Repercussions for Artists, Labels, Music Investors, and Beyond
Mentioned in this article: UMG, Spotify, Apple, Amazon, Disney, YouTube, Sony Music, Warner Music Group
When Spotify reported 21% revenue growth for Q2’24, investors were impressed. Spotify is the best-known pure-play proxy for streaming music, commanding a third of the market and possibly a higher share-of-mind.
Less reported was the fact that their cost of revenues (a closer proxy for what they pay for music rights) only grew by 14%. Sure, those include other items like podcasts and audiobooks, but movements in the latter two likely canceled each other out. Plus, there is currently a dispute between Spotify and the labels as to how much of their revenue is attributable to “Bundled” products versus pure music. Still, if artists, labels and catalog investors could look forward to only 14% of revenue growth YoY, they’d be thrilled.
Yet the cheers didn’t last. Just a day later, UMG poured cold water on expectations by reporting their revenue from streaming had only grown by 7% in the same quarter. Shares tanked...