Warner Music Group’s latest results show that digital revenue increased by 30.2% to $496 million (£380.7m) in the three months to June compared to the same period a year ago.
Digital now represents 54.1% of the company’s total revenue, compared to 47% a year earlier. It’s the second consecutive quarter in which WMG’s digital revenue amounted to more than 50% of its total revenue. Streaming was responsible for the digital revenue surge.
During its conference call, WMG did not comment directly on any long-term licensing deal with Spotify but confirmed "positive" discussions with streaming services are ongoing.
The major’s US fiscal third quarter results (which run to June 30) show total revenue was up 13.1% to $917m (£703.9m) over the same period. WMG turned a loss of $7m in Q3 2016 into a net income of $143m in the three-month period this year. Operating income increased 13% to $51m over the same period.
“Our momentum continues with our eighth consecutive quarter of revenue growth – the last seven of which were up double digits,” said Steve Cooper, Warner Music Group’s CEO. “Our artists and songwriters are creating great music and our team is outperforming in a growing industry.”
In the recorded music division, revenue increased 13.2% year-on-year to $770m (£591.1m), of which digital revenue was $448m (£343.9m), an increase of 29%. Streaming revenue over the three months totalled $360m (£276.4m), an increase of 58.6% on the previous year. Downloads and other digital revenue totalled $88m in the quarter, down 27.3% on a year earlier.
In its statement covering recorded music, WMG said growth in artist services and expanded-rights revenue (resulting from higher US ticketing and merchandising revenue) as well as in digital and licensing revenue was partially offset by decline in physical revenue as music consumers switched to streaming services. Operating income was $77m, up 20% from a year earlier.
Top-selling artists over the quarter included Ed Sheeran, Bruno Mars, Gorillaz and Clean Bandit.
Warner/Chappell Music Publishing revenue increased 11.9% year-on-year to $150m (£115.2m), of which digital was $50m (up 47% on 2016’s Q3). While revenue grew in performance and digital, mechanical revenue declined as a result of the shift to streaming and sync revenue was unchanged. Publishing operating income was also flat at $6m.
“I’m proud of our team for delivering such strong results, particularly against difficult comparisons in the prior-year quarter,” added Eric Levin, Warner Music Group’s Executive Vice President and CFO. “I’m confident that 2017 will be another strong year.”