Universal Music Group published its Q4 and FY 2024 results on Thursday (March 6), posting overall revenues in FY 2024 (across recorded music, publishing, and more) of EUR €11.834 billion (USD $12.81bn), up 7.6% YoY.
The company’s recorded music subscription revenues, meanwhile, hit EUR €4.624 billion annually, up 9.1% YoY, which represented the equivalent of USD $5.00 billion, according to average exchange rates for the year as per IRS data.
The firm’s adjusted EBITDA hit €2.661 billion ($2.88bn), up 13.8% YoY.
In his opening remarks on UMG’s earnings call on Thursday, Chairman and CEO Sir Lucian Grainge noted that UMG has “posted healthy revenue and double-digit adjusted EBITDA growth for each and every year since 2021, when UMG became a stand-alone public company”.
He added: “At the heart of our success is, of course, the creative brilliance of our artists and songwriters. The worldwide consumption of the music of our artists and songwriters remains simply extraordinary. They’re shaping culture across the entire globe.”
Grainge also explained on the company’s earnings call how “breaking new artists is fundamental to [UMG’s] culture”.
Added Grainge: “We’re very proud of it. All of our teams around the world share a passion for doing just that. And in 2024, strategic investment in new talent continued to produce remarkable results.
“One powerful fact we’re especially proud of; UMG broke the two biggest breakthrough artists in the world last year: Sabrina Carpenter and Chappell Roan.”
Chappell Roan was named Best New Artist at the Grammys last month. Grainge noted on the call that “UMG’s artists and songwriters won a record-breaking total of more than 50 Grammys.”
Grainge dedicated the second half of his opening statement to the growth strategies outlined by UMG’s leadership team at the company’s Capital Markets Day in September. According to Grainge, the company is “already turning those strategies into realities…” and highlighted three particular initiatives on Thursday’s earnings call.
The first is “working with [UMG’s] DSP partners to drive the exciting new era of sustained growth we’re calling streaming 2.0”.
Second, is UMG’s focus on growing its artist and label services business, which, he said, complements the company’s frontline label business and “provides a broad set of resources to a wide range of artists, labels, and entrepreneurs.”
The third strategy highlighted by Grainge on the call was the expansion of UMG’s global footprint by “partnering with local labels, developing local artists, and through M&A.”
Grainge pointed to Virgin Music Group’s recent strategic partnerships with Hungama Digital Media and RainLabs, which are based in India and Ghana, respectively.
He also referenced Universal Music Greater China’s strategic distribution agreement with independent label Modern Sky. UMG also recently signed an exclusive global agreement with Liu Huan, who Grainge noted, is “known as the King of Chinese Pop.”
Meanwhile, highlighting Universal”s recent acquisition of a majority stake in Japan’s A-Sketch, Grainge explained that UMG is also “expanding [its] presence in established markets around the world” where “local repertoire and adjacent businesses continue to present exciting growth opportunities.”
Sir Lucian Grainge, plus Boyd Muir, UMG’s Chief Operating Officer and Chief Financial Officer, and Michael Nash, Executive Vice President and Chief Digital Officer, were grilled by analysts on the company’s earnings call on Thursday.
Here’s what else was said on the call…
1. Sir Lucian Grainge says that streaming 2.0 ‘will build on the enormous scale we’ve achieved thus far in streaming’s initial stage’
Universal Music Group introduced the concept of Streaming 2.0 at the company’s Capital Markets Day for investors in September. It was explained that for UMG, ‘Streaming 2.0’ represents a new era of digital music hung on changes, including:
- (a) Streaming subscription offerings becoming ‘segmented’, with more expensive options for music ‘superfans’;
- (b) Subscription ARPU (average revenue per user) moving upwards across music platforms, partly as a result of the aforementioned ‘superfan’-targeted offerings, and partly as a result of future streaming price rises.
Speaking with analysts on Thursday’s earnings call, Grainge explained that Streaming 2.0 will “build on the enormous scale we’ve achieved thus far in streaming’s initial stage”.
He added: “This next stage of streaming will see it evolve into a more sustainable and growing artist-centric ecosystem that improves monetization and delivers great experiences for fans.
“At the same time, enhanced consumer acquisition strategies will drive greater conversion by fans from free to paid. And then from paid on to super premium tiers enabling us to segment and [improve] customer value at higher than ever levels.”
“We are extremely encouraged by this initial implementation of streaming 2.0.”
Sir Lucian Grainge
Grainge explained, however, that the “execution” of Streaming 2.0 “requires a highly nuanced approach and one which adapts to the specific characteristics of each individual platform” including “distinct subscriber base and obviously, the regional variations, culture, language, styles, genres, etc.”
He told analysts he’s “delighted to report that [UMG’s] work to usher in streaming 2.0 is well underway,” noting that UMG completed its first “major new DSP deal to incorporate the key principles of the strategy” by the end of 2024. That first deal was with Amazon Music. A deal with Spotify followed in February.
Grainge explained that these “agreements provide for new paid subscription tiers, the bundling of music and non-music content and a richer audio and visual content catalog that will benefit artists, songwriters, platforms and consumers alike”.
He added: “We are extremely encouraged by this initial implementation of streaming 2.0, aligning our goals with those of our platform partners, both the Spotify and Amazon deals are win-win initiatives that will deliver meaningful growth and benefit the entire music ecosystem.”
2. UMG is committed to being “the premier destination for the industry’s best entrepreneurs and independents….”
One of the growth strategies outlined by Sir Lucian Grainge during his opening remarks on Thursday’s call was what he called “the increasing focus [UMG’s] placing on expanding our artist and label services business.”
Added Grainge: “The independent services space is highly competitive and a growing part of the industry. The reason so many independent music entrepreneurs actively seek to partner with UMG, when they have more alternatives than ever before, is that we provide what they’re seeking; the most innovative creatives and the finest resources to advance their artist careers and achieve their financial goals.
“We are committed to ensuring that UMG continues as the premier destination for the industry’s best entrepreneurs and independents. After all, UMG’s core is a collection of some of the greatest labels in music that always started as independent.
“And today, we continue to foster a culture whose highest priority is respect for artists and entrepreneurs.”
“By investing in businesses like Downtown that can and do support today’s leading music entrepreneurs, we can also help to advocate for an advanced policies and practice that will further protect and grow the entire music system.”
Sir Lucian Grainge
Grainge pointed out an example of the company’s “efforts in this direction,” highlighting the news of Virgin Music Group’s agreement to acquire Downtown Music Holdings for $775 million.
“We expect the deal to close later this year,” said Grainge, “at which point Virgin Music Group and Downtown will offer a broadened and enhanced suite of services to clients, including digital and physical distribution, release marketing, business intelligence, neighboring rights, synchronization, royalties and royalties management”.
Added Grainge: “By investing in businesses like Downtown that can and do support today’s leading music entrepreneurs, we can also help to advocate for advanced policies and practice that will further protect and grow the entire music system.”
3. UMG spent over $1 billion on investments last year. Expect ‘similar investment levels in the next few years’.
Boyd Muir, UMG’s CFO & COO, revealed on the call that Universal spent just over EUR €1 billion (USD $1.08bn) on investments in 2024, across both catalog and other acquisitions.
He provided what he called “a bit more color” on UMG’s investments last year, noting that in 2024, the music company spent EUR €266 million ($287.8m) on catalog acquisitions specifically, up from EUR €178 million ($192.6m) in 2023.
Muir also revealed on the call UMG spent EUR €186 million ($201.29m) on royalty advance payments in 2024, compared to EUR €100 million ($108.22m) in 2023 (see below).
Muir added that UMG’s “catalog spending in 2024 included EUR €73 million from a previously disclosed 2023 deal that was in escrow until early 2024 as well as the acquisition of the remaining stake in RS Group, among other items”.
Universal acquired a 70% stake in the recorded music catalog of Thailand’s RS Group for around USD $45 million (plus a potential ~$5m in bonus payments) in 2023.
As revealed by MBW in September, UMG acquired the remaining 30% of RS Group’s catalog for approximately USD $18 million, with a potential additional bonus fee of approximately USD $2 million. The total sum spent by UMG to take full ownership of the RS recordings portfolio was approximately USD $65-$70 million.
Muir noted on Thursday’s call that the remainder of UMG’s 2024 investment spending “focused largely on deals, which push forward UMG’s strategic initiatives”.
Deals called out by Muir included UMG’s majority acquisition of Nigeria-based record label Mavin, the undisclosed minority stake in Complex Networks, $240 million investment in M&A vehicle Chord, and the acquisition of the remaining stake in [PIAS].
In response to a question from Goldman Sachs‘ Lisa Yang about the company’s investment strategy, and how much it plans to spend annually in the coming years, Muir confirmed: “You should expect similar investment levels in the next few years”.
Muir also explained that UMG is investing in “geographies” which are “evolving” and where UMG sees “the consumption pattern shifting towards paid subscription”.
Added Muir: “We’re looking at our relative share in those geographies. We want to ensure that we are positioned in those markets at a similar level to how we are positioned in the more evolved market. M&A is [how] we will pursue it.”
He added that UMG is also pursuing “M&A in relation to other strategic initiatives” and highlighted UMG’s investment in Complex Networks as “taking [UMG] into the zone where music meets culture, meets commerce and e-commerce and having the relationship with the superfan”.
4. Sir Lucian Grainge says that where DsPS go geographically, UMG goes “with them hand-in-hand, investing in local talent”.
Sir Lucian Grainge also weighed in on the answer to the question above about UMG’s investment strategy.
He explained that the expansion of licensed streaming globally and the availability of market-level data have impacted the decision-making behind UMG’s M&A strategy in various markets.
“There’s a significant story in terms of what happened in the past over the last three, four, five decades insofar as a lot of the markets and regions where we’re investing are where there was no investment [previously] because there was massive piracy and there was no protection for copyright and IP”, said Grainge.
He added: “So where markets evolve through music in the cloud and digital distribution and global platforms like Amazon, Apple, Spotify, etc; where they go, we go with them hand-in-hand, investing in local talent.”
Commenting further on the company’s geographic M&A strategy, Grainge continued: “There are some markets where there are enormous libraries and catalogs of labels that were created decades ago. We can actually [direct] our M&A strategy to continue to invest in their business as the markets [mature].
“And now with all the data, we’re able to actually identify exactly what the audience and what the consumer actually wants in these markets, whereas before, we were running an operating blindfold in terms of the direction in which we were going.”
5. UMG’s research shows that global music subscriptions grew just over 9% in 2024.
UMG’s leadership team were asked a pair of questions by Guggenheim Securities’ Michael Morris about the pace of Recorded Music subscription streaming revenue growth, and the progress being made on the rollout of superfan tiers at streaming platforms.
Michael Nash, UMG’s Executive VP & Chief Digital Officer, explained that UMG’s “updated consumer research in the global subscription market tracks to the financial results” that UMG has just reported.
As reported last week, the company’s recorded music subscription revenues hit EUR €4.624 billion annually, up 9.1% YoY.
Meanwhile, in Q4 2024 (the three months to end of December), UMG’s subscription streaming revenues from recorded music were up 9.0% YoY, to EUR €1.227 billion (USD $1.33bn).
Added Nash: “Our research shows that global subscriptions, which means the payers, grew just over 9% in 2024. And in terms of geographic mix, 45% of [the] current subscriber base is in the developed markets and 55% is now sitting in the high-growth markets, including China.”
Nash added that the company sees “some basis for even more optimism in terms of the expansion of the total addressable market” for global subscriptions in “terms of progress on superfan and on the super-premium tier”.
Nash also confirmed that UMG is “in conversations with all of our partners about super-premium tiers,” adding that it is “going to be an important development [for] segmentation of the market”.
Nash added that UMG “expect[s] the platforms are going to compete on product with differentiated super-premium tier offers”. He added: “So we’re not necessarily looking for standardization there.”
Music Business Worldwide
