May 6, 2016 Last Updated 10:44 am

Warner Music streaming revenue now surpasses physical media

Total revenue also grew, though sales of physical media such as CDs continues to fall, margins also remain tight for the world’s third largest music company

The music company Warner Music Group  today reported its earnings from its second quarter of its fiscal year. The first thing that stands out is that business is good, revenue climbing 10 percent in the quarter. The second thing, and maybe the most important, is that the company reports that the revenue it gets from streaming now exceeds that it gets from physical media such as CDs.
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Warner Music is one of the industry’s big three, behind both Universal Music Group and Sony Music Entertainment in size.

“We are now the first major music company to report that streaming is the largest source of revenue in our recorded music business, surpassing our revenue from physical formats,” said Stephen Cooper, Warner Music Group’s CEO. “And this new milestone comes only four quarters after our streaming revenue first topped our download revenue.”

Like most trends in a market, the rise in streaming revenue is coming at the same time CD sales are declining, so at Warner Music what they are saying is that the two line items have now crossed, with streaming sales now higher than physical media. A bit of a good news-bad news situation.

But total revenue did climb, which would probably surprise a few people.

As for the bottom line, operating income rose to $52 million, compared to $44 million in the prior-year quarter. But net income fell due to debt and currency issues.


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