Streaming heading to be Warner Music’s largest revenue source

A 34% rise in streaming royalties saw the third largest major Warner Music Group’s total revenue rise 6.2% at constant currency to US$2.97 billion in its fiscal year ended September 30.

In what was a milestone for the company, streaming easily outstripped downloads. Streaming grew 34% throughout the fiscal year, and an impressive 47% in the fourth quarter.

“2015 was our first fiscal year in which our recorded music streaming revenue exceeded download revenue, and it did so by a significant amount,” said CEO Stephen Cooper. “Streaming continues on a trajectory to become our largest revenue source.

“As the first music major to report streaming revenue exceeding download revenue, we’ve continued to lead the digital transformation, helping us to achieve four consecutive years of revenue growth in our combined recorded music digital and physical business.”

Cooper added that download revenue declined by over 10%.

The report does not include Apple Music, which launched in June and was a free service for three months. But early indications of Apple’s impact on the label’s revenue are good, Cooper said, adding he expected a greater revenue hike as more streaming services were entering the market. In the first half of 2015, streaming revenue for the entire music industry in the US jumped 23% to $1.03 billion, accounting for a third of revenue

Warner Music’s digital revenues grew 10% to $1.24 billion, making up 48.5% of the label’s total recorded music revenue of $2.5 billion. In the US, where Warner is headquartered, digital accounts for 58.8% of recorded music revenue.

Of the $2.5 billion made by the recorded music division, digital and physical made up $1.9 billion. Physical was flat at $767 million. Warner’s total revenue of $2.97 billion was a 2% drop from the previous financial year.

Net loss improved to $88 million at constant currency from $303 million.

At Warner/Chappell Music publishing, revenue decreased 7% to $482 million, a decline of $35 million. Performance right, its largest component, was flat at $184 million. Digital made up 20.5%. Licensing (sync) rose by $19 million (or $40 million excluding the unfavourable impact of foreign currency exchange rates).

Artist services and expanded-rights revenue – that’s ‘360’ and label services revenues – decreased by $31 million, or increased by $6 million excluding the unfavourable impact of foreign currency exchange rates.