Streaming becomes Warner’s biggest revenue spinner

Image: WMA artist Conrad Sewell

Streaming has become the biggest source of revenue for Warner Music Group. It is the third largest label after Vivendi SA’s Universal Music and Sony Corp’s Sony Music Entertainment, with 17% of the global recorded music market. 

Warner has been successful in tapping streaming’s potential on a global basis. Last year Warner said that streaming overtook downloads as far as its digital sales were concerned.

In its second quarter figures released last Friday, streaming rose 59% representing US$72 million (A$97.7 million), and more than half of that was from outside the U.S.

“We are now the first major music company to report that streaming is the largest source of revenue in our recorded music business, surpassing our revenue from physical formats,” said its Chief Executive Stephen Cooper. “And this new milestone comes only four quarters after our streaming revenue first topped our download revenue.” 

Last year, the global music industry grew 3.2% to $15 billion ($20.3 billion), its first growth after 20 dark years. The rise was due to a 45% increase in streaming revenue, to a total of $2.9 billion ($3.9 billion) and now almost half of the world’s digital music sales. Streaming is a saviour, offsetting the declining physical format made up of CDs and vinyl: despite its 5% decline is still the major part of the industry internationally.

Streaming now makes up the largest revenue source for the US recorded music sector at 34%, up from 27% in 2015.

In the quarter ending March 31, Warner Music’s revenue rose 10% to $745 million ($1 billion) – or up 13% without currency effects. Profit was $11 million ($14.9 million), down from $18 million ($24.4 million) last year. Digital revenue rose 20% to $328 million ($445.2 million) – with downloads declining by $17 million ($23 million) – offsetting $6 million ($8.14 million) worth of decline in the physical (CD and vinyl) format.

The company reported the growth of its markets outside the US: Asia and Latin America both upticked by 17% and Europe by 12%. "We continue to believe these regions have huge potential, and we are exploring other growth opportunities," Cooper said.

The group’s top-selling artists in the quarter included Coldplay, Ed Sheeran, Bloc Party, Twenty One Pilots and Japanese band Gesu no Kiwami Otome.

Cooper joins other music industry executives in insisting that user-upload services as Google and YouTube should pay more for the use of their music.

“It is imperative that we ensure a fairer correlation between the massive consumption of music via services built around user-uploaded content and the value generated for artists, songwriters and rights holders. We have made our views known through our submissions to the European Commission and the U.S. Copyright Office.”

For the past 15 years, the so-called safe harbour” legislation has protected online hosting services from lawsuits for copyright infringement.