The Ledger: Three Vital Tendencies Revealed in Music Corporations’ Q1 2022 Earnings

Dave May 21, 2022

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The Ledger is a weekly newsletter in regards to the economics of the music enterprise despatched to Billboard Legitimate subscribers. An abbreviated version of the newsletter is published on-line.

From streaming companies and products to dwell performance promoters and worth sellers, music corporations hold reported encouraging first-quarter earnings results that explain patrons continue to adopt subscription companies and products and eagerly return to are living events after COVID restrictions hold been lifted in late 2021. The identical corporations’ inventory prices uncover one other story, alternatively. Whereas music corporations posted double-digit beneficial properties in subscription progress, revenue, worth gross sales and diverse other metrics, their part prices are down by double-digits in 2022. That’s now not a surprise given the declare of the financial system: Inflation is at a 40-year excessive ; rising pastime rates despatched investors taking a leer for build shares and security in bonds; and patrons are starting to head away out credit card and auto mortgage funds. Correct now, investors are taking a leer past mere progress to margins and profitability.

In the wake of these earnings stories, Billboard is highlighting three factors that are influencing the music enterprise in 2022. First, progress in subscription companies and products is reshaping labels and publishers’ revenues; progress might maybe well be slowing, and it will disappoint some investors, but it absolutely’s there. Second, publishing revenues saw especially gain progress in the first quarter and contributed extra to guardian corporations’ progress than file labels (given their barely smaller measurement). Third, are living music is going to hold a gain 2022, which is able to electrify now not simply touring artists but file labels that promote merchandise on the boulevard.

Subscription progress was gain (but it absolutely’s slowing).

Spotify’s subscriptions grew 15% to 182 million, an annual lengthen of 24 million and a pair of million extra than the fourth quarter of 2021. Whereas second-quarter progress was underneath Spotify’s guidance, the corporate talked about it was above expectations if “involuntary churn” of 1.5 million subscriptions from the corporate’s exit from Russia weren’t counted. (Spotify expects one other 600,000 lost subscribers in Russia in the second quarter.)

The second-quarter guidance is 6 million win unique subscribers, which would secure Spotify to roughly 188 million, up 14% from the second quarter of 2021. That might maybe well signify a smaller annual originate in subscribers (23 million versus 27 million in the second quarter of 2021) and a lower annual progress rate (14% versus 20%).

Smaller streaming companies and products posted increased progress rates in the first quarter. Despite the reality that Tencent Music Leisure revenue fell 15% due to losses in social leisure, its music subscriptions grew 31.7% to 80.2 million, an annual lengthen of 19.3 million and up 4 million from the fourth quarter of 2021. Anghami’s subscription revenue grew 26% year over year. Chinese language music streaming service Cloud Village stories first-quarter earnings on Would possibly maybe maybe 24.

Publishing and merchandising hold been increased in the revenue mix.

At Universal Music Neighborhood, recorded music accounted for 78.3% of revenue but delivered top 61% of first-quarter revenue progress despite gain beneficial properties in subscription royalties. UMG’s publishing division accounted for 17.1% of total revenue but 26.7% of total revenue progress. Merchandising was 4.9% of UMG’s total revenue and 12.3% of its revenue progress. At Warner Music Neighborhood, publishing’s part of revenue grew to 16.7%, up from 15.4% a year earlier, and accounted for 30.2% of the revenue progress. At Sony Music, publishing increased its part of quarterly revenue from 16.4% to 18.3%. Recorded music grew from 58% to 60% as the “visible media and platform” division fell from 25.6% to 19.2%.

Dwell events corporations are seeing double-digit progress.

At Dwell Nation, which claimed to hold its top first quarter ever, revenue jumped extra than six-fold in the first quarter after the lifting of COVID-19 restrictions. More importantly, the corporate expects double-digit progress this year when in contrast to 2019, the precise year for comparison on story of COVID affected every quarter in 2020. Dwell Nation has bought 70 million tickets for reveals in 2022, a 36% lengthen from the identical level in 2019, and dedicated explain rely is up 44% thru late April. On the identical time, no-explain rates seem like a non-declare, falling “as soon as quickly in the mid-single digits,” the corporate talked about in its earnings commence.

MSG Leisure’s leisure (are living match) revenue grew extra than six-fold to $194.6 million thanks to the lifting of COVID restrictions. Minus MSG Networks, which merged with MSG Leisure in July 2021, the corporate had $292.5 million in revenue, up 17% from the identical period in 2019.

Gleaming Seats’ first-quarter revenue was up 442% from the prior-year period. The company increased second-quarter guidance for every revenue (its lower of total revenue) and corrupt announce build (total worth gross sales build). Music accounted for 53.1% of revenue, up from 31.9% in the prior-year period. Market announce volume increased 589%. At Eventbrite, first-quarter paid tickets rose 78% year over year, and win revenue per worth increased 13.6%.

STOCKS

Via Would possibly maybe maybe 20, the % substitute over the remaining week, and the year-to-date substitute.

Spotify (NYSE: SPOT): $107.19, +1.0%, -54.2% YTD

Universal Music Neighborhood (AS: UMG): 20.41 euros, 0%, -17.6% YTD

Warner Music Neighborhood (Nasdaq: WMG): $29.76, +2.3%, -31.1% YTD

HYBE (KS 352820): 221,000 KRW, +2.8%, -36.7% YTD

Dwell Nation (NYSE: LYV): $89.16, -2.3%, -25.5% YTD

iHeartMedia (Nasdaq: IHRT): $12.13, -5.2%, -42.3% YTD

Cumulus Media (Nasdaq: CMLS): $12.50, -2.5%, +11.1% YTD

Tencent Music Leisure (NYSE: TME): $4.07, -0.7%, -40.6% YTD