It marks the major label's biggest year for revenue... Ever.
Warner Music Group hit a record US $6 billion (AU $9.27 billion) in the 2023 financial year – its highest revenue in its history.
Making the announcement last week about the fortunes of the 12 months to September 30, the company singled out Dua Lipa, Ed Sheeran and the Barbie soundtrack as its biggest sellers. Linkin Park, country singer-songwriter Zach Bryan, and South Korean girl groups FIFTY FIFTY and MiSaMo were also on the list.
Robert Kyncl, who joined as CEO of Warner Music Group at the start of the year from YouTube, attributed some of the revenue rise to streaming services like Apple Music, Spotify and Amazon increasing their subscription fees, and the continued emergence of new markets.
“Our work is already beginning to bear fruit and I assure you that there is much more excitement to come,” he told analysts and media in a call after the figures were released. “Looking forward to a new fiscal year, I’m even more optimistic than I was when I started. We’re excited about the trends we’re seeing in the industry and energised by our plans to capitalise on them.”
Total revenue increased 3.9 percent to $6.037 billion. Streaming revenue was up by 6.7 percent in recorded music and music publishing. Recorded music reached $4.95 billion, relatively flat due to a light release schedule in the first half of 2023. It made up 81.1 percent of the company’s overall revenue.
Breaking it down, streaming (which comprised 67 percent of recording business) only grew by 3.9 percent because of that light schedule, downloads fell by 32.2 percent to $99 million (two percent of revenue), physical fell by 10.2 percent bringing in $507 million, and artist services and expanded rights dropped by 3 percent to $744 million and 15 percent of the revenue pie.
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Publishing generated just over $1 billion (18.1 percent) of company revenue, with a 22 percent growth to $656 million and rises in performance ($174 million), synchronisation ($167 million) and mechanical ($63 million).
Speaking at an analysts call after the figures were released, Kyncl unveiled priorities for the third largest major label. These included a drive for a greater royalty cut for its artists from streaming services because they drew the biggest audiences to them. Warner has also signed to Deezer’s artist-centric streaming model in France. It means artists are paid a share of total streams on a platform, not royalties put in a pool and sharing it equally.
The major also has climbed abroad YouTube’s AI experiments. The first was released on beta last week. Called Dream Track it allows users to auto-generate short 30-second music tracks in the style of famous artists with their permission. It is testing it with nine acts: Charlie Puth, Charli XCX, Sia, T-Pain, Troye Sivan, Demi Lovato, John Legend, Alec Benjamin and Papoose.
Of Warner’s involvement in AI experiments, Kyncl told analysts that it was important that the music industry not be left behind by technology. “Imagine in the early 2000s if the file sharing companies came to the music industry, and said, ‘Would you like to experiment with this new tool that we built and see how it impacts the industry and how we can work together?’ It would have been incredible. Obviously, that didn’t happen.
"This is the first time that a large platform with massive scale and new tools at its disposal is reaching out to its partners to test and learn… This is the right way to engage whenever I say responsible engagement with our partners.”
Warner worked the singles Dance The Night – from the Barbie soundtrack (she also made her acting debut in the movie) – and Houdini, while setting up for her third album due out in 2024. The campaign for Houdini tapped into her huge global following (the track, on which Tame Impala’s Kevin Parker was a collaborator, reached #7 in Australia), teasing its release.
The track, with disco and psychedelia elements, was both radio-friendly and challenging. It had 25 million video views in three days and 17 million streams where on Spotify it was the cover of New Music Friday in 44 countries on day one. Warner started a new website where she spoke to fans. On the first week, 100,000 signed up.
“I think she manages to bridge the idea of a modern pop star and an old-school pop star. There’s glamour, theatre, excitement, it’s epic,” said Alex Burford of her UK record company. The campaign for the third album will last over a number of years during which they hope to have more #1 singles and two billion streams.
Barbie was one of two global movie phenomena of the year. In Australia, it scored the largest second week ever, for a running total of $30.6 million after two weekends. By November 2023, it has grossed $1.442 billion around the world.
Warner Bros. Studios spent $150 million on its marketing – more than the $145 million it cost to make. There were tie-ups with major brands for Barbie-themed Xboxes, Burger King burgers, Airbnb rentals, Gap clothes, Krispy Kreme doughnuts, Crocs, ice cream sundaes, roller skates and candles. A renovation TV reality competition series titled Barbie Dreamhouse Challenge was so popular that it caused a shortage of pink paint.
The Barbie soundtrack, produced by Mark Ronson, went to #1 in seven countries in Australia, It also become the first soundtrack album in the UK to have three songs on the Top Five of the Singles Charts simultaneously.
The soundtrack yielded five hit singles all of which streamed over a million each. Warner pulled off a masterstroke with a strong push on vinyl, with vinyl records with extra tracks and selected retailers getting their own exclusive album designs and colours. This ensured that fans would include every format of the album to their Barbie memorabilia.
It is considered one of the best uses of a soundtrack to consolidate the message and image of the movie. It had a star-topped list of Gen Z-friendly names as Dua Lipa, Billie Eilish, Charli XCX, The Kid LAROI, HAIM, Tame Impala, Lizzo, Sam Smith and PinkPantheress.
There were acts with older female demographics like Cyndi Lauper, Indigo Girls and Olivia Newton-John, and underlined its global appeal by including Colombia’s KAROL G and South Korea’s FIFTY FIFTY.
Actress Margot Robbie had begged for Danish-Norwegian band Aqua’s Barbie Girl song from the late ‘90s be used. This was a problem as Barbie toy maker Mattel unsuccessfully sued Aqua’s label, MCA Records, in 1997 – alleging trademark infringement. The soundtrack got over this bad blood by getting Nicki Minaj and Ice Spice’s Barbie World to sample the original.
According to Chart Metric, “Barbie World” was used in over 105,000 videos on TikTok, while the official video has 33 million views on YouTube. The Aqua song got 382 million Spotify streams, used in over 867,000 videos on TikTok and now has 1.2 billion views on YouTube.
With a strong background of chart toppers, it was no surprise that Ed Sheeran’s sixth album – (Subtract) debuted at #1 in 12 countries including Australia and his native UK, where it was the fastest selling album of the year. 71 percent of initial sales were from physical formats.
Warner emphasised the deeply personal nature of the record with initiatives for his core fans, the Sheerios. One was a limited edition zine featuring 20 pages of never-before-seen photos and included a CD of Subtract with 14 tracks.
In America, before his stadium tour, American Express hosted a five-city tour with pop ups which drew 9,000 fans. Interactive installations referenced the album along with photos of him writing and recording. Each had journals for fans to express their thoughts, which were sent back to the star. Sheeran made surprise appearances in some cities to play.
In India, his second largest market, there were exclusive listening parties for 300 in Mumbai, Banglore and Delhi where in between quizzes and tales of why they were fans, there was a lengthy video message from Ed.
To gain new fans, there was a campaign through Swiggy, a popular food delivery app in India with a database of 20 million, with song titles on its interface. It proved such a strong interaction with 39 million impressions that it exploded on Twitter/X, gained mainstream media attention and tweets from the singer.
A version of the yellow diary in which Sheeran penned the lyrics to Subtract was offered to fans through a ‘Who’s Your Yellow’ contest on social media.