Universal Music Group (UMG) achieved 3.3% year-over-year (YoY) revenue growth during Q3 2023 despite a slip on the recorded side, according to a newly released earnings report.
The Big Three label today posted its financials for 2023’s third quarter, which is said to have delivered €2.75 billion (currently $2.90 billion) in overall revenue. Within the sum, the mentioned recorded side accounted for €2.04 billion ($2.15 billion), reflecting a 1.1% YoY decline, as highlighted; a once-off ISP settlement boosted the Q3 2022 total by over $75 million, however.
Behind the recorded figure, the BMG-partnered company identified for Q3 2023 a north of 11.4% YoY improvement for physical, at €294 million ($310.50 million), against a 4.5% YoY bump for streaming. And in this streaming category, UMG attributed €1.06 billion ($1.12 billion) to paid listening (up 6.7% YoY) and the remaining €357 million/$377.22 million (down 1.4% YoY) or so to ad-supported consumption.
Rounding out the recorded segment, the Sollos developer disclosed a falloff for permanent downloads (€59 million/$62.33 million, down 56.9% YoY) and in licensing and other (€270 million/$285.24 million, down 11.8% YoY). UMG chalked up the latter to Q3 2022’s live-concert comeback and noted that the former had benefited from the aforesaid once-off payment.
On the quarter, UMG’s bestselling acts included the ever-prominent Taylor Swift as well as Seventeen, Morgan Wallen, Olivia Rodrigo, and King & Prince, per the Desi Trill Music parent.
Shifting to Universal Music Group’s publishing showing, including a €53 million ($55.99 million) Phonorecords III payment, the company pointed to €491 million ($518.82 million) in Q3 2023 revenue, up 17.5% YoY or 4.8% when calculating without the retroactive compensation.
Excepting sync (€55 million/$58.10 million, down 3.5% YoY) and mechanical (€25 million/$26.42 million, flat YoY), each sub-category therein increased, UMG indicated. Specifically, performance generated €106 million/$112.00 million (up 15.2% YoY), compared to €294 million/$310.66 million for digital (up 25.6% YoY) and €11 million/$11.62 million for other (up 10% YoY), according to the resource.
Lastly, in terms of core Universal Music Q3 financials, merchandising is said to have brought in €227 million ($239.86 million) on the quarter, for a 20.1% YoY spike. Meanwhile, EBITDA dipped by 11.3% to €478 million ($500.02 million) during the three-month stretch, the report shows.
And during UMG’s Q3 2023 earnings call, execs rather predictably touted their ambitious vision for Deezer’s newly implemented “artist-centric” model (“we’re looking forward to following the progress of the implementation”), expressed support for legislation addressing unauthorized soundalike tracks, and reiterated their backing of DSP price increases (“a recognition of the incredibly compelling value proposition of streaming subscription”).
Elsewhere in the call, higher-ups provided long-winded explanations about the perceived effectiveness of the overarching artist-centric model amid criticism from some in the industry. (However, execs offered little concrete information when asked about the royalties pivot that Spotify’s reportedly exploring.)
“I have a reputation for being blunt, so I’ll be blunt,” a testy Lucian Grainge, UMG’s CEO, said. “Those peer groups who have expressed the concern about artist centric are unsurprisingly those whose business model is based on being merchants of garbage.
“Sorry, I can’t really think of another word for content that no one really actually wants to listen to. So if you’re committing fraud or flooding the platforms with content that has absolutely no engagement with fans, doesn’t help churn, doesn’t merchandise great music and professional artists, then I suppose you’re not going to be in favor of artist centric.
“So it’s an opportunity for us to call them out. And I suppose that’s where we are. It’s an approach, it’s a set of principles, and the idea is that it can be implemented on each platform, in a bespoke way with all sorts of different platforms and DSPs and companies, and improved over time.
“I’ve been in this business my entire career, and if you like The Beatles or The Rolling Stones (which are two critical releases for us this week), or if you think that Taylor Swift is one of the most significant generational artists of the last 40 or 50 years, or you believe that the performance on Olivia Rodrigo – is one of the artists that we’ve signed recently and delivered worldwide.
“If you like listening to Eminem, if you believe in Elton John, if you enjoy Queen, then these are professional artists. And they are not vacuum-cleaner sounds or rain on a pane of glass, gaming the system,” continued Grainge.
Of course, these and several other impassioned comments on the topic fail to acknowledge the potentially devastating impact that minimum-stream thresholds could have on new acts – overlooking also that a retooled framework would be unnecessary if the uploads at hand were in actuality failing to garner listener interest.