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Shares in Universal Music Group slumped 20 per cent after reporting slower growth in revenues from streaming, triggering fears of an end to years of rip-roaring results.
The world’s largest music company, whose roster includes stars such as Taylor Swift, reported on Wednesday evening that its quarterly revenue from “subscriptions and streaming” rose just 4 per cent, below forecasts and far from the double-digit growth the industry had enjoyed in recent years as services like Spotify revived the industry.
Universal shares were trading down 21 per cent on Thursday afternoon in Amsterdam. Shares in rival Warner Music fell 1 per cent on Thursday morning in New York after losing 8 per cent on Wednesday.
“We’ve been saying for years, that the streaming slowdown is coming”, said Midia analyst Mark Mulligan.
On a call with investors, Universal executives partially blamed the slowdown on the streaming services, claiming that some of the major platforms had failed to keep up momentum in adding subscribers.
The major music companies rely on licensing income from streamers, who pay Universal about 70 per cent of their revenue in royalties. The largest paid music streaming services are Spotify, Apple Music, Amazon Music and YouTube Music.
Streaming and subscriptions makes up about half of Universal’s total revenue. The unit’s revenue rose by 4 per cent in the most recent quarter to €1.5bn. This compares with annual growth of 7 per cent in 2023, 19 per cent in 2022, and 17 per cent in 2021.
Chief financial officer Boyd Muir said that while Spotify and YouTube had “continued to exhibit healthy growth . . . other large partners . . . have seen a slowdown in new subscriber additions” — an implicit jab at Apple and Amazon.
“We’ve been in very deep dialogue with our [streaming] partners” about reigniting growth, said chief digital officer Michael Nash.
Neither Apple nor Amazon regularly report their music subscriber figures. Music makes up a small share of their overall businesses.
Universal’s streaming revenue was further hit by a change in strategy by Meta, which has in recent years paid hundreds of millions of dollars to music companies to license their songs for use in videos on Facebook and Instagram. Meta “is no longer licensing premium music videos from us as of May”, said Muir.
UMG executives on Wednesday emphasised a long-term view and sought to downplay the importance of one quarter.
Chief executive Lucian Grainge told investors that “quarterly fluctuations in one source of revenue or another are to be expected”. He spoke at length about the recent successes of artists including Swift, Sabrina Carpenter, and Billie Eilish.
Universal’s total revenue jumped 9 per cent to €2.9bn in the quarter. Adjusted ebitda rose 10 per cent from a year ago, to €649mn.
