Higher music streaming platform prices, kicking off with Apple Music’s recently-unveiled subscription price increase, have been welcomed by publicly traded label giant Universal Music Group, which reported its third quarter earnings on Thursday.
“I think that Apple’s statement announcing their change sums it up well and [to] paraphrase what they essentially said is that they strongly believe in the value of music and then by making these pricing changes, artists and songwriters are going to earn more for the streaming of their music,” Nash, executive vp of digital strategy at UMG, told analysts following the release of the company’s financial results.
During its latest quarter, UMG reported that overall revenue jumped 13.3 percent to $2.65 billion, as streaming and subscription revenue rose 7.7 percent.
UMG artists share in the royalties when their music is played on Apple Music, Spotify and other music streaming sites. Apple Music announced it will raise the price of its single plan by $1 per month to $10.99, its family plan by $2 per month to $16.99 per month, and the annual plan to $109 per year, a $10 increase, in part because of higher music licensing costs.
Nash argued the value proposition for music streaming services “is extremely compelling,” even as he added that Apple Music makes its own consumer pricing decisions independently.
As analysts looked for signposts pointing to the future of the global music business, UMG execs also reacted to rival music streaming giant Spotify reporting 195 million paid subscribers in the third quarter of 2022, up from 188 million paid or premium subscribers in the previous quarter, and above expectations.
“We’re encouraged to see they’re delivering growth, It’s a great sign for the industry,” Nash said of the Spotify results, unveiled on Tuesday. At the same time, he added Spotify was only part of the music label’s overall subscription revenue base globally.
During the analyst call, UMG execs discounted speculation the streaming music market share of music label giants, including Sony and Warner Music Group, was falling, as they insisted that market reach remained stable as a host of far smaller music creators increasingly put their product online to tiny audiences only. The music giant said that its top selling artists in the quarter were BTS, BLACKPINK, Ado, INI and Morgan Wallen.
UMG, which represents top artists like The Weeknd, Taylor Swift and Drake, was also hit in the third quarter by a wider industry digital ad downturn amid recessionary and inflationary pressures for consumers. But Lucian Grainge UMG’s chairman and CEO, in prepared remarks said “slower growth” in ad-supported streaming revenue was offset during the latest financial quarter by growth in other revenue streams, including subscriptions, live touring and merchandising.
Despite that stumble, Boyd Muir, UMG´s executive vp, CFO and president of operations, added during the analyst call that digital advertising had a long runway for the music label. “We feel confident in the growth of our ad-supported business in the medium and long term as we right-size certain deals in the social space and bring new digital partners on board,” Muir told analysts.