Warner Music chief looking past streaming for revenue growth

For the six month period ending March 31, music streaming made up 59% of Warner Music Group’s global revenue, or US$1.175 billion.

This was a 13.1% increase from the US$1.04 billion tallied in the first half of fiscal 2019.

Streaming now makes up 70% of revenue, Warner Music’s CEO Steve Cooper said in an interview during financial giant Goldman Sachs’ Communacopia virtual conference last week.

“When [WMG owner] Access acquired Warner, we saw the future in streaming, and we invested very heavily in that area,” he told an audience primarily of investors. 

“It’s now our biggest source of revenue, plus 70% of our total revenue, and it’s still growing in very healthy double digits.”

Despite such buoyant figures, Cooper believed the music industry is only in “the early innings of streaming growth”.

“Roughly 10% to 12% of people with smartphones have subscribed to music,” he said. “So there’s a tremendous amount of conversion still to take place.

“It’s true in the biggest, established markets. In the US, UK, Japan, Germany, France, we’re nowhere near the [level of] penetration in the Nordics.

“In emerging markets, growth is faster, but they’re in their very nascent stages.  With the mature markets, [there’s still] an enormous amount of upside.”

He specified that “audio is vastly under-monetised” in relation to video.

“We believe that with growth and changes in pricing, the value of audio will begin to converge to the value of video.”

Subscription streaming, Cooper emphasised, “is just a tip of the iceberg but granted, it’s a large tip”.

“Music has also become the cornerstone for a whole host of new business models, from social media to in-home fitness to new utilisation in TV and film.

“What we’re looking to do is be the leading, 21st-century digital music entertainment company that works globally as well as locally. 

“The way we add value with the speed at which the music ecosphere is changing, and the growing complexity that it brings, is that we and other major labels and our publishers are now the people that enable our artists to cut through the noise.” 

During COVID lockdown, Cooper said digital had grown for Warner while physical sales, artist services and sync which were affected early on, are slowly returning to normal.

In this period, Warner aggressively signed new acts while providing established acts with the chance to create and collaborate in its various in-house studios around the world or shipped out mobile studio kits, he said. 

Fan bases were tapped to crowd-source videos.

Release schedules were affected but Q4 and early 2021 will see major acts such as Coldplay return.

“We have some huge artists coming back,” he revealed.  “They’re all at the top of their game. Their new music is being heavily anticipated.

“At the same time, we’ve got some really, really cool, great, dynamic, new artists coming through.” 

How Warner coped – and continues to – during the pandemic after transiting to a from-home business very quickly “reassures us that our organisation and strategies make a lot of sense and it really reinforces our belief in the future of music,” he summarised.