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News May 15, 2017

Back to Biz: UMG, WMG post year-on-year growth; Ultra embroiled in legal battle, and more

Lars Brandle
Back to Biz: UMG, WMG post year-on-year growth; Ultra embroiled in legal battle, and more

Breaking Biz

Researched by Lars Brandle, presented by Jess Westcott

UMG produces sixth successive quarter of growth

Universal Music Group, the world’s biggest music company, has produced its sixth successive quarter of growth with revenues grow of 1.284 billion euros, up 12.7%, in the first quarter ending March 31, 2017.

The music giant citied gains from streaming services (up nearly 50% to 467 million euros) and big-shifting records from The Weeknd,  Drake and soundtracks from La La Land, Fifty Shades Darker and Disney’s Moana for a 12.2% spike in recorded music revenue to 1.016 billion euros. Also within its recorded music division, revenue from downloads fell to 155 million euros from 197 million euros, and the business for physical soundcarriers eroded slightly to 226 million euros, while licensing was up slightly to 168 million euros. Universal’s music publishing (17.1% to 220 million euros) and merch operations (up 13.3% to 47 million euros) were solid. UMG’s execs are confident the company will continue on its growth trajectory thanks to a stacked line-up of album releases featuring Lana Del Ray, Feist, Imagine Dragons, Lorde, Pearl Jam, Katy Perry, Shania Twain and a 50th anniversary of the Beatles’ Sgt. Pepper album.

Looking ahead, Universal will hope to improve its bottom-line to the tune of $31 million by disentangling itself from a deal with Prince’s estate. UMG is calling for the Carver County District Court in Minnesota to rescind a multi-year agreement struck in February which would give the company exclusive licensing rights to Prince’s post-1996 catalog and the U.S. rights to “certain renowned albums” from his Warner Bros. era (1979-1996). The deal, much like the handling of many aspects of Prince’s estate, has turned into a mess and UMG wants its money back. The company is blaming former estate entertainment advisor L. Londell McMillan for misleading them over the terms of the arrangement. McMillan has denied this and pointed out that, “There are parties that are new to the Prince estate and unfamiliar with the music industry. They may need time to figure it all out.”

WMG is also on a tear

Warner Music Group posted its seventh consecutive quarter of year-on-year growth. WMG reported revenue of $825 million, up 10.7%, for its second quarter, which ended March 31, 2017, with digital revenue driving the gains. During the period, digital revenue rose 21.9% (or 23.3% in constant currency) and digital now accounted for more than half of its total revenue 53.2%, up from 48.3% in same quarter in 2016.

“Our streaming revenue is now double that of physical and triple that of downloads,” explained WMG CEO Steve Cooper, who declared it “another excellent quarter.” Cooper, who recently hammered out terms with YouTube, added, “An improved industry environment is helping, but we continue to outperform our competition due to fantastic new music and outstanding execution by our operators around the world.”

Net income came in at $20 million, against $12 million in the same period last time, and operating income before depreciation and amortisation (OIBDA) was $141 million versus $127 million last year.

WMG’s execs aren’t sitting still

Max Lousada, the recently promoted chief for WMG’s recorded music activities worldwide, has hired Chris Bovill and John Allison from 4Creative,  the in-house agency at U.K. TV network Channel 4, MBW reports.  The pair will lead the U.K.  company’s “Firepit,” a creative content division which incorporates a cutting-edge recording studio and innovation lab with a view to “incubate emerging technologies” for WMG’s affiliates.

Sinks claims 2017 Hilltop Hoods Initiative

Melbourne MC and producer Sinks (real name Alex Sinclair) is the recipient of the 2017 Hilltop Hoods Initiative. The winner’s spoils include legal advice from David Vodicka and Media Arts Lawyers, a Love Police ATM merchandise start-up kit and a $10,000 grant from Hilltop Hoods and APRA AMCOS for the manufacturing and promotion of an album.  Sinks, who has already won a triple j Unearthed competition and supported the likes of Action Bronson and Mobb Deep, paid thanks for the “epic moment” which Hilltop Hoods founded twelve years ago to give emerging hip-hop artists and soul artists a leg up. “Expect a lot more material soon,” he posted on Facebook.


Robert Miles, the European DJ and producer who created one of mid-‘90s clubland’s favorite works, ‘Children,’ has died at 47.

Miles’ signature tune was a hit with party-goers across both sides of Atlantic and Down Under, reaching No. 2 on the U.K. singles chart No. 21 on the Billboard Hot 100.

The Swiss born artist also won a Brit Award for best international breakthrough, and landed a top 10 on the U.K. albums chart with Fable (reaching No. 7). Miles died in Ibiza on May 9 after a months long battle with stage 4 metastatic cancer.

The Dotted Line 

Spotify has tapped Morgan Stanley, Goldman Sachs and Allen & Co to advise on a possible listing on the New York Stock Exchange. The market leading music streaming is expected to go public later this year or early next year, sources close to the situation told Reuters.

A rare direct listing would give the Swedish company a means to operate on the NYSE without raising any new money or issuing new shares to public investors. Spotify, which now boasts more than 50 million paid subscribers, is reportedly valued at around $13 billion.

Crossing Borders

An EDM Storm is brewing. China’s leading festival production firm A2LiVE has announced plans to rollout its Storm Music Festival into 11 cities including events in Australia and Taiwan for the first time. The festival will come to Sydney and Taipei sometime in 2017, though precise dates and venues haven’t been announced. The tour will also visit nine Chinese cities, including Beijing, Shanghai and Guagnzhou, up from five last year. With Budweiser on board as headline sponsor, Storm launched in 2013, pulling an estimated 24,000 punters to a show in Shanghai featuring headliners Axwell, Zedd and others. A2LiVE’s self-assured growth strategy comes soon after the rival Ultra brand unveiled its own move into China with a two-day fest in Shanghai from Sept. 9-10, and announced plans to bring its Road to Ultra events to Australia and India. With the Big Day Out, Soundwave, Future Music Festival and Stereosonic all missing from the festivals calendar, expect to see more foreign players enter the market.

The Big Stage

Life isn’t all a big party for Ultra Music Festival right now

The business is embroiled in a legal battle with Croatian promoter Adria MM Productions, which licenses the Ultra festival brand for the annual event in Split.

According to Miami New Times, Adria MM accuse the Miami live music business of making outrageous demands and blocking them from social media, while Ultra hit back with a counter-complaint claiming the Croatian promoter breached its contract, organized unauthorized events, and shared trade secrets. The latest iteration of Ultra Europe is still scheduled to go ahead July 14 – 16 in Split.

He might have 99 problems, but for Jay Z cash ain’t one of them

The entrepreneur and hip-hop great has entered into a 10 year touring deal with Live Nation worth US $200 million, sources tell Billboard. The arrangement covers worldwide touring, with Live Nation as producer and promote, but not recorded music. “For the next 10 years,” says Jay-Z of his new pact with LN, “we will continue redefining the live event landscape.”

LN’s Ticketmaster business has launched its white label festival ticketing solution

Front Gate Tickets in the U.K. is seen as big picture project for LN as it retools for the festivals space. The Texas-based company has powered almost 20 million ticket sales, process more than $300 million in sales in a single year, and activated over 6 million RFID wristbands, LN said in 2015 when it acquired a controlling stake in C3 from AEG and C3 Presents. Front Gate’s U.S. clients include Lollapalooza, Bonnaroo, Outside Lands, Electric Daisy Carnival and Austin City Limits Music Festival among its clients.

Final word

Financing giant KKR is pumping $150 million into Pandora as a strategic investment. But the cash injection comes as the internet radio firm posts first quarter revenues of US$316 million with a quarterly net loss of $132.3 million. The New York Times and others are asking, is the writing on the wall for Pandora? Tune in to find out…

This article originally appeared on The Industry Observer, which is now part of The Music Network.


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