BTN News: Universal Music Group (UMG) saw a big drop of 24% in its stock today. This fall happened because the company’s subscription and streaming revenue growth was not as good as expected. Even though total revenues increased, the poor performance in these important areas worried investors and industry experts.
UMG’s market value, which was strong before, dropped a lot, losing $16 billion. This loss is mainly due to bad results from its streaming and subscription services. In the second quarter, UMG’s subscription revenues went up by 6.9% compared to last year, without considering currency changes. However, this growth is much less than the 12.5% increase seen in the first quarter.
UMG’s Streaming Revenue Declined by 3.9% in the Second Quarter Compared to the Previous Quarter’s 10.3% Growth
Additionally, UMG’s streaming revenue fell by 3.9% in the second quarter, not counting currency effects. This was very different from the 10.3% growth in the previous quarter. The company said this decline was because of slower growth from key advertising-based partners and problems with the timing of agreement renewals on some platforms.
UMG Ended Its Partnership With Meta Platforms and Lost Revenue During Licensing Talks With TikTok
One major change that affected UMG’s revenue was ending its partnership with Meta Platforms (formerly Facebook), which used to license premium music videos. Also, UMG lost some income during high-profile talks with TikTok over a new licensing agreement.
UMG’s Vice President and CFO Boyd Muir Explains Reasons for Year-Over-Year Decline in Subscription Growth
Boyd Muir, UMG’s Vice President and Chief Financial Officer, gave several reasons for the drop in subscription growth compared to last year. One reason was the timing of price increases by the company’s partners, which include big audio streaming services like Spotify, Amazon Music, and Apple Music.
Some Streaming Platforms See Healthy Growth While Others Struggle With Global Adoption
Muir also pointed out a bigger trend affecting the industry. “While Spotify, YouTube, and many regional and local platforms keep seeing good subscriber growth, some of our key partners have had trouble getting more global users, leading to fewer new subscribers,” he said. This shows that different streaming platforms are performing unevenly.
Despite Challenges, UMG’s Overall Revenue Reaches €2.93 Billion, Surpassing Estimates
Even with these problems, UMG’s total revenue for the second quarter was €2.93 billion ($3.18 billion), which is almost 9% more than last year and above what experts expected. This growth happened while the company was making bigger changes to save €250 million per year by 2026, including cutting jobs.
In summary, UMG is facing a tough situation where total revenue growth is very different from the struggles in streaming and subscriptions. The company’s future plans and changes in partnerships and pricing will be very important to regain trust from investors and keep its market position strong.
