Streaming boosts Universal’s revenue with 34% jump

Universal Music Group has reported increased revenue and earnings for the first half of 2015, largely due to the growing popularity of online streaming.

Discounting the effects of exchange rates, revenue for UMG’s parent company Vivendi has risen by 3.1% to $US2.6 billion in the first half of the year. Vivendi attributed this growth to the 34% spike in subscription and streaming services such as Spotify.

According to Vivendi’s report, UMG itself had an increase of 11.5% in earnings during the six months, totalling to $US255 million before interest, taxes depreciation and amortisation. In its second quarter, UMG reported $US1.4 billion in revenue and $US139 million in earnings.

Universal’s highest performing artists included Taylor Swift, Drake, Mumford and Sons and the Fifty Shades of Grey Soundtrack, all which saw strong carryover sales in the first half of the year.

The popularity of streaming services also saw publishing revenues grow at a constant currency of 2.7%. Thanks to greater touring activity, merchandising revenues were also up by 3.2%.

However, the jump in subscription and streaming platforms also resulted in the decline of both digital download and physical sales. According to Vivendi, download sales decreased by 5% in the first half of 2015. In comparison to UMG’s results last year, the company had said that although streaming had experienced “significant growth,” it did not make up for the revenue lost from the drop in download sales. Furthermore, the second quarter results did not include the arrival of Apple Music, which launched on June 30.

UMG’s performance this year was not the only factor that contributed to Vivendi’s overall rise in net profit. It was also boosted by the sale of its Brazilian telecom unit GVT, as well as the sale of its controlling share in Moroccan telecommunications unit, Maroc Telecom.

It seems as though Vivendi is moving away from telecommunications and is becoming more media-focused – namely with UMG and French pay-TV group, Canal Plus. Last June, Vivendi announced that it acquired a 90% stake in the online video platform Dailymotion.

Wall Street Journal reports that Vivendi is set to do more acquisitions. Arnaud de Puyfontaine, Chief Executive of Vivendi, said the company was “at the start of a journey” that would see it build a media group with a strong presence in southern Europe.

“In terms of participation in telecoms companies we haven’t the global strategy; we want to be opportunistic,” said de Puyfontaine.

Image: Lucian Grainge,chairman and chief executive officer of Universal Music Group