STRINGER DELIVERS GOOD NEWS TO INVESTORS

Sony Music Group Chairman Rob Stringer spoke about recent successes, next-generation platforms, the pros and cons of AI and the continued global growth of Sony Music’s creative footprint in Sony Group’s 2023 Business Segment Briefing for investors.

Stringer detailed the “record-breaking year for the company on almost every core metric,” which made the music division the top profit contributor to Sony’s bottom line in fiscal 2022. He noted that the company has continued an “aggressive investment in creators and our people to support them."

"In the last five years, our global roster and catalog have grown by over 34% and we have doubled our creative teams to service this scale,” he noted, adding that the company’s revenue of $7.6b in fiscal year 2022 was up from $4.1b five years ago. He also singled out the acquisition of Alamo and the integration of AWAL alongside The Orchard.

Stringer spelled out the importance of subscription services as a growth driver and drew attention to the nearly 16% rise in the number of paid users of premium services in 2022 as well as DSP rate hikes. “Recently, we have seen price increases from a number of our digital partners that have been long overdue," he remarked of the latter development, "and we look forward to more DSPs recognizing that the value of music continues to rise.”

But the next step is getting artists and songwriters appropriately paid for their work in all areas, a paramount concern of Stringer's.

“Young consumers are gaming-first in their entertainment orientation and highly engaged in creating and viewing massive amounts of content,” he said by way of example. “This translates into heavy use of short-form video, which is amassing total views well into the trillions. And overwhelmingly, they want music to be part of these experiences. With this transformation, proper compensation of artists and songwriters is required.”

Then there’s AI. “We are at the gateway of a new technological era with AI," Stringer pointed out. "And unsurprisingly, music will be a core component of this process. AI promises to provide the tools for our artists and writers to create and innovate. It also heralds greater levels of insight through machine learning, as well as potential new licensing channels and avenues for commercial exploitation. There is a lot of opportunity in this area to be excited about throughout our company. We are greatly aware of the challenges ahead, too. We will protect our creators on every level possible, whether it be creative, financial or legal. Infringement of their rights should be the basis for a unique new set of artist and songwriter protections industrywide. Tech does not simply overrule art.”

As for the overflow of content on streaming platforms, Stringer said, “At Sony Music our attention is on identifying quality and not purely quantity as we face competition from many investors and new companies wishing to capitalize on this sheer volume. We are convinced that consumers want the same quality and remain concerned that DSPs are watered down by low quality and meaningless volume, which negatively impacts music fans and real artists. In addition, as publicly reported, fraud on key DSPs is a problem that must be eliminated through aggressive enforcement by these DSPs and distributors or by changing payment methods to better reduce the incentive for fraud.”