It’s not exactly hot news that the CEO of Warner Music Group, Steve Cooper, has cautioned the industry against tactics used by streaming services to push cut-rate subscriptions to their platforms.
Back in December, Cooper sounded the alarm about the “trend of falling ARPU” at platforms like Spotify, pointing the finger at “family plans and meaningfully lower price points in emerging markets”, while adding that Warner would be “working with our subscription partners to address this concerning trend”.
The rhetoric from Warner, though – currently embroiled in a legal battle with Spotify in India over publishing rights, remember – is definitely getting harsher.
Speaking to analysts on the earnings call for WMG’s latest financial quarter (calendar Q1, fiscal Q2), Cooper noted: “With a lot of growth coming from emerging markets, we acknowledge that increases in revenue will not always keep pace with rising subscribers and free user numbers.
“That being said, we’re going to continue to push back against the devaluation of our artists’ and songwriters’ music from freemium models, mismanaged family plans and other customer acquisition strategies employed by streaming platforms at the expense of creators and content producers.”
“we’re going to continue to push back against the devaluation of our artists’ and songwriters’ music from freemium models, mismanaged family plans and other customer acquisition strategies employed by streaming platforms at the expense of creators and content producers.”
Steve Cooper, WMG (pictured)
He added: “To unlock the full potential of the global music business, we need to work closely with our distributors to achieve the right balance in meeting consumer demand, and appropriately compensating the creative community.”
Spotify’s Premium ARPU (Average Revenue Per User) stood at €4.71 a month in Q1 2019, which was roughly flat year-on-year (down 2% excluding the impact from foreign exchange rates).
Spotify told investors last month: “Downward pressure on ARPU has moderated, and we expect that ARPU declines through the remainder of the year will be in the low single digits.”
However, the company’s monthly ARPU has consistently fallen in recent years. At the end of 2015, it stood at €6.84, which dropped to €6.20 at the end of 2016.
By the close of 2017, it had fallen to €5.32, while in Q4 last year it declined again to €4.89.
Warner Music Group’s quarterly recorded music revenues in the three months to end of March this year grew 22.4% YoY at constant currency, hitting $933m.
Streaming revenues ($537m) made up 57.6% of Warner’s overall quarterly recorded music sales in the period.Music Business Worldwide