Universal Music Group reported a 9% increase in revenue for its fourth quarter of 2023, totaling $3.5 billion (3.2 billion euros). The company highlighted top-selling acts like Taylor Swift, the Rolling Stones, Drake, Jung Kook, and Stray Kids contributing to this growth.
In addition to its financial performance, UMG addressed plans for a strategic organizational redesign aimed at achieving over $270 million in annual run-rate savings by 2026. This initiative involves a combination of headcount reduction and operational efficiencies, with the first phase targeting $134 million in annual run-rate savings by 2025, including $81 million in 2024. The goal is to enhance efficiencies in specific cost areas while strengthening the labels’ capabilities to deepen connections with artists and fans.
The company also announced a revamped operating model, appointing John Janick of Interscope Geffen A&M and Monte Lipman of Republic to lead U.S. label operations for UMG. This move aims to consolidate leadership and accelerate business strategies to maximize their impact.
Additionally, UMG discussed its implementation of artist-centric royalty models with streaming platforms like Deezer and Spotify. While streaming revenue experienced a slight decline of 1.3% year-over-year in the fourth quarter, it grew by 5.6% in constant currency. For the full year, streaming revenue increased by 0.4% year-over-year, or 3.6% in constant currency. These results reflect UMG’s ongoing efforts to adapt to changes in the music industry and strengthen its position in the market.
In the fourth quarter of 2023, Universal Music Group experienced a significant increase in physical revenue, expanding by 10.6% year-over-year or 17.0% in constant currency, driven by a surge in vinyl sales across the U.S. and Europe. However, digital revenue from downloads and other sources decreased by 49.2% year-over-year or 45.8% in constant currency, similar to the trend observed in the previous year.
UMG also reported promising growth in revenue from neighboring rights, synchronization, touring, and sponsorship deals, with a remarkable improvement of 26.5% year-over-year or 34.0% in constant currency.
The quarter saw strong performances from top-selling artists like Taylor Swift, the Rolling Stones, Drake, Jung Kook, and Stray Kids, with Swift leading the pack for the year alongside Morgan Wallen, King & Prince, Karol G, and The Weeknd. Notably, UMG’s strategic initiatives and innovative business models have contributed to its overall success.
Lucian Grainge, UMG’s chairman and CEO, expressed satisfaction with the company’s performance in 2023, highlighting record-breaking achievements by artists and songwriters, advancements in industry innovation, and responsible AI leadership. He emphasized UMG’s readiness to capitalize on future growth opportunities for the benefit of artists, employees, and shareholders.
Boyd Muir, UMG’s executive VP and CFO/president of operations, echoed Grainge’s sentiments, citing robust top- and bottom-line growth driven by exceptional artist and songwriter performances. Muir emphasized UMG’s commitment to strategic investments, maintaining a healthy balance sheet, and returning significant cash to shareholders through its dividend program.