategy, Kyncl explained that WMG will “consider Bolt-on acquisitions Accelerate our progress while meeting our return thresholds.”
In addition to these investment opportunities, Kyncl revealed that WMG’s board of directors has also approved an investment of up to $100 million.
“This plan demonstrates our confidence in the value of the company and our optimism about the path forward,” Kyncl said.
Here are three more things we learned on Warner’s earnings call today…
1. Elliot Grainge’s appointment as CEO of Atlantic Music Group was a ‘seamlessly executed transition’
In his opening remarks, Robert Kyncl discussed Atlantic Music Group’s recent leadership shake-up, which included 10K Projects founder Elliot Grange Promoted to CEO on October 1.
“While this transition was never easy, it was a seamlessly executed handover,” Kyncl said of the transfer of power to Grainge. AMG was previously led by Chairman Julie Greenwald, who resigned from the company’s leadership at the end of September and will remain as an advisor until January 2025.
According to Kyncl, the revamped AMG leadership team “achieved best-in-class results for priority projects while introducing new ideas, developing dynamic executives and attracting exciting new artists.”
He added: “Elliott and his team have an impressive ability to identify extraordinary talent across multiple genres and find new ways to help both established and emerging artists stand out.”
Kyncl also praised Atlantic Music Group’s “digitally native approach,” which he elaborated on during the Q&A portion of the call. He was answering from Benjamin Swinburne What “works well” in Morgan Stanley’s 10K Projects “applies to Atlantic’s larger business.”
“When you think about the music industry today, there are obviously a lot of different independent music companies, and many of them claim to be very good at a lot of things. I would say you have to take everything with a grain of salt.
“But one of them [labels] Did it [well] It’s 10K. I know this to be true from the numbers they had before [to joining WMG] and the numbers they delivered in their first year under WMG. [10K has achieved] Both in terms of revenue and profits, we have achieved amazing growth.
“Elliott and his team have an impressive ability to identify extraordinary talent across multiple genres and find new ways to help both established and emerging artists stand out.”
He added: “The skills they bring are not just Elliotand his team are very digital. Today, the vast majority of our revenue comes from streaming. Promotions mostly occur online. If you want to succeed in the music industry today and in the future, you must be a digital native. It’s important to the company’s DNA, and they’ve done that.
Atlantic Music Group’s recent successes highlighted by Kyncl include easycooperation with Korean superstars Rose and Bruno Mars
“Bruno Mars is the greatest artist in the world,” Kinkel noted. “He has the biggest reach – over 130 million monthly listeners on Spotify.”
Other recent successes that Kyncl highlighted for The Atlantic include Coldplay’s recent No. 1 album in the U.S., and the album’s “influential remixes.” boy Charli XCX’s albums have been nominated for seven Grammy Awards, including Album of the Year and Record of the Year.
He also pointed to AMG’s “next generation of talent,” including Altmas Whose blow? I love the way you kiss me It has been played 1 billion times and also features Forrest Frank and Jordan Adetunji, who recently received their first Grammy nominations.
2. Atlantic Records and Warner Records are the “important twin engines of growth” for Warner Music Group.
In addition to highlighting Atlantic’s success this year has seen Kyncl focus on another of the company’s flagship US brand groups, Warner Records, leader Aaron Beschuk and Tom Corson In Los Angeles.
Two labels, AMG and Warner Music, are “very important” according to Kyncl twin engine Growth within the global Warner organization”.
“At Warner Records, the team’s commitment to artist development is driving hits and developing superstars,” Kinkel told analysts on a conference call today.
“Under the leadership of Aaron Bay-Schuck and Tom Corson, the brand’s market share reached a new peak this year, ranking third among products currently released in the United States,” Kyncl added.
“I can’t stress enough how creatively successful Warner Records and Atlantic Records are seeing this.”
Some of the breakout Warner recording stars highlighted by Kyncl include Teddy Swaims (pictured), Benson Boone, Zach Bryan and NLE Choppa.
As Kyncl admitted during the conference call, Teddy Swims’ US No. 1 single, out of controlIt has spent 44 consecutive weeks in the top 10 of the Billboard Hot 100 chart, and both Swims and Benson Boone have been nominated for the upcoming Grammy Awards for Best New Artist.
According to Kyncl, NLE Choppa’s career income exceeded the 9 billion mark this year, “when he was already 22 years old.”
Kyncl also emphasized that Warner Records was “vital to the successful resurgence of icons such as Green Day, Cher and Linkin Park.”
“I can’t stress enough how creatively successful Warner Records and Atlantic Records have been,” he said.
3. “India will become an increasingly influential global force in the music industry.”
Warner Music Group has been engaged in significant M&A activity in India over the past few years, with Kyncl telling analysts today that it believes in the region’s “huge global potential”.
Some of these investments include a recent minority stake in ticketing platform SkillBox and a strategic investment in JetSynthesys’ Global Music Junction in April. WMG also acquired Indian artist management and live events company E-Positive in October 2023, and acquired a majority stake in digital media and music company Divo in February last year.
Since the official launch of Warner Music India in March 2020, the company has also inked distribution deals with Bollywood major Tips Music and Punjabi music company Sky Digital India.
“With a population of 1.4 billion, India is more like a continent than a country,” Kyncl said by phone. He added: “It has the fifth-largest GDP but is still only the 14th-largest music market in the world.”
Kyncl believes that this gap will continue to shrink in the coming years, and “India will become an increasingly influential global force in the music industry.”
Kyncl added in his opening remarks: “The country has seen a significant increase in paying subscribers, by almost 40% since last year, but [the total number of subs is] Penetration rate is still below 2%” [of the total population].
He provided more insight into the 2% statistic later in the call, noting that the total number of subscribers in India is currently “around 15 million,” but noting that when you consider that “there are many more out there,” There is still a lot of room for growth.” More than 100 million households in India subscribe to television services.
Elsewhere on the call, Kyncl revealed Warner has seen “impressive revenue growth” [of] India will exceed 100% by fiscal year 2024.” “The bottom line is that as India continues to grow explosively, everything we have done means we are well-positioned to continue to capture market share,” he added.
Evidence of the explosive growth comes from statistics released by Luminate in January, which showed the market saw the largest year-on-year growth in total annual on-demand music streams of any country last year.
As MBW reported in January, if annual streaming volumes grow us As many expect, growth will slow in 2024 – but India This year, India will successfully maintain the year-on-year streaming growth rate of 2023 – India may become the world’s largest music streaming region by volume in 2024.
Kyncl noted that WMG is “helping Indian stars like Diljit Dosanjh [pictured, inset] and King have attracted new audiences while building a loyal Indian fan base for global acts such as Coldplay and Dua Lipa, both of whom will be touring there in the coming months. “global music business
