Universal Music Group saw its revenues grow by 12.7% on a constant currency basis to 1.284 billion euros ($1.361 billion) in the first quarter ending March 31, 2017, from the 1.119 billion euros ($1.224 billion) it had in the first quarter of 2016.
The company said that this quarter’s performance represents the sixth quarter in a row the UMG has produced growth. Moreover, a UMG company spokesman said that the first quarter revenue was its highest first quarter total since UMG reported 1.365 billion euros ($1.48 billion) back in the first quarter of 2002.
Along the way its operating income improved 33.1% on a constant currency basis to 141 billion euros ($149.5 million) from 102 million euros ($111.6 million) in the corresponding earlier period.
But stepping back before non-cash charges and other expenses come into play, UMG reported 152 million euros ($161.2 million) in earnings before interest, taxes, depreciation and amortization, a 31% increase on a constant currency basis over the 113 million euros ($123.6 million) reported in the first quarter of the prior year.
UMG attributed the revenue growth to surging streaming revenue, which increased 49% on a constant currency basis to 467 million euros ($495 million) from 307 million euros ($335.9 million) in the first quarter of 2017.
Recorded music best sellers for the first quarter of 2017 included carryover sales from The Weeknd, a new release from Drake and soundtrack releases from La La Land, Fifty Shades Darker and Disney’s film Moana, according to the company.
Within recorded music overall digital grew to 622 million euros ($659.3 million) from 504 million euros ($551.4 million) but within that downloads fell to 155 million euros ($164.3 million, from 197 million euros ($215.6 million), a decline of 21.3%. Meanwhile, physical declined slightly to 226 million euros ($239.6 million) from 236 million euros ($258.2 million); while licensing was up slightly to 168 million euros ($178 million) from 150 million euros ($164.1 million).
Overall, UMG reported that it has entered into licensing agreements with over 400 digital music services around the world.
But even though streaming is driving the industry’s growth, UMG warned that the EU Commission and other regulatory agencies around the world have to help the industry address the discrepancy between the immense consumption of music on user-upload platforms and the low revenues received from those platforms by those who create and invest in music.
“The European Commission has recognized the existence of the value gap and has proposed solutions that are now working their way through the European Parliament and the European Council,” the company stated in its earnings report. “However, an appropriate legal framework needs to be established worldwide.”
Overall, its recorded music operation grew 12.2% in constant currency to 1.016 billion euros ($1.077 billion) from 890 million euros ($973.7 million; while its music publishing operation grew 17.1% to 220 million euros ($233.2 million) from 188 million euros ($205.7 million); and merchandising and other revenue grew to 54 million euros ($57.2 million) from 47 million euros ($51.5 million), a 13.3% increase in constant currency.
On a percentage basis, that breaks out to overall digital for 2017 of 61.2%, and within that downloads were 15.2% and streaming was 46%; with physical 22.2% and licensing and other 16.5%. In the prior year, those percentages, respectively, were digital 56.6% and of that downloads 22.1% and streaming 34.5%; and physical 26.5%, and licensing and other 16.9%.
Breaking out overall UMG revenue by territory, the company reported that North America accounted for 48% of revenue; Europe 32%, Asia 13%, Latin America 4% and the rest of the world 3% in the first quarter of 2017. That compares with the first quarter of 2016, when North America was 43%, Europe 37%, Asia 13%, Latin America 4% and the rest of the world 3%.
Translating those percentages into euros using UMG’s total revenue for each territory extrapolates out to North America growing by 28.1% (not constant currency) to 616.3 million euros ($653.3 million) from 481.2 million euros ($526.4 million); Europe, decline slightly to 410.9 million euros from 414. million euros ($452.9 million); Asia grew 14.7% to 166.9 million euros ($176.9 million) from 145.5 million euros from $159.1 million); latin America grew 53% to 51.4 million euros ($54.4 million, from 33.6 million euros ($36.7 million); while the rest of the world revenue fell to 38.5 million euros ($40.8 million) from 44.8 million euros ($49 million.
Looking ahead, UMG reported upcoming releases include the 50th anniversary of the Beatles’ Sgt. Pepper album. Lana Del Ray, Feist, Helene Fischer, Imagine Dragons, Lorde, Pearl Jam, Katy Perry, Chris Stapleton and Shania Twain.
