Universal hits historic digital tipping point as streaming jumps 34%

September 2, 2015

It’s a big day for Lucian Grainge: Universal Music Group‘s recorded music revenues grew 15.2% in the first six months of 2015 – as a boom in streaming income transformed it into a truly digital-first enterprise.

According to MBW analysis of Universal’s recorded music operation (omitting publishing and merchandising), digital income claimed more than 50% of company revenues in the six months to June 30 – outperforming physical sales and licensing combined.

By generating €926m in the period, digital music revenues were up 7.3% year-on-year at constant currency and perimeter.

That dwarfed UMG’s recorded music income from physical sales (€573m, down 7.4% at constant currency/perimeter) and licensing (€348m, up 16.4% on the same basis).

UMG’s recorded music operation accrued €1.85bn in the six-month period in total, up 15.2% on the €1.60bn achieved in H1 2014 in real terms – and up 3.6% at constant currency/perimeter.

Factoring in UMG’s other operations – merchandising and music publishing, via UMPG – the Vivendi-owned company pulled in €2.31bn in the first six months of 2015.

Boosted by the strong US dollar, that was up more than €300m, or 15.4%, on the comparable revenue figure from H1 2014.

At constant currency, UMG’s total revenues grew by a healthy 3.1% (and were up 3.4% factoring in perimeter).

The key reason for all of this growth was simple: streaming income.

At a time when UMG remains locked in licensing negotiations with Spotify and other services, the major saw its total revenues from streaming – across ad-funded and subscription – leap up by 34% in H1 2015.

This was more than enough to offset drops in physical sales, from which income fell 7.4% (at constant currency/perimeter), and downloads, which were down 5% on the same basis.

Music publishing revenue at UMPG was up 2.7% at constant currency/perimeter to €352m, which Universal pinned on “improvements in digital and performance revenues”.

Meanwhile, merchandising revenues grew 3.2% at constant currency/perimeter to €132m.

And in crucial news for CEO Lucian Grainge, who recently extended his contract at UMG by five years, the company’s EBITA in the first half of 2015 – the closest clue we can get to UMG’s overall profit – was up 6.7% at constant currency to €171m.

UMG named its bestselling recorded music artists/sources in the six-month period as: