Universal Music Group achieves highest revenue in a decade thanks to streaming
Ever since streaming became popular, thanks to sites like Spotify and Pandora, record companies large and small have made a racket about how it hurts their music sales. While this may be true, there is also research suggesting that Spotify was right when it stated that it was offsetting this decline by reducing the amount of music that is downloaded illegally. Although helped by a favorable Euro to USD exchange rate, Universal Music Group’s (UMG) 2015 earnings provide compelling evidence to substantiate this fact.
UMG’s 2015 Fiscal Year Results Presentation, published February 18, 2016, shows total revenue up 1.4% and total net profit up 11.3% from 2014. UMG attributed the increase in revenue to “strong growth in streaming and subscription sales, which has more than offset the decline in physical sales and downloads.” In the graph below, it is apparent that while physical sales continue to decrease, streaming and subscription services are well on their way to becoming sustainable, at least for a company of this size.
In 2014, UMG was the largest recorded music company in the world, holding just over a third of the entire market. As a further example of its size and scope, the company put out 7 of the 10 top albums in the USA in 2015. Without a doubt, independent labels and artists will have a much harder time replicating these results in the near future, but UMG’s latest earnings report shows that there is hope for the sustainability of streaming.