Warner Music Group generated $92m from ’rising platforms’ in calendar Q3 – and different takeaways from Steve Cooper’s final earnings name with WMG - Geo Tv News

Warner Music Group generated $92m from ’rising platforms’ in calendar Q3 – and different takeaways from Steve Cooper’s final earnings name with WMG


Warner Music Group‘s earnings name on Tuesday (November 22) ended on an upbeat observe – and it’s simple to see why.

WMG posted revenues of $1.5 billion for the three months to finish of September (up 16% YoY at fixed foreign money), with adjusted EBITDA additionally up by 16% YoY.

Consequently, WMG’s share worth flew upward by 15% yesterday, as Financial institution Of America upgraded the agency’s inventory.

Fittingly, this glowing quarterly earnings announcement was the final in Steve Cooper‘s 11-year tenure as Chief Government of WMG; Cooper shall be succeeded within the function within the New 12 months by YouTube‘s Chief Enterprise Officer, Robert Kyncyl.

Cooper spoke extremely of Kyncl on WMG’s earnings name on Tuesday, calling him “a pioneer of the creator economic system, whose command of know-how will allow us to unlock new alternatives for our firm, our artists, and our songwriters”.

Added Cooper of his 11-year run as Warner CEO: “It’s truthfully been simply an unlimited quantity of enjoyable, extremely fascinating, and one of many biggest experiences of my working life.

“I’m actually honored to have been a small a part of the unimaginable Warner Music Group journey.”

“I’m actually honoured to have been a small a part of the unimaginable Warner Music Group journey.”

Steve Cooper, WMG

Cooper’s valedictory remarks weren’t the one fascinating revelations from Warner’s calendar Q3 (fiscal This fall) earnings name.

There have been, naturally, the uncooked numbers to chew over: WMG’s recorded music revenues have been up 13.1% YoY at fixed foreign money within the quarter, with recorded music streaming revenues up 4.7% YoY;  music publishing revenues have been up 32.3% YoY.



But maybe essentially the most illuminating information to tumble out of Warner’s calendar Q3 earnings got here from Cooper himself – and WMG CFO Eric Levin – after they have been placed on the spot by analysts.

MBW has delved deep into one significantly necessary knowledge level mentioned by Cooper on the decision by means of right here.

However a handful of different issues stood out, too…


Instagram logo

1. ‘Rising platforms’ are actually producing revenues of round $92 million 1 / 4 for WMG

Warner Music Group categorizes income from a bunch of social, gaming, and video streaming platforms – Fb/Instagram, TikTok, Snapchat, and Roblox amongst them – as “different” or “rising” platforms.

You would possibly recall that in September 2021, Steve Cooper indicated that Warner Music Group was producing round $273 million yearly from these platforms (on a run-rate foundation) throughout recorded music and music publishing mixed.

A 12 months on, that determine has bounced up significantly – with a rise of round +$100 million a 12 months from then to now.

“Together with our current cope with Meta, our annualized income from [’emerging platforms’] reached $370 million this quarter.”

Steve Cooper, WMG

Cooper confirmed on Tuesday: “Together with our current cope with Meta, our annualized income from [’emerging platforms’] reached $370 million this quarter.”

That’s “annualized” as a result of Cooper is extrapolating throughout the 12 months forward. That extrapolation suggests Warner generated round $92.5 million from rising platforms within the quarter to finish of September this 12 months.

Cooper instructed analysts on Tuesday that “the income development curve of rising [platforms] continues to outpace extra established codecs”.

“These new platforms are all closely reliant on music,” he added. “And as engagement continues to develop, we anticipate monetization to comply with swimsuit.”

(Additionally price noting: On Warner’s earlier quarterly earnings name in August (masking calendar Q2 / fiscal Q3), WMG CFO Eric Levin stated that “companywide streaming income from rising platforms was… $345 million on an annualized foundation”. This determine due to this fact climbed by round $25 million in calendar Q3.)


2. Warner’s streaming revenues in calendar Q3 obtained a lift from Meta

Warner Music Group’s recorded music streaming revenues have been a tough factor to report of late, all due to a deal the corporate struck with a sure licensing companion in summer season 2021.

That deal, with an unnamed digital companion, primarily noticed Warner conform to a much less favorable price than it used to receives a commission by stated platform.

Due to this, Warner’s recorded music streaming numbers within the 4 quarters to finish of September 2022 have a year-on-year drag-back.

Instance: In calendar Q3, WMG posted $774 million in recorded music streaming revenues, up 4.5% YoY at fixed foreign money.

But in case you omit the impression of this “new cope with one among [our] digital companions” – as Warner places it – the corporate says its recorded music streaming revenues would have climbed 10.5% YoY in calendar Q3 2022.

Warner hasn’t confirmed who this streaming companion is, however sources inform MBW that it isn’t Spotify.

“WMG’s quarterly streaming income elevated 5% [in calendar Q3], reflecting continued development in subscription streaming and a current cope with Meta… which partially offset by the market-related slowdown in ad-supported income.”

Steve Cooper, WMG

Regardless, right here’s one thing we do know for certain: Warner’s $774 million in recorded music streaming income within the three months to September obtained a hefty financial enhance from Meta, guardian firm of Fb.

That hefty enhance probably took the type of an advance cost from Meta along side Warner’s new licensing deal with the agency, which is able to see advert income on Fb shared with WMG. (Common Music Group introduced an analogous cope with Meta final quarter.)

Eric Levin confirmed on Tuesday that WMG’s quarterly streaming figures in calendar Q3 have been boosted by “the profit from rising streaming platform deal renewals”.

Who have been these renewals with? Steve Cooper dropped the large title.

“[WMG’s recorded music] streaming income elevated 5% [in calendar Q3],” stated Cooper, “reflecting continued development in subscription streaming and a current cope with Meta [which] partially offset by the market-related slowdown in ad-supported income”.


Credit score: QuiteSimplyStock/Shutterstock

3. WMG’s ad-supported streaming revenues declined by between 5% and 10% YoY in calendar Q3

This was one of many few destructive factors in WMG’s quarterly earnings – and it’s one for the broader music enterprise to sit down up and take note of.

We’ve identified for a while that ad-supported streaming income development was prone to decelerate at massive music firms within the second half of 2022, because of the macroeconomic impression of a recession on common B2C digital advert spending.

However in calendar Q3 at Warner Music Group, that deceleration grew to become a downturn.

CFO Eric Levin revealed on Tuesday that WMG’s ad-supported streaming income within the quarter noticed “growing stress and declined by excessive single digits” (i.e between 5% and 10% YoY).

“When macro environments get troublesome, one of many first issues that we’ve seen persistently will get affected negatively is ad-supported. We noticed it when COVID hit in 2020, and we’re seeing it now.”

Eric Levin, WMG

Levin clarified that WMG didn’t “embrace income from rising streaming platforms” on this calculation. In different phrases, we’re speaking about ad-supported revenues from the likes of Spotify and YouTube’s ‘free’ tiers… however not TikTok and Meta.

(This would possibly clarify why Common Music Group was capable of publish a 5.2% YoY rise in non-subscription streaming income in calendar Q3.)

Some context: this single-digit drop in Warner’s ad-supported streaming income within the quarter occurred in the identical three months that YouTube noticed its promoting revenues slip 1.9% YoY to $7.07 billion.

Levin famous that “ad-supported has been tougher [than subscription] within the brief time period” and acknowledged that “the ad-supported market is in decline”.

He added: “Despite the fact that consumption of merchandise [has gone] up, monetization [via ads] has gone down within the brief time period. When macro environments get troublesome, one of many first issues that we’ve seen persistently will get affected negatively is ad-supported. We noticed it when COVID hit in 2020, and we’re seeing it now.”

He urged analysts to recollect, nonetheless, that “earlier than the macro atmosphere was so difficult, ad-supported [revenues] would develop in line double digits fairly persistently with subscriptions”.

Added Levin: “When the macro atmosphere begins to enhance and economies begin to enhance, we’d anticipate… ad-supported [streaming revenues] to rebound strongly and return to development.”Music Enterprise Worldwide



Supply hyperlink

Leave a Reply

Your email address will not be published. Required fields are marked *