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News April 21, 2020

Universal Music confident streaming will remain ‘stable’ in months ahead

Senior Journalist, B2B
Universal Music confident streaming will remain ‘stable’ in months ahead

The world is in lockdown, all gigs are off, and the path ahead is a tricky one. The enormous streaming business, however, should tick along just fine in the months ahead.

That’s the upbeat line from Universal Music Group, which reports a solid January-March quarter, a period during which the coronavirus emergency was declared a global pandemic.

During the first three months of this year, recorded music revenues grew to $1.56 billion, up 13% year-on-year, with streaming accounting for the bulk of that sum, rising to just shy of $1 billion, up 16.5%.

Going forward, the impact of COVID-19 on streaming “should be more limited” while, predictably, the ad sales market, and sales of physical soundcarriers and merch will likely be bashed by the health emergency.

MBW editor Tim Ingham logged into parent company Vivendi’s annual shareholders meeting, which was hosted by its CEO Arnaud De Puyfontaine and Chairman, Yannick Bolloré and featured Universal Music France CEO Olivier Nusse among its speakers.

“Streaming by subscription, which generates the largest portion of UMG revenues by far, is intrinsically more stable and robust,” Nusse is reported as saying. “Ad-funded streaming is likelier to be affected, along with the advertising market as a whole.”

Streaming activity in Australia has been two-paced in recent times. Music subscriptions are up, streaming is down, sources say. And with homegrown bands bagging No. 1 albums over consecutive weeks (5 Seconds of Summer’s CALM and Violent Soho’s Everything Is A-OK), local content is key.

Music Streaming: An iPhone showing Spotify with earbuds sprawled upon a Macbook

Streaming numbers are two-paced during the lockdown.

Video streaming services are said to be flying right now, with Netflix (adding 16 million subscribers during lockdown) and YouTube enjoying high levels of traffic during the lockdown.

“Each of Vivendi’s businesses is closely monitoring the current and potential effects of this outbreak,” says the company in its Q1 earnings statement.

“At this point, it is impossible to determine with certainty how long it [the heath emergency] will last and how it will impact Vivendi’s revenues and annual results.”

Staying with UMG, its overall revenues grew to $1.95 billion in Q1, up 12.7%. Music publishing revenues were up 18% to $294 million, fueled by subscription and streaming gains.

During the meeting and in a followup financial update, execs touched on the game-changing $3.4 billion sale of a 10% stake in Universal Music Group to a Tencent-led consortium.

As previously reported, the buyer has until Jan. 15, 2021 to decide if it will buy an additional 10% stake at the same agreed price.

Also, Vivendi confirmed it’s looking to sell further minority stakes in UMG, the world’s biggest music company, and has tapped “several” banks to facilitate the process.

Earlier this month, Billboard reported UMG’s CEO Lucian Grainge was recovering at home after being hospitalised with COVID-19.

Grainge, who is in charge of a company that boasts Lady Gaga, Billie Eilish, Jay-Z, Justin Bieber, Lorde, Vera Blue, Empire of the Sun and many more on its roster, is expected to make a full recovery.

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

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