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Warner Music Group Rakes in That Streaming Cash

Warner Music Group's streaming revenue for the quarter surpassed revenue of its physical sales.

May 6, 2016
The Best Streaming Music Services for 2016

Major record labels might still have some squabbles over streaming services—specifically, the amount of revenue they can extract from them—but that doesn't mean the labels detest streaming outright.

Warner Music Group, in fact, is probably pretty happy about streaming right now. The company just announced that its streaming revenue for the quarter ending March 31 surpassed the revenue of its physical sales. In other words, streaming is bringing in a lot of money for Warner Music Group—more than real-world albums, and even more than digital sales of albums or individual tracks. The latter shouldn't be much of a surprise, given that the company's streaming revenue already passed up its digital download revenue some time ago.

Warner Music Group's overall revenue grew 10 percent from the same time period last year ($677 million to $745 million), and its digital revenue—which counts streaming—jumped 21.2 percent from $297 million to $360 million.

"These impressive results were driven by outstanding music from our artists and songwriters, the expansion in our global footprint, our leadership in the industry's digital transformation and excellent execution globally," Stephen Cooper, Warner Music Group's CEO, said in a statement.

"We are now the first major music company to report that streaming is the largest source of revenue in our recorded music business, surpassing our revenue from physical formats. And this new milestone comes only four quarters after our streaming revenue first topped our download revenue."

Warner Music Group's overall streaming revenue increased by $72 million for the quarter. Its physical sales and digital downloads didn't fare nearly as well, dropping $6 million and $17 million, respectively.

"This rapid transformation is evidence of our ability to sign, develop, and market artists that thrive in the streaming world. Reaching these achievements is made possible by healthy macro trends in the recorded music industry, as well as tireless execution by our global operators," said Cooper in a Friday morning earnings call, as reported by Billboard.

You can expect to see Warner Music Group, and its peers, working to fight for a higher cut of streaming revenue in the months and years to come. Just yesterday, the British Phonoraphic Industry (BPI) released new figures highlighting the disparity between consumer interest in streaming services and the revenues record labels receive for streaming. In the UK, BPI notes that streaming doubled in 2015, giving record labels a 70 percent increase in payments from streaming services. Music video streaming nearly doubled as well, but payments only rose less than half of 1 percent.

"The rising flow of royalties that should be nurturing artists and labels has slowed to a trickle, as platforms that rely on safe harbours use consumer demand for our music to grow their own businesses at the expense of creators," said Geoff Taylor, BPI chief executive, in a statement.

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About David Murphy

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David Murphy got his first real taste of technology journalism when he arrived at PC Magazine as an intern in 2005. A three-month gig turned to six months, six months turned to occasional freelance assignments, and he later rejoined his tech-loving, mostly New York-based friends as one of PCMag.com's news contributors. For more tech tidbits from David Murphy, follow him on Facebook or Twitter (@thedavidmurphy).

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