Spotify’s next round of licensing talks with major music companies will be an interesting time for modern businesses.
As MBW recently reported, Spotify This year, the company will report an annual operating profit for the first time, and it’s no small amount. Led by CEO Daniel EkSpotify expected to hit record operating income of $1 in fiscal 2019 US$1.5 billion 2024.
This will make it possible to make any future requests Spotify Reduce the percentage of revenue it pays music copyright holder When it comes to royalties, it’s a more difficult question.
There is still a long way to go until 2017 Spotify Convince the recorded music business to accept a lower royalty share of streaming’s pro-rata net revenue. (It is understood that labels and distributors now share a 52% A prorated portion of Spotify’s net revenues; prior to the 2017 transaction, they received 55%.)
The then-CFO of Spotify explained how to reduce the royalty rate, Barry McCarthy, Said in 2018, “Record labels are acting in their own self-interest. The economic challenges facing Spotify profit structure”.
Six years since that announcement, Spotify is no longer “Financial difficulties”… but it yes Still keen to improve its profit margins.
Earlier this year, the streamer began controversially paying American songwriters/publishers “bundling” Machinery usage rates; estimated savings point About US$150 million Annual royalties.
The above-mentioned “bundling” move caused widespread protests in the industry music publishing community (Not to mention the lawsuit from MLC, which is seeking to reverse Spotify’s “bundled” royalty switch).
at the same time, Spotify The continued push into its podcast and audiobook businesses has led to concerns in the music industry that these “talk” formats could cannibalize the service’s listening share and, ultimately, royalty payouts.
All this is important background to the new revelation: Spotify salaried Warner Music Groupthe third largest major music company, ca. US$1.16 billion Royalty income from recorded music and publishing for the 12 months to end-September 2024.
We know this thanks to the data contained in WMG Annual SEC filing shows Spotify’s contributions 18% Warner’s total revenue (equivalent to Dollar $6.426 billion) in its most recent financial year.
Youtube It is Warner’s second largest partner, contributing 12% Its annual income is equivalent to $771 millionand Apple contributed 11%equivalent to $707 million.
In general, Spotify, YouTube and Apple contribute 41% Warner Music Group’s revenue. (WMG specifically mentioned these three companies in its 10K filing because they each accounted for more than 10% its annual income.
Spotify salaried Warner About $1.09 billion Royalties will increase in fiscal 2023, based on calculations based on previous filings with the SEC.
interestingly, Spotify Total payment to Warner Music Group The latter’s revenue in the most recent fiscal year was only slightly more than the amount Spotify executives/former executives have absorbed through cashing out of company stock so far in 2024.
As MBW reported earlier today (November 27), Spotify executives (and former executives), including co-founder Daniel Ek and Martin Lorensonhas been collectively realized $1.1 billion Year-to-date spot inventory.
Spotify 18% Contribution to Warner Music Group revenue is broadly consistent with streaming contribution to Warner Music Group revenue Part of Universal Music Group Equivalent numbers.
In its annual financial report, UMG, like WMG, lists any contributions exceeding 10% Annual income (including music publishing and recorded music).
Universal MG’s The latest annual report, covering 2023, reads: “2023, UMG have 3 customers Each individually accounts for more than 10% of total revenue (3 customers in 2022) and accounts for 19%, 11% and 10% respectively…”
MBW hypothesis 19% Contributors are Spotifyfollowed by Youtube exist 11%, and apple exist 10%.
Universal Music Group’Total revenue in 2023 will be $12.01 billion (€11.108 billion).
Therefore, MBW estimates Spotify salaried universal music group About US$2.28 billion 2023 (i.e. 19% of $12 billion).global music business
