Major record companies are losing market share on Spotify. But Spotify is gaining market share in Warner’s own revenues.


MBW’s Stat Of The Week is a series in which we highlight a single data point that deserves the attention of the global music industry. Stat Of the Week is supported by Cinq Music Group, a technology-driven record label, distribution, and rights management company.

One of MBW’s most talked-about articles this year was published back in March, with the headline: ‘Slowly but surely, the major labels’ dominance of Spotify is declining.’

It explained that – according to Spotify’s own data – some 78% of music-related streams on the platform in 2020 were of tracks distributed by one of the three major record companies, or affiliated with Merlin.

That number was down significantly on the equivalent figures from 2017 (87%), 2018 (85%), and 2019 (82%).

In short, then: The major record companies still dominate Spotify, but that dominance is lessening as the market share of DIY artists and (non-Merlin) indies grows.

But what about the other way around?

What about Spotify’s own ‘market share’ as a percentage of the revenues generated by the major music companies? Do the majors rely more or less on Spotify’s payouts than they used to?

This is an especially relevant question when we consider the rapidly-growing income those same majors are seeing from ‘alternative platforms’ like Roblox, Peloton, and Facebook in 2021.

According to revelatory new stats discovered in a Warner Music Group annual SEC filing, Spotify is actually becoming more important, not less, as a singular contributor to WMG’s business.

Warner’s stats relate to its fiscal year, which covers the 12 months ending September 30 in each relevant period.

In FY2021, according to Warner’s filing, payments from Spotify accounted for 18% of WMG’s total annual revenues ($5.301bn).

That’s perhaps a lesser proportion than many might expect, but it’s worth remembering that, because this relates to WMG’s total revenues, it covers recorded music and music publishing revenues, but also ‘ancillary’ revenues like merch, ticketing, e-commerce etc.

The relevant section from Warner’s FY2021 SEC filing

What’s particularly interesting about the 18% stat is that it represents an increase on the share of WMG’s revenues that Spotify contributed in FY2020 (17%), as well as FY2019 (14%), and FY2018 (14%).

Ergo: Warner is relying (slightly) more on Spotify’s business as the years tick on, not less.

The company that claimed the second biggest share of WMG’s revenues in FY2021 was Apple, with 13% – though this was down on the 14% that Apple contributed in FY2020.

YouTube was the third biggest partner of Warner in FY2021, with 11%. (Warner only declares data for partners who contribute more than 10% of their revenues each year.)

Combined, Spotify, Apple, and YouTube contributed 42% of Warner Music Group’s revenues in FY2021.

Here’s what happens when we convert these stats into an approximate calculation of actual annual revenue at WMG, using the firm’s published total revenue figures for each FY:

  • Spotify paid around $954 million to Warner in FY2021 (remember, across music publishing and recorded music), which was up by approx. $195 million versus FY2020;
  • Apple paid Warner approx. $689 million in FY2021, up by around $65 million year-on-year vs. FY2020.

This means that Warner’s annual revenue from Spotify, in monetary terms, grew YoY by around three times the equivalent figure from Apple in FY2021.

STAT OF THE WEEK: According to MBW’s calculations, Spotify paid Warner Music Group approximately $954 million in the 12 months to end of September 2021. Combined, Spotify, Apple, and YouTube contributed 42% of all of WMG’s revenues in the year.

Warner didn’t declare a percentage-of-revenue figure for YouTube in FY2020 (i.e. last year), but we know it had to be 9% or lower (as if it was 10% or higher, WMG would have been duty bound to publish it in a SEC filing).

On this basis, we can confidently estimate that the $583 million paid to Warner by YouTube in FY2021 must have been up by at least $181 million on the prior year. (At 9% of revenues in FY2020, YouTube would have paid Warner approximately $402 million.)

That estimated $181 million jump for YouTube suggests that, in the 12 months to end of September 2021, it grew its music streaming revenue (and therefore its related music biz rightsholder payouts) significantly faster than Apple YoY.

What to make of all of these statistics?

It’s true to say that the major music companies keep a very close watchful eye on the individual power of each streaming platform – particularly Spotify, which remains the world’s market leader.

Indeed, both Universal Music Group and Warner Music Group admit to their investors in their financial filings that seeing any one streaming platform contribute too high a percentage of revenues to their companies could become a cause for concern. (If a major becomes too over-reliant on any one platform, that platform could consequently use its leverage to, for example, lower royalty rate payouts in negotiations.)

Then again, Spotify is still only contributing 18% of Warner’s total revenues.

In FY2021, those total revenues weighed in at $5.301 billion – meaning that, while Spotify paid Warner approximately $954 million in the period, various other sources of income paid WMG around $4.35 billion.

That all being true, there appears to be little doubt that Spotify will become a billion-dollar-plus annual revenue partner of WMG’s in the music company’s fiscal 2022.

Warner’s FY total revenue figures for reference: FY2021: $5.301bn; FY2020: $4.463bn; FY2019: $4.475bn; FY2018: $4.005bn.

Cinq Music Group’s repertoire has won Grammy awards, dozens of Gold and Platinum RIAA certifications, and numerous No.1 chart positions on a variety of Billboard charts. Its repertoire includes heavyweights such as Bad Bunny, Janet Jackson, Daddy Yankee, T.I., Sean Kingston, Anuel, and hundreds more.Music Business Worldwide

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