Universal Music Group NV, the largest music company in the world, reported better-than-expected second-quarter revenue due to significant growth in recorded music and merchandising. The company's revenue rose by 6.4% to €2.70 billion ($3 billion), surpassing analysts' estimates of €2.56 billion.
The increase in revenue was driven by a 10.6% rise in subscription revenue, fueled by a growth in global subscribers and price increases on certain platforms. Streaming revenue, an integral part of the recorded music segment, also experienced a 2.9% growth. While music streaming has greatly contributed to the industry's growth, concerns have been raised regarding the fair compensation of artists and record labels. CEO Lucian Grainge has emphasized the urgent need to reimagine the streaming model to adequately reward artists whose music attracts fans. This has led Universal Music to collaborate with music streaming platforms such as Tidal and Deezer SA to explore an "artist-centric model" that aims to enhance subscriber growth, deepen retention, and monetize fandom more effectively.
Additionally, Universal Music has been actively opposing the use of artificially generated music created through generative AI. The company considers the training of AI using its artists' music as a breach of agreements and a violation of copyright law. During the second quarter, Universal Music expanded its presence in the Thai market through the acquisition of RS Group's music catalog, which represents the work of over 960 artists.
The quarter saw several top-selling artists in recorded music, including King & Prince, Morgan Wallen, SEVENTEEN, and Taylor Swift. Despite lower touring activities during this period, revenue from merchandising was boosted by growth in direct-to-consumer sales.
Universal Music's strong performance in the second quarter reflects the continued growth of the music industry, driven by the popularity of streaming platforms and increasing subscription revenues. The company's strategic partnerships and acquisitions further solidify its position as a global leader in the music business. With a keen focus on rewarding artists and protecting their music, Universal Music remains at the forefront of industry innovation and advancement.