In another sign of the growing importance of online streaming to the music business, the Universal Music Group had increased revenue and earnings for the first half of 2015, largely because of the popularity of streaming and subscription outlets like Spotify and Deezer.
Universal, whose financial results were reported on Wednesday as part of its parent company, the French conglomerate Vivendi, had $2.6 billion in revenue for the first half of the year, up 15.4 percent from the same period in 2014. Discounting the effects of fluctuating exchange rates, the growth was 3.1 percent.
For the first half of the year, Universal, the largest music company in the world, had $255 million in earnings before interest, taxes, depreciation and amortization, up 11.5 percent from the same period last year, or 5 percent on a “constant currency” basis. For its second quarter alone, Universal had $1.4 billion in revenue and $139 million in earnings.
The results, Vivendi said, were helped by a 34 percent jump in subscription and streaming services during the first half of the year, which “more than offset the decline in both digital download and physical sales.” For the first half of 2015, Vivendi said, download sales were down 5 percent.
That was a shift from Universal’s results in 2014, when the company said that streaming had experienced “significant growth” but did not contribute enough revenue to make up for a drop in download sales. As Vivendi executives noted in a conference call with investors, the second-quarter results did not reflect the arrival of Apple Music, which started on June 30 and is available free for 90 days.
While the recording industry’s revenues have remained relatively flat in recent years, analysts have begun to warm to the idea that streaming may lead the way to growth. Marcus Diebel, an analyst at JPMorgan, recently upgraded Vivendi’s stock, saying that the growth of streaming had led the music business to “an inflection point” and predicting growing revenues for the next three years.
Vivendi, which also owns the Canal Plus television and film group, among other media and technology assets, reported $2.9 billion in revenue for the second quarter, up 9 percent from last year. For the first half of 2015, it had $5.7 billion in revenue, up 8.3 percent.
Copyright © 2015 China Music Business News