Warner Music reports 5% revenue growth, narrower losses
With growth in international sales offsetting a decline in the U.S., Warner Music Group posted a 5% uptick in revenue and narrower losses in its most recent quarter.
In its first financial report since Access Industries completed its $3.3-billion acquisition of Warner on July 20, the record label posted sales of $686 million in its third quarter, which ended June 30, up from $652 million a year earlier. It lost $46 million, or 30 cents a share, in the quarter, down from a $55-million loss, or 37 cents a share, a year earlier.
Although the music industry continues to struggle with steadily declining CD sales and the proliferation of free online alternatives, Warner’s chief executive, Edgar Bronfman Jr., noted that album sales in the U.S. rose in the first six months of this year for the first time since 2004. He also said that the industry overall has been helped by “super premium” pricing of newly released songs and albums, countering the notion that steep discounting would help sell more music.
“The vast majority of albums acquired in the first month [after their release] are super premium priced,” he said. The decision to buy songs is “not driven by value. It’s driven by desire.”
Bronfman, who once said that free streaming services were “clearly not net positive for the industry,” said he was “very pleased” with last month’s U.S. launch of Spotify, a Swedish digital music service in which Warner has a stake that lets users listen to any song free for their first six months.
Spotify has garnered more than 10 million users in Europe; 1.6 million users pay for Spotify’s premium service, which lets them use it on mobile devices and home audio systems such as Sonos.
Bronfman predicted that Spotify, which is paying more money for music royalties than it makes in subscriptions and advertising, would be profitable if it could continue to induce its free users to spring for the premium service.
Warner, three other major record labels and an independent label own a little more than 17% of Spotify.
Although Warner is now privately held, the company must still report its quarterly financials because it continues to hold a little under $2 billion in publicly held bonds.
