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GLOBAL STREAMING HITS 112M SUBSCRIBERS

The number of paid music streaming subscribers worldwide has nearly doubled to 112 million within the last 12 months, according to Vivendi CEO Arnaud de Puyfontaine, and that’s driving not just profits, but the main agenda for Lucian Grainge.

“We are working now on accelerating the monetization of music on digital services in all geographies, especially in tough markets,” de Puyfontaine told investors after releasing Vivendi second quarter results and breaking down Universal Music Group’s growth over the last two years.

The number of subscribers a year ago was 68m. Universal, in the last year has seen a 26.2% rise in India, 20.3% in China and 12% in Latin America.

De Puyfontaine singled out “Despacito” as an illustration of “how streaming growth is helping to fuel the global success of Latin artists” and “proves the ability of UMG to discover new talents and promote them at global level.”

Streaming accounted for 45% of Universal Music Group’s revenue in the quarter that ended 6/30. Revenue was nearly 16% over Q2 2016 to $1.5 billion. Operating income was up 48% $183.3m and EBITDA raced up 38% to $191m.

In the first six months of 2017, revenue is up15% percent to just under $3b; operating income spiked 43% to $335m; and EBITDA saw a 36.5% increase to almost $355m. Recorded music is up nearly 17% to $2.3b; Jody Gerson's UMPG saw a nearly 11% rise to $431.2m.

“We are satisfied with the evolution of the margin during the first part of this year,” Vivendi CFO Hervé Philippe said. “And this improvement was largely driven by the increase in revenue, which has created operating leverage and overheads declining as a percentage of the sales. These were really the driver of the margin expansion.

“It doesn't mean that the margins will increase during all the year at the same speed.” UMG singled out albums from Drake and Kendrick Lamar, the 50th anniversary edition of The BeatlesSgt. Pepper’s Lonely Hearts Club Band and, in Germany, Helene Fischer as top performers.

Executives noted the decline in download sale has been less drastic this year, estimating that while the decline was 30% in 2016, it’s less than 20% this year.

As for that IPO idea that was floated around earlier this year, Philippe noted “one day that could be an option but there is no plan as we speak to be able to trigger that process.”

And with that, the executives adjourned to a buffet of pate de champagne, summer truffles and pre-WWII Sauternes before a screening of The Nutty Professor.

 

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