Warner boss Steve Cooper talks TikTok and Peloton revenues, the rise of digital artists, and the worth of report labels

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It’s been a little over a year since Warner Music Group went public on June 3, 2020 after its IPO was delayed due to uncertainty over the coronavirus pandemic.

Warner Music Group CEO Steve Cooper said this week on the company’s third quarter (but calendar Q2) earnings conference call, “WMG’s first year as a publicly traded company, despite home restrictions, was one of the most satisfying of my career.” .

This is the case, he says, because the “WMG artists and songwriters, supported by our excellent team, have achieved so much in a very stressful time”.

Some of those accomplishments were highlighted this week in Warner Music Group’s third quarter (but second quarter calendar) results, in which WMG reported that it had over $ 1 billion in quarterly music recording revenue for the third straight quarter.

Announced yesterday (Aug. 3), the company’s quarterly recorded music revenue for the three months ended June – including streaming, digital and physical sales, and ancillary income – reached $ 1.152 billion, up 34% year over year (or 27.6.). % in constant currency).

$ 781 million of this music recorded in the 2021 calendar quarter was generated through streaming, up $ 192 million, or 32.6% (27.2% in constant currency) from $ 589 million in the 2020 calendar quarter.

“We have kept pace with our constant development and have grown faster than ever.”

Steve Cooper

We’re really happy to look back on our third quarter to celebrate the extraordinary accomplishments of our global team, artists, songwriters and partners during this really crazy time, ”added Cooper.

“Entertainment consumption habits changed rapidly during COVID and the growth of new business models accelerated.

“We have kept pace with our constant development and have grown faster than ever.”

Cooper got grilled while talking to analysts about the company’s earnings this week. Here are four things that caught our eye …

Sales with emerging platforms such as TikTok and Peloton “are now around 235 million US dollars on an annual basis” …

In his opening address, Cooper stated that “the music ecosphere is so much more than albums, singles and videos,” adding that as a result, WMG is “continuously transforming into a technology-enabled digital-first company for long-term growth.”

In practice, according to Cooper, this means that “subscription streaming still has a long way to go”, but the Warner Music Group is also actively positioning itself “at the center” of the convergence of social gaming, digital fitness and music.

WMG’s involvement in these sectors can be seen, for example, in its participation in the Wave virtual concert platform in May and in its participation in the $ 520 million investment round in the Roblox video game platform in January.

According to Cooper, the company’s revenue from emerging platforms such as Facebook, the TikTok video app and the Peloton fitness platform as a result of WMG’s “Digital First Strategy” “now amounts to around $ 235 million on an annual basis”. Cooper also confirmed that this number was “only from recorded music”.

“Be on the lookout for more announcements of new investments, partnerships and collaborations in the near future,” added Cooper.

The Warner Music Group’s network of media brands gives it “a real head start in understanding fan behavior”.

In recent years MBW has followed the development of the Warner Music Group from a large music company to a full-fledged media publisher.

This transition was clearly visible in 2018 and 2020 when WMG acquired the UPROXX and HipHopDX media brands. WMG also bought Instagram and TikTok meme maker IMGN a few years ago for around $ 85 million.

Referring to the company’s conference call this week, Cooper said that WMG “differentiates itself in the marketplace by building an influential network of consumer destinations.”

“It is very important for us to control our own network of media brands. this is something unique for the Warner Music Group. “

He added, “Every brand has music in its DNA and has its own independent audience of loyal fans.

“Our strategy to drive growth included merging our own media channels into a newly formed unit for digital advertising and creative content

“These coordinated channels, which include UPROXX, Songkick, IMGN, HipHopDX and Cover Nation, have seen accelerated growth over the past year.”

Cooper suggested that “it is a powerful thing for us to control our own network of media brands” and that “this is unique to Warner Music Group”.

“These assets are manual digital ad revenue, they give us a real edge when it comes to understanding fan behavior, identifying new trends quickly, and recognizing cultural changes,” added Cooper.

It is beneficial for artists to work with labels to cut through “the noise” of the “tens of thousands of tracks” uploaded to music streaming platforms.

During his opening speech, Cooper highlighted recent news that WMG had acquired the entire recording catalog from David Guetta (pictured) and had a contract with him for future recordings.

According to Cooper, “artists at his level can choose any route to get their music out, and our new partnership is a great endorsement of the value we bring to the creative community at all stages of their careers.”

On this point, one analyst asked for more details about the value a label can offer an artist in the current and future industrial landscape, noting in particular that “There is concern in the marketplace that technology will ultimately increase the value of the Labels impaired “.

Cooper responded that it is beneficial for artists to work with labels because “Despite the tools that are available in the digital world, there is an opportunity to use those tools effectively and promote an artist career, their music and social presence through one Organization with one The global and local footprint literally around the globe should not be underestimated. “

“The value a label brings to an artist is the ability to help them get through the noise.”

He then noted that “literally tens of thousands of tracks” are uploaded to music streaming services every day, and further suggested that “the number is now likely somewhere between half a million to three quarters of a million tracks uploaded a week”.

(Spotify alone announced in February that 60,000 new tracks are now being added to its platform every day.)

“The value of a label to an artist is to help them get through the noise of 0.5 million or three quarters of a million tracks and separate their music and career from literally all that noise,” added Cooper.

“When you look at really, really well-established, great global superstars who all had the opportunity to turn their backs on the labels, use the digital tools available, and go solo, so to speak … virtually none of them – none of them took it . ”This decision to turn away from the labels.

“In the end, it’s not that easy to separate the really great music and the great artists without an organization like ours behind it. It’s really hard work. “

Virtual artists are not “flash in the pan,” says Cooper. they are “here to stay”.

In late July, Warner Music Group’s pan-Asian dance label in China, Whet Records, announced it had signed a virtual artist named Ha Jiang, known locally as a “virtual idol.”

These virtual characters are popular in Asia and particularly China and Japan, some of which have amassed significant fan following.

Cooper was asked by an analyst after signing how much of an Asia-specific opportunity virtual idols are, how positioned WMG is to benefit from growth in this area, and whether there is any potential for growth outside of Asia.

Cooper: “If you look at social gaming and this metaverse, we’re already talking about trading in the virtual world where people have their own avatars.

“The creation of purely virtual beings is not an illogical next step. And while this has mainly been the domain of some Asian countries, the wonderful thing about it is that you can create these characters and you can build a tremendous following in relation to these characters.

“We are determined to lead the crossover of these virtual beings into the world of music.”

He added, “I’ll give you something that’s a little bit analog, even if it’s not entirely digital. When you watch a Marvel movie, you are talking about characters that don’t exist in real life and you are talking about computer generated images that don’t exist in real life.

“But when you look at the success of these characters, you look at the success of Marvel, you look at the success of a lot of the soundtracks that we are providing, in many cases, and you look at the fan base for these characters all in one Doing the virtual world is really not a huge step.

“And it’s a step where we’re determined to take the crossovers of these virtual beings into the world of music. So, I don’t think it’s a flash in the pan. It’s here to stay And I think it’s not just here to stay, I think it’s here to grow. “Music business worldwide

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