‘Beginning of a new wave of growth’ for music’, Lucian Grainge says as Universal revenue leaps up 17%

“I firmly believe the music industry is only at the beginning of a new wave of growth and evolution,” Universal Music Group CEO Sir Lucian Grainge told investors in an earnings call after the release of the company’s Q3 results.

In the three months to end of September, Universal Music Group generated revenue of €2.153 billion (AU$3.139 billion) across all its divisions including recorded music, publishing and merchandising.

It represented a growth rate of 17.4% YoY at constant currency, and up by 6.5% on the €2.022 billion ($3.117 billion) revenues posted in Q2.

This was Universal Music Group’s first financial post as an independent public company.

In September it spun off from Vivendi in Europe’s largest listing of the year on the Euronext Amsterdam exchange.

Driving revenue were streaming and social media. Q3 big sellers were new releases from Billie Eilish, King & Prince and Drake, and carry-on sales of BTS and Olivia Rodrigo.

Recorded music generated revenue of €1.711 billion ($2.738 billion), up 15.5% from €1.481 billion ($2.283 billion) in Q3 2020.

Within this division, streaming, which comprised 66.1% of revenue, was up 14% to €1.131 billion ($1.744 billion).

Downloads made up 4.8%. These and other digital fell 4.7% to €82 million ($126.4 million).

While digital in total made up 70.9% of the revenue pie, physical formats were 16.4%.

Sales of CDs, vinyl and cassettes together were up 11.6% to €280 million ($431.7 million), mostly driven by consumer demand for vinyl product in the US.

A scene from Billie Eilish’s movie

Music publishing rose 19.8% to €363 million ($559.5 million).

“Revenues benefited from the continued growth in subscription and streaming, the timing of certain society distributions and from an improvement in synchronisation,” the company stated.

“While performance revenue experienced the delayed impact of last year’s COVID-related slowdown, this was more than offset by revenue from catalogue acquisitions.”

Merchandise and other revenue, which suffered the biggest negative impact of the pandemic, still managed a rise of 13.5% to €84 million ($129.4 million).

Licensing and other revenue (12.7% of total share) grew 49.3% to €218 million ($336 million).

The jump in licensing returns were from Universal Music Group’s division of creating original music based film and TV content.

Executives said it was still a new business and would vary from quarter to quarter depending of course on content.

In Q3, the division had Billie Eilish’s concert film Happier Than Ever: A Love Letter to Los Angeles, which premiered on Disney+.

Sir Lucian Grainge

Grainge explained his comments on a new era for the music industry to investors.

He cited the IFPI’s recent report on 40,000 fans from 20 countries who listened to an average more 18.5 hours a week (or 368 songs each) and spent 51% more time on subscription audio streaming in the past two years.

Add to this streaming penetrating further into new markets and becoming more monetised.

“People are not only enjoying more music than ever before, they’re also connecting with artists in ways that were unimaginable just a few years ago,” he said.

“A diverse mix of musical genres are delighting fans across an expanding landscape that includes short-form video, social networks, fitness apps, gaming, live streams, digital goods and much more.”