What's Really Happening With the Streaming Slowdown? Insights from Three Major Label Earnings Reports

August 13

	Universal Music Group (UMG), Sony Music Entertainment (SME), and Warner Music Group (WMG) have each released their financial results for Q2 2024, providing insight into the ongoing debates about a potential slowdown in music streaming. The short answer to whether these reports shed light on the issue is "absolutely." A deeper look reveals significant details about each company's position in the evolving music industry landscape. Leading in size, UMG acknowledged a slowdown in paid streaming growth in its Q2 2024 earnings report, which triggered a notable reaction in its Euronext-traded stock. In contrast, WMG and SME reported more optimistic figures. WMG’s CEO, Robert Kyncl, highlighted “healthy industry trends” and emphasized the “strong subscription streaming growth” his company experienced during the quarter. This optimism contrasts sharply with the more cautious tone from UMG executives, underscoring the uncertainty surrounding the future of streaming. Amidst this uncertainty, concrete numbers provide clarity. WMG reported a 5% year-over-year (YoY) increase in recorded music streaming revenue and a 7% YoY rise in revenue from subscriptions. Without the one-time impact of BMG’s ADA split, these percentages would have been even higher. WMG’s recorded digital revenue reached $882 million, a $36 million YoY increase, while digital publishing revenue rose by $12 million YoY to $194 million. Sony Music, on the other hand, saw a 6.8% quarterly and 19.3% YoY increase in recorded music streaming revenue, totaling $1.34 billion (¥196.66 billion). Publishing streaming revenue also grew, surging 28% quarterly and 35.8% YoY to $273.70 million (¥40.17 billion). UMG reported a 3.8% YoY increase in Q2 recorded subscriptions and streaming revenue, amounting to $1.62 billion (€1.48 billion). However, ad-supported revenue fell 4.2% YoY to $374.79 million (€343 million), while subscription streaming revenue grew 6.5% to $1.25 billion (€1.14 billion). UMPG’s digital revenue saw a significant 17.8% YoY jump, reaching $339.91 million (€311 million). While double-digit gains were common in earlier reports, driven by booming economic conditions and high expectations, recent single-digit growth rates are less thrilling and raise concerns among investors, particularly when they fall below 5%. Aside from streaming, other financial factors are worth noting. WMG, the smallest of the three majors, still has considerable ground to cover to catch up with SME and UMG in terms of revenue. For Kyncl, improving efficiency remains a priority, though even positive results relative to competitors may represent catching up rather than taking the lead. Sony Music’s financial performance continues to benefit from favorable exchange rates, a key factor mentioned by Sony Group executives when raising their guidance for music operations for the remainder of the fiscal year. In Q2 2024, Sony identified an average exchange rate of ¥155.6 to the dollar and ¥167.6 to the euro. As for streaming, despite concerns over paid listening trends and a volatile economy, the evidence suggests ongoing growth. It’s too early to declare a significant downturn in streaming, especially with upcoming initiatives aimed at superfans, Spotify’s “deluxe” plan, and other developments on the horizon. Source: www.digitalmusicnews.com