Warner’s recorded music revenues just topped $1bn for the fourth straight quarter

The three months to end of September marked the fourth billion-dollar quarter in a row for Warner Music Group‘s recorded music business.

Published today (November 15), WMG’s fiscal results for the three months to end of September (its fiscal Q4, but calendar Q3), reveal that the company’s quarterly recorded music revenues – including streaming, digital and physical sales, plus ancillary income – hit $1.172 billion, up 22.3% year-on-year (or up 21.1% at constant currency).

Major sellers across the quarter included Iron Maiden, Dua Lipa, Ed Sheeran, Masked Wolf and Ava Max.

In the previous quarter – calendar Q2 – WMG’s quarterly recorded music revenues from streaming, digital and physical sales, plus ancillary income reached $1.152 billion, up 34% year-on-year (or 27.6% in constant currency).

And in calendar Q1 (the three months to end of March), WMG generated recorded music revenues of $1.059bn, up 16.8% (or 12.9% in constant currency).

In calendar Q4 2020 (WMG’s fiscal Q1 2021), the company’s recorded music revenues were up 4.5% at constant currency YoY to $1.16bn.

Breaking down WMG’s recorded music streaming revenue figure in calendar Q3 2021 reveals that $777 million came from streaming, a figure which was up 22% YoY (see below).

Digital revenue (including streaming and downloads), increased 19% (or 17.3% in constant currency), from $679 million in the prior year quarter  to $807 million in the three months to end of September this year.

Contributing to this increase, according to WMG, was accelerated revenue growth from emerging streaming platforms like Facebook, TikTok and Peloton.

Revenue growth in this area comes as no surprise, following WMG CEO Steve Cooper‘s confirmation in September that the company’s recorded music operation has a present run-rate of $235 million per year in revenue from “alternative” platforms including Facebook, TikTok and Peloton.

Warner Music Group’s digital revenues represented 68.9% of the company’s total recorded music revenues, versus 70.9% in the prior-year quarter.

WMG says that the decrease in digital revenue as a percentage of total recorded music revenue is owed to “the partial recovery of certain COVID-impacted revenue streams in the quarter”.

Amongst those revenue streams to see ‘partial recovery’ were artist services and expanded-rights revenue, and physical revenue.

WMG’s artist services and expanded-rights revenue increased 71.4% (or 69.7% in constant currency) to $168 million in calendar Q3, which the company says reflects an increase in merchandising and concert promotion revenue, both of which were disrupted by COVID in the prior-year quarter.

Meanwhile, WMG’s physical revenues grew 21% (or 22.1% in constant currency) YoY to $127 million, primarily due to what the company says was “an increasing demand for vinyl products and continued recovery from COVID disruption”.

Publishing

WMG’s music publishing operation – Warner Chappell Music (WCM) – saw its revenues increase by 21.3% YoY (or 19.2% at constant currency) to $205 million in calendar Q3, compared to $169 million in the prior-year quarter.

This uplift was propelled by increases to all WCM revenue segments, including synchronization, mechanical and performance, but Digital was the publishing company’s primary growth driver in calendar Q3.

Digital revenue grew 20% (or 18.8% at constant currency) to $120 million, compared to $100 million generated in the prior year quarter. Digital revenue as a percentage of total Music Publishing revenue fell to represented 58.5% in calendar Q3, from  59.2% in the prior-year quarter.

WMG says that the decrease is also due “to partial recovery of certain COVID-impacted revenue streams in the quarter”.

Amongst those revenue streams was income from Synchronization, which grew 44.4 YoY, from $27 million in Calendar Q3 2020, to $39 million  in the three months to end of September 2020.

Sync revenue increased “due to higher motion picture and commercial income and a one-time licensing settlement”, according to WMG.

Elsewhere, Warner Chappell’s mechanical revenues increased from $10 million $13 million (30% YoY) “as businesses continued to recover from COVID disruption and from an increase in physical sales”, says WMG.

Performance revenue, meanwhile, increased 7.1% YoY to $30 million “as bars, restaurants, concerts and live events continued to recover from COVID disruption”.

“Music is essential to billions of people across the globe,” said Steve Cooper, CEO, Warner Music Group.

He added: “But now, more than ever, great talent needs help to cut through the noise. By delivering for new artists and songwriters, returning superstars, and global legends, we’ve also delivered outstanding results in 2021,”

“Music is essential to billions of people across the globe.”

Steve Cooper, Warner Music Group

“Looking to 2022, we’re excited to release incredible new music from the world’s hottest artists and most influential songwriters.

“We’re also planning innovative moves and collaborations that will strengthen our leadership position across a vast universe of opportunities, in both the digital and physical worlds.”

“Our strong fourth-quarter results put an exclamation point on an outstanding year.”

Lou Dickler, Warner Music Group

Lou Dickler, Acting CFO, Warner Music Group, added: “Our strong fourth-quarter results put an exclamation point on an outstanding year.

“Even as certain revenue was impacted by COVID, the strength and resilience of our music propelled us to double-digit revenue growth and margin expansion in 2021.

{As the possibilities for music continue to evolve, we remain focused on delivering shareholder value through our financially disciplined investment strategy and positioning ourselves for the next wave of growth.”Music Business Worldwide