UMG revenues up 4.8%, streaming up nearly 47%

Total revenues for Universal Music Group in the first nine months of its financial year were better than expected, rising 4.8% to €3.62 billion (A$5.17 billion).

Much of the gain was attributed to a combined 64.3% growth in subscription and streaming revenues. The company has made major changes in its digital management executive structure, and struck partnerships with Pandora Media, iHeartMedia and Amazon to a total of 400 digital services.

Streaming alone had a near-47% growth, now overtaking physical product as its main revenue source.

In the nine months to September 30, the recorded music division had a 2.9% growth to €2.83 billion ($4.04 billion), from the €2.75 billion ($3.92 billion) made from the year before.

Music publishing revenue was up 4.1% from €565 million ($840.1 million) to €588 million ($840.1 million). This was the result of rises in subscription and streaming as well as growth in synchronization and performance income.

Merchandising and other revenue grew 8.9% to €227 million ($324.3 million) from €209 million ($298.6 million), attributed to stronger touring activity.

For the recorded music division, streaming was the main juice, generating €1.03 billion ($1.47 billion) which was a 47% rise from 2015 figures of €701.8 million ($1 billion).

Physical sales, its second largest source of revenue, were down 13.4% to €751 million ($1.07 billion). Last year these sales were €867 million ($1.23 billion).

Downloads took a deeper dive, down 18% to €547 million ($781.8 million).Licensing and other revenue declined slightly to €498 million ($$711.8 million) from €505 million ($$721.8 million).

In 2016, streaming made up 36.4% of Universal Music Group’s recording revenue set up (25.5% last year), physical is 26.6% (31.6% in 2015), downloads 19.4% (from 24.4%) and licensing and other revenue sources 17.6% (which constituted 18,4% last year).

North America remained Universal Music’s biggest market, with 44% of its pie. Europe made up 35% (down two points), while Asia rose to 13% and the rest of the world was up 8%.

Its Paris-based parent company Vivendi said that it is focussing on Universal Music Group’s new opportunities in China, Russia, Brazil and Africa.

It is relying on its new WatchMusic service, which it launched in Brazil in early October with Brazilian telco Vivo. It offers music videos, documentaries and original content, and live-streams of gigs and festivals, with audio-only and offline viewing options.

In coming months, it will roll out the service in other territories, starting in Latin America.

The company said key fourth quarter releases include Avenged Sevenfold, Bon Jovi, DNCE, Emeli Sande, Lady Gaga, Mary J Blige, Metallica, the Rolling Stones, Sting and The Weeknd, as well as carryover sales from Justin Bieber.