Warner Music Group’s stock was up around 3% Wednesday as investors optimistically received its fiscal third-quarter earnings report, which showed that streaming revenue continues to grow for the third-largest major music company.
Overall streaming revenue was up 5% for Warner this quarter, with recorded music streaming revenue up 8.7% — reflecting growth in subscription revenue of 7%. While that was welcome news to investors, the subject of Spotify’s contentious decision to bundle music and audiobooks — allowing them to qualify for the lower mechanical royalty rate reserved for bundles under the Copyright Royalty Board’s Phonorecords IV agreement — did not go unmentioned.
“I know that investor attention has recently been focused on the dynamics between labels and DSPs, with some speculating that we’re adversaries playing a zero-sum game. That’s simply not the case,” Kyncl said. “We’re actively engaged with our partners around ways to drive growth for all of us. Streaming dynamics remain healthy … with plenty of headroom for subscriber growth in both established and emerging markets … across multiple partners.
Kyncl went on to note that bundling, which could result in lower payments to songwriters, has been used in other industries, like TV, for the purpose of market expansion. “The job of wholesalers like the music companies is to ensure that the sanctity of our pricing are in line with each other. You can expect us to pursue that strategy,” Kyncl said. “As it relates to CRB, I don’t see it as something that will persist in the long term.”on Tuesday .
However, Kyncl did share details about a restructuring plan he mentioned on WMG’s last earnings call, which included selling the entertainment websites— with the overall goal to increase investment in music, technology and new skill sets and deliver $200 million in savings by the end of fiscal 2025.“The majority of changes have already been implemented,” Kyncl said. “We are laying a strong foundation to accelerate our progress and yield greater value over time.