{"id":491751,"date":"2019-10-31T10:29:57","date_gmt":"2019-10-31T16:29:57","guid":{"rendered":"https:\/\/www.rollingstone.com\/?p=905159"},"modified":"2019-10-31T10:29:57","modified_gmt":"2019-10-31T16:29:57","slug":"streaming-growth-is-slowing-at-the-worlds-biggest-music-company-could-tiktok-help","status":"publish","type":"post","link":"https:\/\/alwaysmountaintime.com\/kqzr\/music-news\/streaming-growth-is-slowing-at-the-worlds-biggest-music-company-could-tiktok-help\/","title":{"rendered":"Streaming Growth Is Slowing at the World\u2019s Biggest Music Company. Could TikTok Help?"},"content":{"rendered":"

It\u2019s an exciting time for the owners of Universal Music Group<\/a>.<\/span><\/p>\n

Paris-based Vivendi, parent to the world\u2019s biggest recorded music company, updated its shareholders this month with the news that a $3 billion\u2013plus deal with China\u2019s Tencent \u2014 the latter company is set to acquire 10%\u201320% in UMG \u2013<\/span> should move to the final stages within the next few weeks.<\/span><\/a><\/p>\n

Not only that, but more bidders are apparently now showing their interest in UMG, as Vivendi reiterates its willingness to sell up to 50% of its most lucrative asset.  \u201c[There is a] continuing process for the potential sale of an additional minority stake in UMG to other partners,\u201d said Vivendi in a statement dated October 17th. \u201cSome have already expressed an interest in investing at a similar price level [as Tencent].\u201d<\/span><\/p>\n

You don\u2019t have to be an economics wonk to see why such would-be bidders, over and above any strategic \u201csynergies,\u201d might be tempted to own a piece of Universal right now.<\/span><\/p>\n

In the first nine months of this year, according to<\/span> Vivendi filings<\/span><\/a>, UMG\u2019s total revenues (across recorded music, publishing and other activities) hit \u20ac5.06 billion ($5.71 billion). At a U.S. dollar level that was up over $770 million year-on-year; compared to the<\/span> same nine month period<\/span><\/a> just five years before, in 2014, it was up by a massive $1.5 billion.<\/span><\/p>\n

<\/p>\n

Despite all of this positive news for UMG, there was one wrinkle in its Q3 results, revealing a definite trend that warrants industry scrutiny: In the first nine months of 2019, Universal\u2019s recorded music revenue growth from streaming<\/a> fell significantly.<\/span><\/p>\n

In simple percentage terms, year-on-year streaming revenue growth at Universal was up, organically, by 23.4% in the nine months to end of September 2019. In the prior year period, that figure stood at 35.8%; in the year before that, it was 40.8%.<\/p>\n

I\u2019ve dug further into Vivendi\u2019s results, which are reported in Euros, by converting them into U.S. dollars at the prevailing rate in each relevant quarter over the past three years. This gives a more accurate picture of UMG\u2019s true performance, not least because the firm\u2019s biggest territory today, where nearly 50% of its recorded music money is generated, is North America.<\/span><\/p>\n

These calculations show that, in the first nine months of this year, UMG\u2019s growth in recorded music streaming revenues was over $100 million smaller than that same YoY growth in the equivalent period of 2018 (see below): +$611 million (9M 2018) vs. +$497 million (9M 2019).<\/span><\/p>\n

<\/p>\n

<\/p>\n

This is, by no means, a big problem. At the end of the day, UMG\u2019s nine-month recorded music streaming revenues in 2019 have still grown by nearly half a billion dollars YoY \u2014 and the company remains on course to smash its record FY global revenues tally.<\/span><\/p>\n

Plus, Universal is still the inarguable number-one most dominant force in mainstream music: Vivendi proudly trumpeted on its call with investors earlier this month that UMG-signed artists claimed eight of the top 10 tracks on Spotify\u2019s Global chart in the first half of 2019 \u2014 including the entire top six. (\u201cSe\u00f1orita,\u201d by Shawn Mendes & Camila Cabello, likely led these rankings; it was officially Spotify\u2019s biggest track of the summer worldwide.)<\/span><\/p>\n

Yet what is also true is that the onset of a streaming revenue growth slowdown (which also applied at UMG\u2019s biggest rival,<\/span> Sony Music, in the first half of this year<\/span><\/a>) raises challenges that the major music companies will have to meet in the years ahead. Namely: if global streaming growth on the likes of Spotify, Apple Music, and TIDAL is going to decelerate as key markets (USA, U.K. and Europe) mature, are there any key factors which could inspire a re-acceleration of this income in the future?<\/span><\/p>\n

In an investor update issued on October 17th, Morgan Stanley remained upbeat on UMG\u2019s prospects for growth. It noted that, in a bull-market scenario, Universal could currently command a whopping $45 billion valuation. However, Morgan Stanley has also noticed the slowing revenue growth UMG\u2019s labels are seeing from streaming in 2019: It noted that YoY growth from streaming at Universal weighed in at 28% in Q1 this year, down to 23% in Q2 and just 20% in Q3.<\/span><\/p>\n

Morgan Stanley\u2019s update forecast that \u201cstreaming growth will slow materially\u201d at UMG across 2019 \u2014 but additionally suggested that the format could pick up speed again in future via \u201cthe opening up\u201d of large emerging markets, including China and India, by existing paid on-demand services.<\/span><\/p>\n

The investment bank also pointed to another, more intriguing factor that could heat up streaming income for UMG in years to come: \u201c[Growth] from emerging users of music licences including TikTok<\/a>, Calm, Facebook and Instagram.\u201d<\/span><\/p>\n

TikTok is a particularly noteworthy idea: the platform\u2019s owner, Bytedance, is currently believed to be undertaking licensing negotiations with the major record companies covering future additions to its service. In particular, TikTok\/Bytedance is expected to launch a new, Spotify-like audio on-demand service soon \u2014 some say before the end of 2019 \u2014 which industry whisperers suggest will initially focus on emerging, non-mature global markets.<\/span><\/p>\n

For Universal Music Group, this will surely be a welcome arrival. UMG is currently locked in negotiations with Spotify over the renewal of a global license to its catalog \u2014 and, not unrelated, has publicly espoused the belief that the more competitors there are in the paid-for streaming music marketplace, the better. That\u2019s especially true if said competitors, like TikTok, can give a boost to streaming revenue growth which \u2014 11 years after the launch of Spotify out of Stockholm \u2014 is now showing its very first signs of sagging.<\/span><\/p>\n

via:: Rolling Stone<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

It\u2019s an exciting time for the owners of Universal Music Group. Paris-based Vivendi, parent to the world\u2019s biggest recorded music company, updated its shareholders this month with the news that a $3 billion\u2013plus deal with China\u2019s Tencent \u2014 the latter company is set to acquire 10%\u201320% in UMG \u2013 should move to the final stages […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[56],"tags":[],"class_list":["post-491751","post","type-post","status-publish","format-standard","category-music-news"],"acf":[],"publishpress_future_action":{"enabled":false,"date":"2026-08-22 05:11:43","action":"change-status","newStatus":"draft","terms":[],"taxonomy":"category","extraData":[]},"publishpress_future_workflow_manual_trigger":{"enabledWorkflows":[]},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"KQZR - The Reel","distributor_original_site_url":"https:\/\/alwaysmountaintime.com\/kqzr","push-errors":false,"_links":{"self":[{"href":"https:\/\/alwaysmountaintime.com\/kqzr\/wp-json\/wp\/v2\/posts\/491751","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/alwaysmountaintime.com\/kqzr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/alwaysmountaintime.com\/kqzr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/alwaysmountaintime.com\/kqzr\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/alwaysmountaintime.com\/kqzr\/wp-json\/wp\/v2\/comments?post=491751"}],"version-history":[{"count":0,"href":"https:\/\/alwaysmountaintime.com\/kqzr\/wp-json\/wp\/v2\/posts\/491751\/revisions"}],"wp:attachment":[{"href":"https:\/\/alwaysmountaintime.com\/kqzr\/wp-json\/wp\/v2\/media?parent=491751"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/alwaysmountaintime.com\/kqzr\/wp-json\/wp\/v2\/categories?post=491751"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/alwaysmountaintime.com\/kqzr\/wp-json\/wp\/v2\/tags?post=491751"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}