Universal Music has released its final quarter results for 2023, and full year financials. For the full year ending 31 Dec 2023, UMG generated €11,108 million, an increase of 7.4% over 2022’s €10,340 million.
Subscriptions and streaming revenues made up €5,700 million of that – an increase of 7.1% from 2022’s €5,321 million. Downloads and other digital revenue accounted for just €207 million – down from €337 million in 2023. Physical revenue was up by 14.3% hitting €1,380 million in 2023, up from €1,207 million in 2022.
Speaking about physical revenues, UMG CFO Boyd Muir said “physical revenue represents incremental spending from superfans above and beyond streaming revenues”. However, the exceptional growth in physical “will be difficult to sustain in 2024”, he went on.
On the subscription and streaming revenue number, UMG breaks this out to €4,275 million from subscriptions and €1,425 million from streaming. Subscription revenue here means revenue from premium streaming subscriptions, while the lower number is other revenue – including advertising revenue – from streaming platforms.
On the publishing side, Universal Music Publishing brought in a total of €1,956 million, up 8.7% from 2022’s €1,799 million. Of this, €1,128 million (57.6%) came from digital exploitation, and a further €108 million from mechanicals.
In his introductory remarks to analysts at the start of the earnings call, UMG CEO Lucian Grainge hit out at TikTok saying “there must not be free rides for massive global platforms such as TikTok that refuse to meaningfully address issues around AI platform safety or pay their fair share for our artists’ and songwriters’ work”.
Universal’s “former deal” with TikTok, said CFO Boyd Muir, represented just 1% of UMG’s annual revenues – which equates to around €111 million. He went on to say that “other platforms in the social video category” had delivered “much greater monetisation”. As a result, continued Muir, there will be “exciting competitive developments” in coming weeks as Universal focuses on accelerating its partnerships with other video platforms, including YouTube.
“We’re friendly people, we like win-win situations, my phone is open 24 hours a day. We hope that we will be able to find solutions. We’ve laid out what is important to us.”
Grainge also highlighted UMG’s “innovative private sector partnerships with AI tech companies”, saying that Universal had “learned from the industry’s prior encounters with disruptive technology” and so – rather than “waiting for AI to take hold” – Universal “got ahead of the game”. Part of this was the “historic relationship” that Universal Music formed with “long-time partner YouTube”, which gives Universal and its artists “a seat at the table to help shape the technological development and determine how to harness and monetise it for the benefit of the entire creative community”.
This, said Grainge, is being done “with artists at the forefront of our thinking”, and Universal is working to help artists “protect their rights to their work, and their names and likenesses”.
“Let me be clear, free doesn’t work for us”, he continued later in the call, in response to an analyst questions about TikTok. “We’ve spent years creating a path to digital monetisation in every single category. I am not prepared to compromise the future of the social category by doing something that completely undermines the economics for us and for everybody else”.
Talking about UMG’s recent acquisition of a stake in Chord Music, Grainge said “we use our cash wisely, we’re extremely selective in rights acquisitions”. Highlighting Chord’s catalogue of “more than 60,000 music publishing and recorded music copyrights”, the Universal CEO said that the Chord recorded music and publishing catalogues are “very high quality” and that the deal will leverage UMG’s global resources in Virgin Music Group and Universal Music Publishing to “actively manage” those rights.
More tellingly, he revealed that the way the deal is structured “through a combination of leverage and partner equity capital” will provide Universal with a “platform for recorded music catalogue acquisitions and publishing catalogues without significant further capital allocation”. The acquisition of 25.8% of Chord, said Boyd Muir, was done on a multiple of around seventeen times EBITDA.
Speaking about catalogue acquisitions in general, Boyd Muir emphasised “it is not a strategic priority to use our balance sheet for large catalogue acquisitions”.