WMG STARTS OFF 2022
WITH A BANG

Warner Music Group’s revenue was up 10.1% in the first three months of 2022 to $1.38 billion, driven by digital-revenue growth of 8.3% in recorded music and music publishing.

Operating income was $166m, compared to $151m in the prior-year quarter.

Recorded-music revenue was up 8.3% to $1.15b, with growth across all revenue lines, including a 6% increase in digital revenue, to $804m. Streaming revenue grew 7.5%. Digital revenue represented 67.7% of total revenue in the quarter.

Q2 of WMG's fiscal 2022 also reflected the impact of a new deal with a digital partner that affected recorded-music streaming revenue. Adjusting for that item, total revenue would be up nearly 13%.

“IFPI reported that the global recorded music industry grew by an impressive 18.5% in 2021,” WMG CEO Steve Cooper said on a call with analysts. “We’re proud to say that we outperformed this benchmark by almost 2.5 percentage points—a testament to our impact on global culture and our ability to create communities of fans across every medium.”

Artist services and expanded-rights revenue increased 19.5% to $141m, indicating an increase in merchandising and concert-promotion revenue, both of which were disrupted by COVID in the prior-year quarter.

“The underlying health and resilience of our business is reflected in the diversified revenue growth that we delivered in the second quarter,” WMG CFO Eric Levin said. “While our core business continues to flourish, new growth vectors are constantly emerging.”

Levin further conveyed that the return of artist tours will have multiple effects on the label group. He expects to see considerable experimentation with web3 opportunities relative to tours and releases of new music to see what engages fans and what, ultimately, can be monetized. In addition, as artists return to performing live, the value of catalogs may be seeing an adjustment, especially given the increase in interest rates. Strategies on catalog sales “could change,” Levin said, “and the math could change as well.”

Major sellers in the quarter included Ed Sheeran, Michael Bublé, Dua Lipa and Red Hot Chili Peppers.

Music-publishing revenue increased 19.8% to $230m, with its digital revenue up 22.1% to $127m.

After noting that WMG is coming up on the second anniversary of its IPO, Cooper said that the company’s long-term outlook on music’s ability to generate revenue has only increased, despite "the craziness and chaos in the world.” “New opportunities are coming online all the time, and the emerging business models at the time of the IPO are now generating meaningful revenue," he attested. "We’re now in a better position to capitalize on those opportunities.”