Warner Music Group, which went public earlier this year, reported revenues that were essentially flat for its fiscal 2020, owing to the impact of COVID-19 and several of its superstar artists being off-cycle.
“We’re proud of everything we’ve accomplished in the past year, despite the challenging conditions that the world has faced,” said Steve Cooper, CEO, Warner Music Group. “We’re essentially flat against a record-breaking prior year and, during the quarter, we grew 11% on an as-reported basis, excluding the revenue streams most impacted by Covid.”
Pointing to the impact of the touring shutdown on artist services and performance revenue in music publishing, he said that minus those categories the company’s revenue was up 9% for the year.
Total revenue decreased by .3% year-on-year (or increased by .4% at constant currency) to $4.5 billion, although streaming helped drive digital revenue up year-on-year by 11.2% (12.2% at constant currency).
Recorded music revenue for 2020 was down .8% (or .2% at constant currency) at $3.8 billion. Physical sales plummeted 22.4% to $434 million. Recorded Music digital revenue grew 9.6% (10.6% in constant currency) to $2.6 billion and represented 67% of total recorded music revenue, versus 61.0% in the prior year.
Fourth quarter revenue was also flat, up just 0.2% (dropping 1.1% at constant currency). Digital revenue up 15.4% year-on-year (14.6% in constant currency), while recorded Music physical revenue was flat.
Top performing artists included Dua Lipa, Roddy Ricch, Saweetie, Lizzo, Charlie Puth, Anitta, Tones and I, Aimyon and Cardi B, although several of the company’s biggest artists, such as Ed Sheeran, Bruno Mars and Coldplay, did not deliver new product.
During a Q&A toward the end of the call, Cooper was asked about the company’s policies toward catalog acquisitions in light of the controversial sale of Taylor Swift’s Big Machine catalog first to artist manager Scooter Braun, and recently to Shamrock Capital, which she has bitterly protested.
“We do not typiclally sell rights,” he said. “We are very sensitive to how our artists feel about these transactions. When we look at the ongoing back and forth between Taylor and Braun, these are types of situations we look to avoid.”
Looking for bright spots on the horizon, he pointed to Spotify’s experimentation with price increases in certain territories, and said he believes others will follow suit. “We think this is good news that Spotify is beginning to take more seriously upward band pricing, and in the news that they’re going to be testing a number of countries,” Cooper said on the earnings call Monday morning. “I think the other services will see this as an opportunity to also test the market and follow along,” he said.
He also pointed to the company’s global growth, with recent launches in Vietnam, India and Turkey, and Warner Chappell’s expansion into China, as well as its partnerships with several social media platforms, including TikTok. He emphasized the surprise hit that Fleetwood Mac enjoyed with the 43-year-old song “Dreams” when it took off on the latter platform.
Music publishing revenue was up 2.2% year-on-year (3.1% at constant currency) at $657 million. Music publishing sync revenue was flat, despite the impact from Covid, as a result of increased deal activity in China and the UK. US revenue declined by 1.1% and international revenue rose 0.2% (1.4% in constant currency).