Welcome to Music Business Worldwide’s weekly round-up – where we make sure you caught the five biggest stories to hit our headlines over the past seven days. MBW’s round-up is supported by Centtrip, which helps over 500 of the world’s best-selling artists maximize their income and reduce their touring costs.
The business of streaming dominated developments in the music industry this week, with Universal Music Group COO and CFO Boyd Muir telling an audience at a Morgan Stanley conference that we can expect to see the first of the new superfan-oriented ‘Super-Premium‘ subscription tiers appear in 2025.
Meanwhile, Amazon Music revealed this week that it’s following in Spotify‘s footsteps and bundling audiobooks (from its Audible service) into its music subscriptions. However, unlike with Spotify’s bundling, Amazon’s move won’t result in lower mechanical royalty payouts for songwriters.
Following a stellar Q3 earnings report, Spotify‘s stock price soared to a record high, giving the company a market cap of $92 billion. Co-founders Daniel Ek and Martin Lorentzon took the opportunity to cash out big-time, selling a combined $420 million in shares in November alone.
That windfall got MBW founder Tim Ingham pondering whether it’s time for Universal Music Group to sell its stake in Spotify, now worth $3 billion.
In a separate column, Ingham noted that, according to Spotify’s Q3 results (and Q4 forecast), the company expects to post a USD $1.5 billion annual operating profit at the close of this year, and suggested that “the long-argued premise that Spotify needs to claw back margin from songwriters – or indeed any music rightsholder – in order to survive is now palpably false”.
Finally, Warner Music Group‘s calendar Q3 earnings, released this week, showed 10.6% YoY growth in subscription streaming revenues.
Boyd Muir, Chief Operating Officer and Chief Financial Officer at Universal Music Group, expects “super-premium” subscription tiers to start appearing in 2025 – and he expects that between 20% and 30% of paying music subscribers will eventually sign up.
Next year, “you’ll see the first of those offerings,” Muir told an audience at Morgan Stanley’s European Tech, Media and Telecom Conference in Barcelona this week.
“We’re talking to all the platforms about what their premium offering might look like. They’re all a bit different,” Muir added.
“The types of things we’re talking about are early release of music, things like premier events around music, things like chat room[s] between artist and fan, collectibles…”
Spotify’s rival, Amazon Music, has become the latest music streaming service to bundle audiobooks with its Premium subscription.
In a challenge to Spotify’s audiobook service, Amazon Music Unlimited subscribers in the US, UK, and Canada can now listen to one audiobook a month from Amazon-owned audiobook service Audible. The retail and tech giant acquired Audible for $300 million in 2008.
The NMPA has already responded to the news, and the contrast between the organization’s reaction to Amazon Music’s move and its response to Spotify’s move earlier this year is striking.
“We expect this new Amazon bundle will not decrease revenue for songwriters,” NMPA President and CEO David Israelite said. “Unlike Spotify, Amazon is looking at music creators as business partners and seeking to have a deal in place before the first round of royalty payments…”
Universal Music Group and its investors have good reason to feel conflicted about Spotify‘s hockey-stick value growth in 2024.
After all, UMG, the world’s largest music rightsholder, was worth three times as much as SPOT in market cap terms as recently as the end of 2022.
Yet as things stand today, in public valuation terms anyway, Spotify is king of the music business.
Having overtaken UMG’s public valuation this summer, Spotify – with a $92 billion market cap today – is currently worth approximately double Universal’s valuation on the Amsterdam Euronext…
Who’s got the bigger user base: Netflix or Spotify?
Right now, there’s no contest: it’s Spotify.
According to its newly-released Q3 results, Daniel Ek‘s green machine was accessed by 640 million MAUs (monthly active users) in the quarter to end of September.
Netflix’s official user base hit 282.7 million ‘members’ in the same period. In addition, Netflix recently confirmed it now has 70 million people signed up to its ‘ad-supported’ tier, which launched two years ago.
There have been plenty of questions about the growth trajectory of streaming revenues at major music companies this year.
Warner Music Group has consistently provided one of the most optimistic responses.
On November 21, WMG announced its fiscal Q4 (calendar Q3) results. The company has posted double-digit YoY recorded subscription streaming growth on a normalized basis for the fourth quarter in a row.
In calendar Q3 (WMG’s fiscal Q4), the company’s subscription streaming revenues grew 10.6% YoY on a normalized constant currency basis to $645 million…
MBW’s Weekly Round-Up is supported by Centtrip, which helps over 500 of the world’s best-selling artists maximise their income and reduce their touring costs.Music Business Worldwide
