Universal Music Group reported revenue of nearly $11 billion in 2022

Universal Music Group (UMG), the major label group, has reported its Q4 and full-year results, revealing an impressive year-on-year revenue increase of 16.7% for Q4, reaching €2.94bn (approximately $3.12bn), while full-year revenues saw growth of 21.6% to €10.34bn. The latter included substantial upswings in both recorded music revenues, up 16.3% in 2022, and publishing revenues, up 34.8%.

Cost of revenues, consisting of artist and product costs, increased by 24.8% to €5,753 million in 2022, reflecting higher revenue and revenue mix. Artist costs in Music Publishing make up a significantly larger share of the total cost structure than they do in Recorded Music. Therefore, the mix shift to Music Publishing in 2022 drove up artist costs as a percentage of revenue. For the same reason, cost of revenue as a percentage of revenue increased to 55.6% in 2022 from 54.2% in 2021. 

UMG’s streaming revenues from recorded music saw an 18.7% growth to €4.48bn in 2022, with subscription streams accounting for a significant 73.5% of that figure. Furthermore, UMG celebrated a key milestone on the songwriting side of its business with a 49% growth in digital revenues from publishing, reaching €1.04bn.

The major label group also proudly announced that its roster included four of the top five global artists and 15 of the top 20 in 2022, according to the recently-published chart by the global music body, IFPI

During the earnings call, UMG’s chairman and CEO, Sir Lucian Grainge, shared his latest thoughts on streaming, noting that this is the first time UMG has ever generated over €1bn of Q4 revenues from music subscriptions. He added that UMG’s consumer research “indicates that music subscriptions continue to hold up very well in a challenging economic environment”. Grainge expects double-digit growth in subscriptions for 2023, despite the wobbly economic and geopolitical climate.

UMG’s digital boss, Michael Nash, also referred to internal consumer research suggesting “more than 100 million subscriptions that we could potentially garner” in 13 major markets studied. Grainge also discussed the label’s efforts to develop new streaming payout models with DSPs, highlighting its partnership with Tidal and a second partnership with Deezer. Discussions with several other major global platforms are currently underway.

The label’s ‘artist-centric’ push extends beyond music streaming services to “all platforms, including short-form video, which are reliant on artists and their music”, according to Grainge. Nash also commented on negotiations with TikTok, stating that UMG wants it to follow the path of “win-win partnerships” trodden by YouTube. He added that the new value-gap issues in short-form video can also be constructively addressed through the development of such partnerships.

Grainge also expressed his concerns about new entrants in the music-rights ownership game from the financial industry, painting them as ‘passive’ entities. “There are many who claim they actively manage rights, but they do not,” he said. “Their lack of infrastructure, lack of experience and expertise, and inability to acquire all the rights necessary to actively manage anything lead to them becoming passive participants who do nothing and, therefore, cannot exploit the full potential of the fractional rights that they do own.”

Click here to read the full report.

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