For Universal Music Group — and Sony Music and Warner Music Group — there’s no stopping revenue from music streaming. Yet, how much are artists really getting?
Under Vivendi ownership, Universal Music Group posted their best financial performance thus far. Across recorded music, publishing, and other activities, UMG’s overall revenues rose to $5.57 billion. This number is up 4.4% from 2015’s $5.41 billion.
Earnings before interest, taxes, and amortization (EBITDA) came to $681 million, up 9.1% from 2015 in constant global currency.
Streaming helped drive UMG’s revenues in 2016. The company’s revenues from streaming grew a whopping 58% in 2016.
All of which leads a fun fact about music streaming. Per the company’s numbers, 2016 streaming figures equated to $137 million a month. By week, the company makes $32 million, and per day, it earns $4.5 million.
This increase helped to offset steep declines in album and download sales.
Those formats have been avalanching. Album sales saw a 15% drop, while download sales also saw a 29% decline. Downloads include the iTunes-standard DRM-free AAC format as well as other formats like ringtones.
Let’s break down some other categories from the financial disclosure.
Operating income.
UMG’s operating income grew 10%. The mega-label attributed the rise in operating income to album popularity from artists like Drake, Rihanna, and Ariana Grande. Carryover sales from Justin Bieber also boosted sales.
Recorded music.
Recorded music revenues also rose to $4.63 billion, up 1.8% over the previous year’s $4.55 billion. Of course, recorded music revenue from Spotify and Apple Music also saw a solid increase, from 2015’s $1.06 billion to $1.64 billion, a 55.5% jump.
Merchandise.
Revenue in merchandising also saw strong growth. It grew 16.1% thanks to “stronger touring activity” from its artists. Income from music operations also jumped 10.7% from 2015, totaling $726.9 million.
Will the streaming surge continue?
While praising record revenue, chief executive of Vivendi, Arnaud de Puyfontaine, remained cautiously optimistic that streaming momentum would continue this year. Yet, UMG’s earnings weren’t enough to offset Vivendi’s losses. FT reports that Vivendi’s core operating profits fell 23%. Canal Plus, a French television channel, saw its weakest revenue in five years.
So can this ever be enough to bring back compensation levels to artists of the pre-piracy era?
No, nothing will ever be enough. Never, ever, ever!
Nope. That era presented a unique balance of advances in technology and limitations in technology to make those significant compensation levels for artists possible. I don’t think that can ever happen again. I think labels could do more to increase compensation for artists, such as windowing new releases as digital downloads only. But it still won’t compare to the pre-piracy days.
It certainly can be better from the labels side. At least to enable a certain level of artist development, instead of the insistence upon obvious formulaic sure hit makers.
But I believe piracy has to be controlled even for that to happen. The worse the market (piracy, bootlegging, streaming underpricing), the more conservative labels become.
All this is absolutely true. The question is… CAN piracy be controlled? I want to believe it is possible, but in the last 20 years, I haven’t seen much to be optimistic about.
iTunes has never had an ‘mp3 standard’. It has only ever sold tracks in AAC format. Basic facts dude
Daniel’s going to kill me, as this was my quick edit. Yes, open DRM-free AAC, maybe you can tell I haven’t downloaded an iTunes track in years.
Doing away with DRM was a disaster. Note that iTunes/Apple retained DRM for books, movies, TV, and only did away with it for music.
I wonder what they are doing with all that money.
So, digital killed the artists (pay). Where do we go from here?
Who is they using for to promote they streams is th ?