In a remarkable year for the music industry, Universal Music Group (UMG) has achieved significant financial milestones. The company reported robust revenue growth in both recorded music, publishing, and merchandise sectors. A notable 8.2% increase in subscription revenue propelled overall annual revenue to €11.83 billion ($12.8 billion), marking a 6.5% rise compared to the previous year. Cost-saving measures, including layoffs, contributed to an impressive 13.8% improvement in adjusted EBITDA, reaching €2.66 billion ($2.88 billion). CEO Lucian Grainge highlighted UMG's consistent performance since becoming a standalone public company in 2021, with double-digit EBITDA growth each year. The company also celebrated several artist achievements, including Grammy wins and top positions on global charts.
Details of UMG's Financial Success and Strategic Moves
In the vibrant and dynamic year of 2024, Universal Music Group (UMG) demonstrated its prowess in multiple facets of the music business. Recorded music revenue surged by 5.2% to €8.9 billion ($9.63 billion), driven primarily by streaming services. Subscription-based streaming saw an 8.2% boost, while ad-supported streaming slightly declined by 0.8%. Physical sales experienced a modest drop of 1.6%, but licensing and other revenues soared by 12.9%, indicating a diverse revenue stream.
The music publishing division also flourished, with full-year revenue climbing 8.4% to €2.12 billion ($2.29 billion). Digital revenue, accounting for 60% of total publishing income, grew by 12.4%, reflecting the increasing importance of online platforms. Performance revenue increased by 6.3%, although synch revenue dipped slightly. Merchandise revenue expanded by 19.3% to €842 million ($911 million), fueled by strong fan demand for direct-to-consumer products and touring merchandise. Despite lower EBITDA margins in this sector, UMG remains optimistic about future improvements.
Cost-saving initiatives played a crucial role in UMG's success, yielding €75 million ($81 million) in savings during the first phase of a €250 million ($270 million) program. Additionally, UMG invested heavily in catalog acquisitions and strategic mergers, including the purchase of remaining shares in [PIAS] and investments in Chord Music Partners, NTWRK, and Mavin Global. These activities, however, impacted free cash flow, which fell to €523 million ($566 million).
The fourth quarter was particularly strong, with comprehensive revenue growing by 7.2% to €3.44 billion ($3.67 billion) and adjusted EBITDA jumping 19.1% to €799 million ($852 million). Subscription revenue continued its upward trajectory, rising 7.9%, while ad-supported streaming faced a slight decline. Overall, UMG's performance underscores its resilience and adaptability in a rapidly evolving industry.
From a journalist's perspective, UMG's achievements in 2024 offer valuable insights into the future of the music industry. The company's ability to navigate challenges such as cost management and digital transformation sets a benchmark for others. Moreover, UMG's emphasis on nurturing new talent and expanding its direct-to-consumer offerings signals a promising shift towards more personalized and sustainable business models. This success story serves as a testament to the power of innovation and strategic planning in today's competitive landscape.