Common Music Group revealed its This autumn and FY 2024 outcomes on Thursday (March 6), posting total revenues in FY 2024 (throughout recorded music, publishing, and extra) of EUR €11.834 billion (USD $12.81bn), up 7.6% YoY.
The corporate’s recorded music subscription revenues, in the meantime, hit EUR €4.624 billion yearly, up 9.1% YoY, which represented the equal of USD $5.00 billion, in accordance with common alternate charges for the 12 months as per IRS knowledge.
The agency’s adjusted EBITDA hit €2.661 billion ($2.88bn), up 13.8% YoY.
In his opening remarks on UMG’s earnings name on Thursday, Chairman and CEO Sir Lucian Grainge famous that UMG has “posted wholesome income and double-digit adjusted EBITDA progress for each 12 months since 2021, when UMG turned a stand-alone public firm”.
He added: “On the coronary heart of our success is, in fact, the inventive brilliance of our artists and songwriters. The worldwide consumption of the music of our artists and songwriters stays merely extraordinary. They’re shaping tradition throughout the complete globe.”
Grainge additionally defined on the corporate’s earnings name how “breaking new artists is key to [UMG’s] tradition”.
Added Grainge: “We’re very happy with it. All of our groups around the globe share a ardour for doing simply that. And in 2024, strategic funding in new expertise continued to supply outstanding outcomes.
“One highly effective reality we’re particularly happy with; UMG broke the 2 greatest breakthrough artists on the earth final 12 months: Sabrina Carpenter and Chappell Roan.”
Chappell Roan was named Finest New Artist on the Grammys final month. Grainge famous on the decision that “UMG’s artists and songwriters received a record-breaking whole of greater than 50 Grammys.”
Grainge devoted the second half of his opening assertion to the expansion methods outlined by UMG’s management workforce on the firm’s Capital Markets Day in September. In accordance with Grainge, the corporate is “already turning these methods into realities…” and highlighted three explicit initiatives on Thursday’s earnings name.
The primary is “working with [UMG’s] DSP companions to drive the thrilling new period of sustained progress we’re calling streaming 2.0”.
Second, is UMG’s deal with rising its artist and label companies enterprise, which, he stated, enhances the corporate’s frontline label enterprise and “gives a broad set of sources to a variety of artists, labels, and entrepreneurs.”
The third technique highlighted by Grainge on the decision was the enlargement of UMG’s world footprint by “partnering with native labels, creating native artists, and thru M&A.”
Grainge pointed to Virgin Music Group’s current strategic partnerships with Hungama Digital Media and RainLabs, that are based mostly in India and Ghana, respectively.
He additionally referenced Common Music Larger China’s strategic distribution settlement with impartial label Trendy Sky. UMG additionally lately signed an unique world settlement with Liu Huan, who Grainge famous, is “often known as the King of Chinese language Pop.”
In the meantime, highlighting Common”s current acquisition of a majority stake in Japan’s A-Sketch, Grainge defined that UMG can be “increasing [its] presence in established markets around the globe” the place “native repertoire and adjoining companies proceed to current thrilling progress alternatives.”
Sir Lucian Grainge, plus Boyd Muir, UMG’s Chief Working Officer and Chief Monetary Officer, and Michael Nash, Govt Vice President and Chief Digital Officer, have been grilled by analysts on the corporate’s earnings name on Thursday.
Right here’s what else was stated on the decision…
1. Sir Lucian Grainge says that streaming 2.0 ‘will construct on the big scale we’ve achieved up to now in streaming’s preliminary stage’
Common Music Group launched the idea of Streaming 2.0 on the firm’s Capital Markets Day for buyers in September. It was defined that for UMG, ‘Streaming 2.0’ represents a brand new period of digital music held on adjustments, together with:
- (a) Streaming subscription choices turning into ‘segmented’, with costlier choices for music ‘superfans’;
- (b) Subscription ARPU (common income per person) shifting upwards throughout music platforms, partly on account of the aforementioned ‘superfan’-targeted choices, and partly on account of future streaming worth rises.
Talking with analysts on Thursday’s earnings name, Grainge defined that Streaming 2.0 will “construct on the big scale we’ve achieved up to now in streaming’s preliminary stage”.
He added: “This subsequent stage of streaming will see it evolve right into a extra sustainable and rising artist-centric ecosystem that improves monetization and delivers nice experiences for followers.
“On the similar time, enhanced shopper acquisition methods will drive higher conversion by followers from free to paid. After which from paid on to tremendous premium tiers enabling us to phase and [improve] buyer worth at greater than ever ranges.”
“We’re extraordinarily inspired by this preliminary implementation of streaming 2.0.”
Sir Lucian Grainge
Grainge defined, nonetheless, that the “execution” of Streaming 2.0 “requires a extremely nuanced method and one which adapts to the precise traits of every particular person platform” together with “distinct subscriber base and clearly, the regional variations, tradition, language, kinds, genres, and so on.”
He instructed analysts he’s “delighted to report that [UMG’s] work to usher in streaming 2.0 is properly underway,” noting that UMG accomplished its first “main new DSP deal to include the important thing rules of the technique” by the tip of 2024. That first deal was with Amazon Music. A take care of Spotify adopted in February.
Grainge defined that these “agreements present for brand spanking new paid subscription tiers, the bundling of music and non-music content material and a richer audio and visible content material catalog that may profit artists, songwriters, platforms and customers alike”.
He added: “We’re extraordinarily inspired by this preliminary implementation of streaming 2.0, aligning our objectives with these of our platform companions, each the Spotify and Amazon offers are win-win initiatives that may ship significant progress and profit the complete music ecosystem.”
2. UMG is dedicated to being “the premier vacation spot for the business’s finest entrepreneurs and independents….”
One of many progress methods outlined by Sir Lucian Grainge throughout his opening remarks on Thursday’s name was what he known as “the rising focus [UMG’s] inserting on increasing our artist and label companies enterprise.”
Added Grainge: “The impartial companies area is very aggressive and a rising a part of the business. The explanation so many impartial music entrepreneurs actively search to accomplice with UMG, after they have extra alternate options than ever earlier than, is that we offer what they’re looking for; probably the most progressive creatives and the best sources to advance their artist careers and obtain their monetary objectives.
“We’re dedicated to making sure that UMG continues because the premier vacation spot for the business’s finest entrepreneurs and independents. In spite of everything, UMG’s core is a set of a few of the best labels in music that all the time began as impartial.
“And as we speak, we proceed to foster a tradition whose highest precedence is respect for artists and entrepreneurs.”
“By investing in companies like Downtown that may and do assist as we speak’s main music entrepreneurs, we are able to additionally assist to advocate for a complicated insurance policies and observe that may additional defend and develop the complete music system.”
Sir Lucian Grainge
Grainge identified an instance of the corporate’s “efforts on this path,” highlighting the information of Virgin Music Group’s settlement to accumulate Downtown Music Holdings for $775 million.
“We anticipate the deal to shut later this 12 months,” stated Grainge, “at which level Virgin Music Group and Downtown will provide a broadened and enhanced suite of companies to shoppers, together with digital and bodily distribution, launch advertising, enterprise intelligence, neighboring rights, synchronization, royalties and royalties administration”.
Added Grainge: “By investing in companies like Downtown that may and do assist as we speak’s main music entrepreneurs, we are able to additionally assist to advocate for superior insurance policies and observe that may additional defend and develop the complete music system.”
3. UMG spent over $1 billion on investments final 12 months. Count on ‘related funding ranges within the subsequent few years’.
Boyd Muir, UMG’s CFO & COO, revealed on the decision that Common spent simply over EUR €1 billion (USD $1.08bn) on investments in 2024, throughout each catalog and different acquisitions.
He supplied what he known as “a bit extra colour” on UMG’s investments final 12 months, noting that in 2024, the music firm spent EUR €266 million ($287.8m) on catalog acquisitions particularly, up from EUR €178 million ($192.6m) in 2023.
Muir additionally revealed on the decision UMG spent EUR €186 million ($201.29m) on royalty advance funds in 2024, in comparison with EUR €100 million ($108.22m) in 2023 (see under).
Muir added that UMG’s “catalog spending in 2024 included EUR €73 million from a beforehand disclosed 2023 deal that was in escrow till early 2024 in addition to the acquisition of the remaining stake in RS Group, amongst different objects”.
Common acquired a 70% stake within the recorded music catalog of Thailand’s RS Group for round USD $45 million (plus a possible ~$5m in bonus funds) in 2023.
As revealed by MBW in September, UMG acquired the remaining 30% of RS Group’s catalog for roughly USD $18 million, with a possible extra bonus charge of roughly USD $2 million. The whole sum spent by UMG to take full possession of the RS recordings portfolio was roughly USD $65-$70 million.
Muir famous on Thursday’s name that the rest of UMG’s 2024 funding spending “targeted largely on offers, which push ahead UMG’s strategic initiatives”.
Offers known as out by Muir included UMG’s majority acquisition of Nigeria-based file label Mavin, the undisclosed minority stake in Advanced Networks, $240 million funding in M&A automobile Chord, and the acquisition of the remaining stake in [PIAS].
In response to a query from Goldman Sachs‘ Lisa Yang in regards to the firm’s funding technique, and the way a lot it plans to spend yearly within the coming years, Muir confirmed: “It’s best to anticipate related funding ranges within the subsequent few years”.
Muir additionally defined that UMG is investing in “geographies” that are “evolving” and the place UMG sees “the consumption sample shifting in direction of paid subscription”.
Added Muir: “We’re our relative share in these geographies. We wish to be certain that we’re positioned in these markets at an identical degree to how we’re positioned within the extra advanced market. M&A is [how] we’ll pursue it.”
He added that UMG can be pursuing “M&A in relation to different strategic initiatives” and highlighted UMG’s funding in Advanced Networks as “taking [UMG] into the zone the place music meets tradition, meets commerce and e-commerce and having the connection with the superfan”.
4. Sir Lucian Grainge says that the place DsPS go geographically, UMG goes “with them hand-in-hand, investing in native expertise”.
Sir Lucian Grainge additionally weighed in on the reply to the query above about UMG’s funding technique.
He defined that the enlargement of licensed streaming globally and the supply of market-level knowledge have impacted the decision-making behind UMG’s M&A method in numerous markets.
“There’s a major story when it comes to what occurred up to now over the past three, 4, 5 many years insofar as numerous the markets and areas the place we’re investing are the place there was no funding [previously] as a result of there was huge piracy and there was no safety for copyright and IP”, stated Grainge.
He added: “So the place markets evolve by means of music within the cloud and digital distribution and world platforms like Amazon, Apple, Spotify, and so on; the place they go, we go along with them hand-in-hand, investing in native expertise.”
Commenting additional on the corporate’s geographic M&A method, Grainge continued: “There are some markets the place there are huge libraries and catalogs of labels that have been created many years in the past. We are able to really [direct] our M&A method to proceed to spend money on their enterprise because the markets [mature].
“And now with all the info, we’re capable of really establish precisely what the viewers and what the buyer really desires in these markets, whereas earlier than, we have been working an working blindfold when it comes to the path wherein we have been going.”
5. UMG’s analysis reveals that world music subscriptions grew simply over 9% in 2024.
UMG’s management workforce have been requested a pair of questions by Guggenheim Securities’ Michael Morris in regards to the tempo of Recorded Music subscription streaming income progress, and the progress being made on the rollout of superfan tiers at streaming platforms.
Michael Nash, UMG’s Govt VP & Chief Digital Officer, defined that UMG’s “up to date shopper analysis within the world subscription market tracks to the monetary outcomes” that UMG has simply reported.
As reported final week, the corporate’s recorded music subscription revenues hit EUR €4.624 billion yearly, up 9.1% YoY.
In the meantime, in This autumn 2024 (the three months to finish of December), UMG’s subscription streaming revenues from recorded music have been up 9.0% YoY, to EUR €1.227 billion (USD $1.33bn).
Added Nash: “Our analysis reveals that world subscriptions, which suggests the payers, grew simply over 9% in 2024. And when it comes to geographic combine, 45% of [the] present subscriber base is within the developed markets and 55% is now sitting within the high-growth markets, together with China.”
Nash added that the corporate sees “some foundation for much more optimism when it comes to the enlargement of the entire addressable market” for world subscriptions in “phrases of progress on superfan and on the super-premium tier”.
Nash additionally confirmed that UMG is “in conversations with all of our companions about super-premium tiers,” including that it’s “going to be an vital improvement [for] segmentation of the market”.
Nash added that UMG “anticipate[s] the platforms are going to compete on product with differentiated super-premium tier presents”. He added: “So we’re not essentially on the lookout for standardization there.”
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