Believe Posts $228 Million in Revenue for ‘Challenging’ Q3, Doubles Down on Opposition to Deezer-UMG ‘Artist-Centric’ Model

believe earnings q3 2023
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believe earnings q3 2023
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Believe founder and CEO Denis Ladegaillerie, whose company posted its Q3 2023 earnings today. Photo Credit: Believe

Despite facing “challenging market conditions” and experiencing a revenue dip in Germany, Believe has reported an even €215 million (currently $227.8 million) in Q3 2023 revenue.

Believe, which trades as BLV on the Euronext Paris, posted its third-quarter financials today. Acknowledging at the outset that the three-month stretch had been “challenging,” the expansion-minded music company disclosed €66.9 million ($70.9 million) in Q3 revenue attributable to European markets excepting Germany and France.

The total represents a 25.9% year-over-year (YoY) increase, and in particular, Believe highlighted revenue hikes in Turkey as well as markets throughout Southern and Eastern Europe.

Asia Pacific and Africa followed by producing €55.8 million/$59.1 million in third-quarter revenue (up 6.6% YoY), according to Believe, which also pointed to €34.4 million/$36.4 million in revenue from France (up 0.7% YoY), €31 million/$32.8 million from the Americas (up 8.4% YoY), and €27 million/$28.6 million from Germany (down 6.4% YoY).

Elaborating upon its showing in France, Believe emphasized that the “comparison base was challenging” owing to the roughly 40% Q3 2022 revenue spike associated with the nation. And in Germany, the Sentric owner said “non-digital sales were strongly down” during Q3 2023, when it kept on moving “away from contracts that were too heavy in physical sales and merchandising.”

Having “now deployed its full offering in 15 markets,” Believe further cited currency fluctuations and “soft ad-funded streaming monetization” throughout Europe and Asia in explaining its Q3 performance.

Looking forward to the fourth quarter, the digital-focused business forecasted a “higher growth rate driven by a solid increase in paid streaming revenues” stemming from price bumps as well as a “slight recovery in ad-funded streaming.”

More interesting than these core Q3 financials are the remarks delivered by Believe execs during the corresponding earnings call.

With the TuneCore parent having previously criticized the much-debated “artist-centric” compensation model proposed by Deezer and Universal Music Group, Believe founder and CEO Denis Ladegaillerie doubled down on his concerns when responding to an investor’s question.

“The UMG-Deezer deal is a UMG-Deezer deal, commercial deal, period. We’ve had conversation[s] with Deezer,” indicated Ladegaillerie. “We’ve told Deezer that we would not move to the new model, because we think that it’s not been well thought out, all the way, and it needs work.

“So we’re continuing that dialogue with them. I have to say that they have provided us with modeling on the same type of deal that they have announced in the market. Based on that modeling, we would gain almost – a significant, actually a very significant double-digit growth in terms of market share… It would actually be very favorable to us as a business. Nonetheless, we do think that this is not the right model.

“Our understanding in the model is that at least one of the other major record labels thinks the same way as we do, and a number of other independents [feel the same]. So we don’t expect that model to be deployed to certainly not to us, and not to the entire market, until we think that there’s a model that makes sense for everyone,” he continued, proceeding to drive home the possibility of a “challenge” in facilitating the model’s widespread adoption.

Furthermore, Believe is “working with digital partners to deploy a new streaming model aimed at lowering streaming fraud and white noise” – or two of the components that Deezer and UMG say are part of their own model.

Predictably, artificial intelligence also came up during the close to hour-long call; the Believe earnings report itself touts the perceived effectiveness of a “Guesser” tool, which is said to be highly effective in automatically detecting AI music.

“It is in production right now and functioning, a proprietary AI tool called AI Radar, to be able to detect tracks created by generative AI or using [a] deep fake,” elaborated Ladegaillerie. “This was developed internally by our own teams that have expertise in AI and audio recognition. This tool is now able to detect [AI-generated] master recordings with a 98% detection rate and deep fakes with a 93% detection rate.”

Notwithstanding this tool, Ladegaillerie (whose company’s aforementioned TuneCore subsidiary vets and distributes Grimes AI music) expressed the belief that generative AI will be positive for the industry in the long term, with its track output “probably decreasing in the coming year.”