Warner Music Earned More Revenue From Streaming Services Than Downloads in Q2 2015

MacRumors · May 11, 2015

Apple's upcoming revamped music service may be coming at the perfect time, right as revenue from streaming music is beginning to surpass revenue from digital downloads.

Streaming music services have been growing in popularity over the last several years, and in an earnings call today (via Re/code), Warner Music Group CEO Stephen Cooper told investors that for the first time, the company earned more revenue from streaming music services than from digital downloads.

Warner Music Group saw a 33 percent increase in its revenue from streaming music services from companies like Spotify and YouTube during the second quarter of 2015, while revenue from digital downloads like those from iTunes grew only seven percent. During the call, Cooper said that the growth of streaming music makes it "abundantly clear" that in the future, "streaming will be the way that most people enjoy music."

"We experienced significant revenue growth this quarter across key segments of our business -- in particular Recorded Music, across the U.S. and international and across digital and physical -- capping off a strong first half of our fiscal year" said Stephen Cooper, Warner Music Group's CEO. "Notably, in this quarter we saw continued growth in streaming revenue which surpassed download revenue for the first time in the history of our recorded music business. Our commitment to being at the forefront of industry change as well as our ongoing investment in artist development is the foundation of our continued success."

Warner Music Group says that it expects streaming growth will continue, and it believes that declines in download revenue will be "a continuing trend." Apple too has seen a stark decline in digital revenue in recent years, with sales dropping 5.7 percent in 2013 and further declining 13 percent worldwide in 2014.

A decline in iTunes music sales may have been one of the major factors that spurred Apple to purchase Beats Music, giving it a foothold in the streaming music market that it was late to enter. Apple has seen some criticism for its failure to embrace streaming music early on and the somewhat lukewarm reception of iTunes Radio.

Beats Music has failed to draw a significant number of customers away from Spotify, which has 60 million subscribers, of which 15 million pay for the premium service, but with more than 800 million credit cards on file, Apple's upcoming revamped streaming music service has the potential to overtake competing services.

Rumors have suggested that the new service will be similar to the existing Beats Music service, but with a focus on exclusive content and deep integration into iTunes and Apple's iOS Music app. It will be priced at $9.99 and no freemium tier will be offered, but Apple is looking at ways to offer music for free, through lengthy trial periods, iTunes Radio, and possibly a SoundCloud-like music sharing platform.

Apple is said to be planning to unveil its new music service in June at the Worldwide Developers Conference.

Article Link: Warner Music Earned More Revenue From Streaming Services Than Downloads in Q2 2015

theheadguy · May 11, 2015

Que everyone that feels the need to let everyone know they would rather own their music.

John.B · May 11, 2015

Nice for Warner, I guess. And how much was the musicians' cut?

...as well as our ongoing investment in artist development ...

Unbelievable that they continue to trot out this tripe in this age of so-called "360" contracts.

AngerDanger · May 11, 2015

theheadguy said:
Que everyone that feels the need to let everyone know they would rather own their music.

I just hope I live long enough to hear elderly folks rant about how, back in the day, kids used to use iPads.

thekeyring · May 11, 2015

Excited for WWDC. Streaming music service, TV update + TV service, iOS 9, OS X 10.11, and maybe, just maybe a new 15'' MacBook Pro. Have I missed anything?

pike908 · May 11, 2015

As an IOS (Iphone and Ipad) user and a Windows 8.1 soon to be embracing Win 10 user, I would be willing to try Beats so long as it is the same price and functionality as Spotify -- in which I subscribe.

Knowing Apple, it will probably cost more than Spotify and/or not play with nice Windows.

I like Apple, but their unwillingness to cater to competing OS (Windows in my case) may make me decide to go a different route in the future. I simply cannon justify paying $1,000 minimums for Mac laptops when one can buy i5 windows laptops all day long for $500 or less.

Revearti · May 11, 2015

I like buying music. I'll be doing it for a while. There is something about having it that I can't leave, yet.

For instance, I want to know the album I'm listening to now will be there in five or ten years for nostalgic purposes. I wish with all of our server farms, we would just leave media in the cloud forever without the worry that it may not be there one day due to a contract.

When it's accessible forever, I'll be more excited about embracing streaming as a replacement. Until then, I'll stick with being old fashioned.

oneMadRssn · May 11, 2015

theheadguy said:
Que everyone that feels the need to let everyone know they would rather own their music.

It's not so much the owning, it's more the not paying in perpetuity.

thekeyring · May 11, 2015

theheadguy said:
Que everyone that feels the need to let everyone know they would rather own their music.

oneMadRssn said:
It's not so much the owning, it's more the not paying in perpetuity.

Revearti said:
I like buying music. I'll be doing it for a while. There is something about having it that I can't leave, yet.

Revearti said:
Yup. I'm one of them.

It's why my parents always bought vinyl records and never, ever listened to the radio. </s>

Revearti · May 11, 2015

theheadguy said:
Que everyone that feels the need to let everyone know they would rather own their music.

Yup. I'm one of them.

Michael Scrip · May 11, 2015

theheadguy said:
Que everyone that feels the need to let everyone know they would rather own their music.

I think most people do own their music.

Spotify has 60 million active users and 15 million paying subscribers.

But that's tiny compared to the billion iOS and Android users.

It doesn't look like streaming is a big as everyone makes it out to be.

Thunderhawks · May 11, 2015

thekeyring said:
Excited for WWDC. Streaming music service, TV update + TV service, iOS 9, OS X 10.11, and maybe, just maybe a new 15'' MacBook Pro. Have I missed anything?

Beats me

,

but maybe:

iPhone 6S
AppleWatch "magical" sales numbers we are very excited about.
iPad bigger on the inside than on the outside

ThisIsNotMe · May 11, 2015

What the article omits is if overall revenues have declined, are static, or have increased as a total.

2015--q2--recorded-music-summary-results-extralarge_1431362326436.jpg

So digital revenue was stagnant. Essentially meaning that WMG is canabalizing its own revenue stream with one that is not very profitable. (30% growth vs 7% growth)

brendu · May 11, 2015

thekeyring said:
Excited for WWDC. Streaming music service, TV update + TV service, iOS 9, OS X 10.11, and maybe, just maybe a new 15'' MacBook Pro. Have I missed anything?

Apple watch native apps sdk.

James Manesh · May 11, 2015

Queue people complaining that "Apple is late to the streaming business."

No. It's actually perfect timing on their behalf, especially as streaming looks to overtake downloads financially.

seatton · May 11, 2015

thekeyring said:
Excited for WWDC. Streaming music service, TV update + TV service, iOS 9, OS X 10.11, and maybe, just maybe a new 15'' MacBook Pro. Have I missed anything?

Apple Watch 2?

It will be available to preorder before my SS arrives.

oneMadRssn · May 11, 2015

thekeyring said:
It's why my parents always bought vinyl records and never, ever listened to the radio. </s>

Who pays for radio?

jman240 · May 11, 2015

I still have no faith in apples cloud anything. Which is exactly what a music streaming service is.

It'll probably only be available through iTunes which is already kind of a bloated and disjointed experience. It might even only be on Apple devices which meh.

thekeyring · May 11, 2015

oneMadRssn said:
Who pays for radio?

BBC Radio isn't free. Other stations are ad supported.

If that analogy is beyond you: TV. Why watch a TV broadcast or pay for Netflix when you can buy the series on DVD?

Some music you want to listen to for a while, others you want to keep and own. If this isn't for you, don't stream music, but let those who want what is essentially on demand radio pay for it.

----------

jman240 said:
I still have no faith in apples cloud anything. Which is exactly what a music streaming service is.

It'll probably only be available through iTunes which is already kind of a bloated and disjointed experience. It might even only be on Apple devices which meh.

Rumours are they're working on an Android version

And Apple's cloud services aren't all bad. iMessage works, as does ICloud Drive, the App Store and the iTunes Store. Managing a large content library is what Apple have been doing for a while so, hopefully, this won't be like Maps.

rickdollar · May 11, 2015

oneMadRssn said:
Who pays for radio?

You pay for radio with your ears. It's horrible.

oneMadRssn · May 11, 2015

thekeyring said:
Some music you want to listen to for a while, others you want to keep and own. If this isn't for you, don't stream music, but let those who want what is essentially on demand radio pay for it.

I never said I don't want streaming to exist, or that people shouldn't be allowed to have it. Get a grip man. I'm saying it's not the holy-grail that will save the music industry, that many folks are making it out to be.

I know lots of people who enjoy it, and that is fine. Maybe I'm pessimistic, but I think many of those folks will be very disappointed if it turns out that prices are raised and the playlists, playcounts, other meta data isn't portable or transferable to competing services; or if your favorite band is an exclusive on a competing service.

Benjamin Frost · May 11, 2015

theheadguy said:
Que everyone that feels the need to let everyone know they would rather own their music.

I would rather own my own music.

Perhaps the reason why sales are so low is because there is precious little good new music these days. If Apple promote streaming, it will simply mean that there will be even less good new music.

Let's not forget that history judges most music of any era as sub-par. Happily, there's plenty of music from 26 to 400 years ago which has stood the test of time.

----------

thekeyring said:
Excited for WWDC. Streaming music service, TV update + TV service, iOS 9, OS X 10.11, and maybe, just maybe a new 15'' MacBook Pro. Have I missed anything?

Not really, I suppose.

I miss Steve Jobs.

----------

thekeyring said:
BBC Radio isn't free. Other stations are ad supported.

If that analogy is beyond you: TV. Why watch a TV broadcast or pay for Netflix when you can buy the series on DVD?

Some music you want to listen to for a while, others you want to keep and own. If this isn't for you, don't stream music, but let those who want what is essentially on demand radio pay for it.

----------

Rumours are they're working on an Android version

And Apple's cloud services aren't all bad. iMessage works, as does ICloud Drive, the App Store and the iTunes Store. Managing a large content library is what Apple have been doing for a while so, hopefully, this won't be like Maps.

BBC radio is free. The licence fee is only required to watch live tv.

'Twas ever thus.

FightTheFuture · May 11, 2015

jman240 said:
I still have no faith in apples cloud anything. Which is exactly what a music streaming service is.

It'll probably only be available through iTunes which is already kind of a bloated and disjointed experience. It might even only be on Apple devices which meh.

Apple is developing Beats Music for Android.

Also, Spotify does not have as many cloud-heavy features as say, iMessage, Contacts or Safari cloud tabs.

fabulous-femme · May 11, 2015

Exclusives are bad for the consumer ...

I don't know whats your opinion ... but when i read this for the new Apple Music Streaming : "but with a focus on exclusive content " - I will stay far away from it. It's nice to have exclusives but I'm the long term it will be bad for the consumer.

I would like to have one streaming service and the choice should be made by the user interface, functionality, quality of service and availability on devices.

I am not willing to subscribe to two services just to listen to exclusives. Exclusive contracts will make you pay double at some stage.

69650 · May 11, 2015

I'm not going to switch from Spotify to Beats Streaming and let Apple dominate the streaming market in the same way they dominated the download market. Apple has used their monopoly in downloads to stifle innovation, drive out competitors and keep prices artificially high.

Warner Music Earned More Revenue From Streaming Services Than Downloads in Q2 2015

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