Universal Music Group generated 51% of its 2023 recorded music revenues in North America… and 8 other things we learned from its new annual report

If you want to know what’s really going on at Universal Music Group, its annual report is a good place to start.

The bulky tome offers in-depth financial information on everything from UMG’s general fiscal performance, to its scale in different markets, and the contribution of ‘catalog’ vs. ‘frontline’ to its revenues.

UMG’s 2023 annual report, weighing in at a bulky 355 pages, was published just the other week, and MBW has since spent some time filleting it.

Much of the publication obviously focuses on UMG’s extraordinarily successful 2023: A year in which it posted USD $12 billion in total revenues, with annual adjusted EBITDA just north of USD $2.5 billion.

But there’s a bundle of other interesting facts and figures revealed within the report.

Here are nine of them…

1. 51% of Universal’s recorded music revenues were generated in North America last year (and 50% of its overall revenues were generated by its US company)

Universal Music Group is a global force, with offices in more than 60 territories, covering nearly 200 markets. “This means we operate in more territories and markets than any other recorded music company,” its annual report reminds readers.

As such, international expansion is a major priority for UMG, especially with streaming subscription growth rates showing signs of plateauing in major markets like the US.

In 2023, UMG acquired Chabaka Music in MENA, for example. It also acquired a majority stake in RS Group in Thailand, in a deal worth approximately USD $50 million, as well as inking an exclusive partnership with Indian talent management firm Represent.

Universal has additionally been ramping up activity in China – recently named the world’s fifth largest recorded market by IFPI. Last year in China, UMG inked new deals with stars like Eason Chan and Jay Chou (inclusive of Chou’s label, JVR Music).

Despite this global expansion, UMG’s recorded music business remains heavily reliant on North American music fans.

According to stats in UMG’s annual report crunched by MBW, some 51.1% of Universal’s total recorded music turnover in 2023 (EUR €8.46bn/USD $9.16bn) took place in the US and Canada – approximately the same proportion of these global revenues that NA claimed at UMG in 2022.

North America’s share of UMG’s global recorded music revenues, according to MBW research, has steadily ticked up over the past decade, from 39% in 2014 through to 46% in 2018 and on to the 51% share we saw last year and the year before that.

Elsewhere in 2023, UMG saw the share of its global recorded music revenues grow slightly in three key international territories: Europe, Asia, and Latin America.

Of these, Europe claimed 28.3% (vs. 27.6% in the prior year), Asia claimed 13.2% (vs. 12.7% in the prior year), and Latin America claimed 4.2% (vs. 3.8% in the prior year).

In terms of UMG’s total external revenues (including recorded music, music publishing, merch, and other activities) in 2023, 50% were generated by UMG’s US company, according to the annual report.

UMG’s UK company generated 9% of these revenues, with a further 7% generated in Japan (see below).

Considering UMG’s total global revenues stood at EUR €11.11 billion ($12.0bn) last year, this means that UMG’s US operation generated approximately USD $6 billion of this money.

2. UMG added around 200,000 recordings and around 500,000 songs to its represented catalog in 2023

According to the latest UMG annual report, the company represented over 3.2 million recorded music tracks at the close of 2023.

In addition, UMG’s publishing company (UMPG) represented songwriting cuts in approximately 4.5 million songs.

Both of these numbers have climbed considerably year-on-year: UMG’s annual report for 2022 said it repped “over 3 million” recordings and, publishing-wise, “nearly 4 million” songs, at the close of that year.

This is especially relevant when you consider that UMG is still yet to sign a new licensing deal with TikTok/TikTok Music across both its recorded music and music publishing catalogs.

Both of these catalogs are therefore not legally allowed on the TikTok platform… Taylor Swift aside.

3. UMG employed over 10,000 people at the close of last year

Understandably, UMG’s global restructuring – taking place as you read this – has been big news of late.

That restructuring includes a plan to lay off hundreds of employees as part of a strategy to find $270 million in annual cost savings by the end of 2026.

One angle on this subject that’s rarely investigated: How many net employees did UMG actually add to its global ranks in recent years, before its 2024 “cut to grow” plan was activated?

The answer: as of the end of 2023, UMG had added 785 net new employees in the prior two years (since end of 2021), and a whopping 1,107 net new employees in the prior three years (since end of 2020).

We know this because, according to its latest annual report, Universal employed 10,290 people around the world at the end of 2023 (see below).

Of UMG’s 10,290 employees in 2023, according to its report, 49% were men and 51% were women.

4. Spotify (almost certainly) contributed a fifth of UMG’s revenues last year

Okay, so Universal doesn’t actually name Spotify as its biggest customer (i.e. its biggest provider of total company revenues) in its 2023 report.

But it’s a fairly certain guess that’s who UMG is referring to when it writes: “In 2023, UMG had 3 customers that each individually represented over 10% of total revenues (3 customers in 2022) and which represented total revenues of 19%, 11% and 10% respectively…”

Spotify, you’d assume, contributed the 19% there (via both recorded music and music publishing royalties/advances). MBW would also guess that YouTube contributed 11%, with Apple on 10%.

We can make that guess thanks to UMG’s rival, Warner Music Group, whose latest 10K annual filing reveals: “In fiscal year 2023, Recorded Music revenue earned under our agreements with our top three digital music accounts, Spotify, YouTube and Apple, accounted for approximately 41% of our Recorded Music revenues.”

Spotify’s share of UMG’s total annual revenues grew slightly in 2023 (to 19% vs. 18% in 2022).

5. Even with Taylor Swift, Universal’s Top 50 artists contributed less than a quarter of its revenues in 2023

One particularly interesting line in UMG’s 2023 annual report is this: “Our extraordinarily diverse roster of artists… means that our business’
success is not reliant on one artist or even a small number of artists. [Our] top 50 artists only accounted for 24% of UMG’s recorded music revenue in 2023.”

That 24% stat was actually slightly up on the equivalent stat from 2022, when UMG’s Top 50 artists contributed 22% of its total recorded music revenues.

The reason for that slight uptick could be the activity of Taylor Swift, whose recorded music catalog claimed a larger share of streaming volume in the US last year than each of two entire genres: jazz and classical music.

Swift was the biggest revenue-generating recording artist in the world in 2023, according to IFPI, followed by SEVENTEEN at No.2, Stray Kids at No.3, Drake at No.4, and The Weekend at No.5 – all of whom are distributed and/or signed to Universal Music Group.

(In fact, UMG claimed nine of the IFPI’s Top 10 global acts in 2023.)

6. Universal spent over USD $5 billion on ‘artist costs’ in 2023

According to Universal’s annual report, UMG’s total “artist costs” stood at EUR €5.15 billion (USD $5.6bn) in 2023.

That was up by over half a billion dollars on the prior year’s equivalent figure (EUR €4.70bn, see below).

“Artist costs” in this regard primarily consist of three items, applied across recorded music and music publishing: (i) royalty expenses, including those applied against unrecouped artist/writer accounts; (ii) advances to new/unproven talent that are immediately expensed by UMG (rather than capitalized as they would be for more established artists); and (iii) write-downs on any advances deemed unrecoupable.

It wasn’t just artists that received big payments from UMG in 2023, either.

The company’s shareholders received total dividends of €929 million in 2023, equivalent to just over USD $1 billion.

Meanwhile, UMG spent EUR €2.081 billion (USD $2.25bn) on salaries and benefits for staff.

Of this figure, EUR €1.196 billion (USD $1.29bn) was paid in salaries – an average wage of approximately USD $126,000 per employee (of which, remember, there were 10,290 globally).

Some EUR €600 million (USD $649m) of UMG’s staff costs in 2023 (see above) was due to share-based compensation plans.

Within this EUR €600 million figure was EUR €561 million in non-cash share-based compensation. This figure increased by EUR €454 million vs 2022 (when it stood at €107m).

That large YoY jump (+€454m) was primarily due to the rollout of the UMG Global Equity Plan beginning in Q4 2022 – a rewards system tied to the performance of UMG’s share price.

According to the 2023 annual report, UMG’s Global Equity Plan grants stock “to senior executives to align the interests of the employees of UMG with its shareholders’ interests by providing them with an additional incentive to improve UMG’s performance and increase its share price on a long-term basis”.

The Global Equity Plan offers these executives the opportunity to earn a share of up to 5% of the issued share capital of the company (as at May 12, 2022).

7. Universal spent around $250m on its recent Mavin Records acquisition and its Complex investment

A note within UMG’s annual report gives us a good idea of what the company spent on two recently announced investments: the acquisition of a majority stake in Nigeria’s Mavin Records, plus an undisclosed minority investment in the Complex media/entertainment brand, now owned by NTWRK.

In each of these deals, the amount invested by UMG was not disclosed.

However, UMG’s 2023 annual report reads: “In February 2024, UMG announced agreements to invest in Chord Music Partners (“Chord”), NTWRK and Mavin Global (“Mavin”). Total cash consideration for these investments will be approximately €450 million.”

That EUR €450 million is the equivalent of USD $487 million as per average annual exchange rates for 2023.

We already know that UMG’s investment in Chord Music – a new M&A vehicle co-owned with Dundee Partners – was USD $240 million, as per the announcement of that deal in February.

Therefore, UMG’s cumulative investment in Mavin (majority stake) and Complex/NTWRK (minority stake) would have been in the region of $247 million.

The bulk of that money, you’d expect, would have gone to Mavin, run by Don Jazzy (pictured inset).

Billboard reported in February that Mavin was being shopped by Shot Tower Capital at a potential sale price of USD $150 million to $200 million.

8. Universal spent $193 million on catalog acquisitions in 2023 – around half the amount it spent on catalogs in the prior year. Expect that number to be closer to zero in 2024.

Universal Music Group’s annual report shows that the company spent EUR €178 million (USD $193m) on catalog acquisitions over the course of 2023.

That figure was less than half the size of 2022’s equivalent number (EUR €359 million) and 2021’s equivalent number (EUR €388m). It was also significantly smaller than the same number from 2020 (€929m) when Universal famously spent a hefty nine-figure sum on the Bob Dylan song catalog.

UMG’s reduction in its acquisitions from balance sheet cash is a deliberate part of its post-IPO strategy – a strategy that will now accelerate in partnership with Chord Music.

Universal announced that it was acquiring a minority stake in Chord two months ago. That deal will see UMG and its co-owned in Chord, Dundee Partners, jointly acquire music assets in the marketplace.

Speaking on Universal’s latest earnings call in February, the firm’s CFO, Boyd Muir, explained: “It is not a strategic priority to use our balance sheet for large catalog acquisitions.”

Muir added that via both debt (leverage) and partner equity capital, UMG would – through Chord – operate a platform “for recorded music catalog acquisitions and publishing catalog acquisitions… without significant further capital allocation” being required from Universal itself.

9. ‘Catalog’ accounted for 62% of UMG’s physical and digital revenue from recorded music in 2023

The quality of Universal’s represented recorded music catalog is not to be sniffed at.

From ABBA to The Beatles, Bob Marley to Nirvana, Frank Sinatra to Amy Winehouse, the list of “evengreens” either distributed/licensed to Universal, or owned by the company outright, is worth its weight in gold.

Well… more than gold, actually.

According to UMG’s 2023 annual report, ‘catalog’ tracks – defined as being older than three years – accounted for 62% of the firm’s revenues from recorded music across physical and digital (i.e. sales and streaming).

Conversely, ‘frontline’ music (i.e., music less than three years old) constituted 38% of this revenue.

Worth clarifying: ‘Catalog’ here would include contemporary music, aka ‘shallow catalog’, from the likes of Eminem and Rihanna, as well as Taylor Swift. Swift’s Cruel Summer, for example – a streaming smash hit throughout 2023 – was originally released in 2019.

What’s particularly interesting about the 62% ‘catalog’ stat? It represents an all-time high for UMG.

MBW has sifted back through the company’s recent annual reports – both as a standalone company (since floating in 2021), and when it was a subsidiary of Vivendi.

Here’s how this ‘catalog’ stat has changed over time:

Important footnote: In the above chart, the years 2018, 2019, and 2020 – all taken from Vivendi annual reports – refer to digital recorded music revenues (streaming/sales) only. The other stats all represent digital plus physical recorded music revenues. All stats refer to catalog as music that was 3 years or older at the time of each report.

Also: All EUR-USD currency conversions in this analysis are based on the annual average rate for 2023 as published by the IRS.Music Business Worldwide