Universal Music Group’s revenue reached $3.45 billion in the final period of 2023, up 9% year-over-year as the company’s non-subscription streaming growth slowed again and its record labels got a boost from strong physical sales and licensing.
Billboard reports Spotify’s price increase helped drive the recorded music division’s subscription revenue up 8.9% (up 15% at constant currency, which removes the effects of foreign exchange rates) to 1.14 billion euros ($1.22 billion). As a percent of recorded music revenue, subscription revenue increased to 47% from 46.7% in the prior-year quarter.
Non-subscription streaming revenue declined 1.3% as reported (increased 5.6% at constant currency) in the quarter, however. That followed a 1.4% decline (a 5% gain at constant currency) in ad-supported streaming revenue in the third quarter. Ad-supported streaming “remains strong” but the ad market recovery “has not been uniform” and UMG is “cautious” about near-term growth, CFO Boyd Muir said during Wednesday’s earnings call. The soft streaming revenue was not affected by UMG’s decision in early February to pull its catalog from TikTok, which accounts for 1% of UMG’s annual revenue.
Sales were strong elsewhere in the recorded music division, though. Physical revenue of 447 million euros ($481 million) was up 10.6% (up 17.0% at constant currency). Licensing and other revenue of 410 million euros ($441 million) was up 26.5% (up 34.0% at constant currency). Downloads and other digital revenue declined by 49.2% (45.8% at constant currency), but at 32 million euros ($34) accounted for just 1.3% of recorded music revenue in the quarter.
Top sellers in the quarter were Taylor Swift, The Rolling Stones, Drake, Jung Kook and Stray Kids.
However, Universal Music Group will cut jobs and streamline operations to save $271.03 million by 2026, the company said on Wednesday, a month after a lucrative licensing deal with social media platform TikTok expired. The deal with TikTok, which expired on Jan. 31, generated about 1% of UMG's total group annual revenue, it said. The license failed to be renewed over disagreement about artist and songwriter compensations, among other issues.
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