Warner Music Group: Rise of Streaming Subscriptions Boosts Monetization of Old Content

As streaming subscriptions have become the main way consumers listen to music, Warner Music Group (WMG) is seeing a shift, where there are new opportunities to drive revenue from artists’ older content.

On a call with analysts Thursday (Nov. 16) discussing the global music entertainment company’s fourth-quarter fiscal 2023 earnings results, WMG CEO (and former YouTube Chief Business Officer) Robert Kyncl discussed how the rise of streaming has changed the way consumers listen to music, and in turn the way that music companies can monetize their catalogs.

“The beauty of the streaming universe is that every time one of our superstars releases a new album, or goes on the tour, or scores a big [song] placement, the fan engagement spikes across their entire body of work,” Kyncl said.

Streaming only continues to grow. The company saw a 9% increase in streaming revenue relative to last year, and streaming revenue from paid subscriptions rose 10%.

Across the industry, key players are seeing such increases. Last month, competitor Universal Music Group (UMG) shared in its own earnings results that showed third-quarter revenue from paid streaming subscriptions up 6.7% year over year.

Consumers are increasingly relying on subscription models across all areas of their lives, with research featured last year in the Subscription Commerce Tracker, a PYMNTS and Vindicia collaboration, finding that consumers spend an average of $278 per month on streaming services. Plus, 80% of consumers reported that they spend their money on music streaming subscriptions.

With this widespread shift in the industry, WMG is looking to change the payment structure, so that rather than flat-rate payouts, artists are paid more per stream for higher-quality, more popular content.

“We’ve been consistently clear that streaming services should ascribe more value to what their customers value most,” Kyncl stated. “It’s the creativity of popular artists and songwriters that deliver subscriber engagement and growth. … Premium music should be better compensated than low-quality filler or functional music.”

He highlighted the company’s deal with French music streaming service Deezer, which according to a Variety report Monday (Nov. 13), was initially developed between the streaming service and UMG.

The deal reportedly offers artists who receive 1,000 plays a month from more than 500 unique listeners a “double boost,” which leads to higher royalties and demonetizes non-artist-created noise content.

“Look out for similar developments with other partners in the coming months,” Kyncl stated.

Notably, current economic conditions could pressure consumers’ streaming budgets, prompting some to hit unsubscribe. UMG, for its part, noted even amid its increase in revenue from paid streaming subscriptions, that streaming overall was down slightly, suggesting some degree of pullback.

As consumers face financial challenges, many deprioritize their streaming services, according to the PYMNTS Intelligence report “The One-Stop Bill Pay Playbook: Drivers of Consumers’ Bill Payment Priorities,” created in collaboration with Mastercard. The study, which drew from a survey of more than 2,100 U.S. consumers, revealed that when people are unable to pay all their bills, streaming subscriptions are the first to get cut.