Warner Music Group spent $1.03bn on A&R in the year to the end of March – including its biggest financial Q4 commitment to signing and developing artists in seven years.
MBW has rifled through the major’s quarterly investor filings to track how its A&R spend has jumped over the past 12 months.
The biggest factor in the billion-topping sum was an A&R commitment of $300m across publishing and records in Q4 last year; the largest seen in that period since Q4 2008, when it spent $313m.
This was followed up with a $245m spend on A&R in Q1 this year – WMG’s highest first-quarter expenditure on artist development since Q1 2008 ($268m).
With $545m spent in the past two quarters alone, Warner is now on course to spend more than $1bn on A&R across its current fiscal year – which closes at the end of September – for the first time since 2009.
That $545m combined Q4 and Q1 cost was up 10% – or $50m – on the same six month period a year prior.
An important caveat: WMG defines its recorded music A&R spend as “signing and developing artists” as well as “creating master recordings in the studio and creating artwork for album covers and liner notes” – but the figure also incorporates artist and songwriter royalty payouts.
Warner enjoyed an impressive commercial performance in 2015, claiming four of the world’s Top 10 bestselling singles of the year – more than UMG or Sony.
It also claimed two of the Top 10 bestselling albums of the year: X by Ed Sheeran (No.2) and A Head Full of Dreams by Coldplay (pictured, No.8).
According to Music & Copyright, Warner made a significant global market share gain in 2015.
WMG’s recorded music share grew from 16.7% to 17.1%, as Universal’s share slid from 34.1% to 33.5%.
Sony was up very slightly to 22.6% in the year, with the independents claiming a 26.8% share of the worldwide market.
However, in the publishing world, Warner/Chappell‘s global share remained flat at 12.4%, as Sony/ATV (including EMI) dominated with 28.3%.
WMG’s A&R figures do not include sales and marketing costs, which are stripped out.
These hit $428m in WMG’s last fiscal year – comfortably less than half the money it committed to A&R ($980m).
A&R spend took care of 33% of Warner’s total revenues in both FY 2014 and FY 2015.
Across Q4 and Q1 this year, Warner’s $545m A&R spend represented 34.2% of its total revenues ($1.59bn).
Interesting to note that although Warner appears to be committing slightly more of its total income to A&R this FY, the key factor in its freedom to spend more on artists is its overall revenue… aka growth from streaming.
Warner is unique in the major label world as its debt is publicly traded, giving us access to more in-depth fiscal information than is available from Universal Music Group (a Vivendi subsidiary) and Sony Music Entertainment (a Sony Corp subsidiary).Music Business Worldwide
