Wednesday, February 24, 2016

Universal is music's first billion dollar streaming record company

Written by Tim Ingham — UMG has become the first recorded music business to generate a billion dollars of revenue from streaming services in a calendar year.

According to the Q4 results of its French parent Vivendi, the major’s streaming income was up 43.2% at constant currency in 2015 to €954m.

When you apply the Euro/US dollar exchange rate from the end of 2015 (1.089/1), that figure equates to $1.04bn.

Vivendi prefers reporting in constant currency as it reflects like-for-like business performance – but 2015 also happened to be a year where a weak Euro was a great advantage to the company’s shareholders.

In actual terms (embracing currency fluctuations), streaming income at UMG was up by a remarkable 56.2% in 2015, from €610m in 2014.

That reflected a jump in annual streaming revenues of €344m ($374m) – comfortably more than a third of a billion dollars.

The results set UMG back on a path of digital growth following something of an annus horribilis in 2014, when its annual digital recorded music income actually fell slightly.

Even at constant currency, 2014’s €1.64bn digital income tally represented a drop of 0.4% on 2013’s income from streaming and downloads (see below).

In 2015, however, digital income surged once again at UMG, hitting €1.975bn ($2.15bn).

This was up 8.6% on 2014’s digital haul at constant currency. But boosted by the Euro exchange rate, the figure actually actually increased by 20.5%, or €340m, year-on-year.

Download income provided €1.02bn ($1.11bn) to UMG in 2015.

That was down 13% at constant currency on 2014’s €1.03bn download revenues – but a drop of just €9m, or 0.9% in actual terms.

Streaming claimed 48% of UMG’s 2015 digital music revenue, with downloads on 52%.

Yet in the second half of the year alone, confirmed Vivendi, these positions switched – with streaming claiming 52% of digital revenues.

In turn, digital music claimed 48% of Universal’s total recorded music income in 2015 – across download, streaming, physical and licensing – of €4.113bn ($4.48bn).

This total recorded music income figure was up 2.2% at constant currency on 2014 but increased 11.5% in actual terms.

Physical music revenues were down 6.7% at constant currency to €1.41bn ($1.54bn) – but were only down by 0.5% or €7m in real terms.

As such, CD and vinyl claimed 34.3% of UMG’s total recorded income pie in 2015, far less than digital’s 48%, with licensing (sync – ‘other’) growing 7.1% to €728m.

That was a significantly different picture to 2014, when digital contributed 44% of UMG’s total recorded music revenue, with physical music on 38% and licensing (sync) on 17%.

Helped by exchange rates, Universal Music Group’s overall revenues in 2015 – including recorded music, publishing, merch and more – stood at a whopping €5.11bn ($5.56bn).

That was up 2.5% at constant currency but 12.1% (or €551m) in actual terms.

Universal Music Publishing’s income hit €756m ($823m) – up 3% at constant currency and 12.4% in actual terms.

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