With 2016 fast becoming a year defined by windowing of major releases on streaming services, Universal‘s been more affected than most.
The company is the major label partner of three acts, in Kanye West, Rihanna and Drake, who have hit the headlines this year for holding their new music off the likes of Spotify for varying periods.
Drake – signed to Universal’s Republic via Cash Money / Young Money – released the biggest new streaming album of the year so far, Views, exclusively on Apple platforms for a fortnight.
Other UMG-affiliated acts, like The 1975 and Gwen Stefani, have also windowed their music off Spotify for a limited period.
Kanye West’s holdout was the longest, with The Life Of Pablo remaining a TIDAL exclusive for six weeks after its release in February.
The record was estimated to have been illegally downloaded 500,000 times in its first 24 hours on the market.
The rush-release of Rihanna’s ANTI, meanwhile, was the cause of a public spat between TIDAL and UMG earlier this year, after Jay Z’s digital service blamed the record company for botching its distribution.
Messy stuff. So does UMG need to get a better grip on its blockbuster artists’ release strategy?
Not according to the CEO of Universal’s parent, Vivendi.
Speaking to investors earlier this month (a conversation freshly listened to by MBW), Vivendi’s Arnaud de Puyfontaine was asked about this trend for exclusive digital deals, and whether it risked slowing down the growth of streaming worldwide.
“It’s not unusual for certain albums to have specially designed release strategies that involve various digital services and retail partners,” he replied.
“Some of those are designed to raise awareness of the album that will lead to sales overtime. However, it wouldn’t be appropriate to discuss release strategy of any specific artist.”
“We don’t see [windowing] as being a threat in regard to the momentum of streaming.”
Arnaud de puyfontaine, Vivendi
You kind of have to wonder why not. Sometimes it seems like we’ve discussed little else this year. Maybe he just doesn’t want to receive an animated voicemail from Kanye West.
de Puyfontaine then said: “There have been some special initiatives. Those are part of the kind of a new blend of approach to the markets… No, we don’t see that as being a threat as regard to the momentum we see in the streaming trend.”
Not everyone agrees with him. Daniel Ek, for example.
Another analyst then asked de Puyfontaine what was going on with YouTube, with whom UMG is currently on a rolling licensing contract during fierce debates about royalty payments – but the exec remained tellingly tight-lipped.
“As you can imagine, it’s a quite sensitive issue,” he said. “I can’t be more precise as regard to what is going to be the approach as regard to the YouTube situation.
“We all are aware of the launch of YouTube Red. And as regard to asking more money, I guess that from the content on the site, there is an objective, which is to make money with YouTube.
“At the end of the day, I think that when you’re thinking about the supply chain, I guess that there are some thoughts in the different companies, and I don’t know what the state is as regard to some of our competitors and colleagues.
“But as a matter of fact… finding the right flying speed as regard to YouTube is something that is quite important in the strategic thinking process, as regard to how we interact with our distribution partner. I’m afraid I can’t dwell any more on that subject, but probably more things to come in the foreseeable future.”
UMG’s overall recorded music income was up 0.5% to €890m ($1.02bn) in Q1, while across all business divisions, UMG enjoyed a 0.6% rise in revenues to €1.12bn ($1.28bn).
Despite seeing revenues from downloads (iTunes, mainly) plummet 32% in the three months to end of March, the major’s digital income still increased by 8% overall – thanks to a 60% rise in streaming revenues.
A string of exec changes at the global company hurt its profitability in the quarter, though, with restructuring costs in excess of €20m bringing down its Q1 EBITA to just €79m.
