Nigerian Artists Confront Uncertainty Amid Slower Streaming Growth at Universal Music

Universal Music Group (UMG) is a big company that works with famous singers like Taylor Swift and Justin Bieber. They also support Don Jazzy’s Mavin Records. Recently, UMG’s shares dropped by more than 20% because there’s a lot of competition in music streaming. 

UMG is based in the Netherlands and had a big drop in its stock price right after the market opened on Thursday. One reason for this drop is that UMG didn’t make as much money from streaming and subscriptions as people expected.

On a call about the company’s earnings, UMG’s Vice President and CFO, Boyd Muir, said the slow growth in subscribers was due to “the timing of price increases” from its partners. Apps like Spotify, Amazon Music, and Apple Music have raised their prices, which helped UMG earn more money.

What They Said

Muir added, “The other factor affecting our subscription revenue growth this quarter is the slowdown in subscriber growth at certain platforms, even though there is still significant growth in subscribers globally.”

He said that while platforms like Spotify and YouTube are growing well, some other big partners are not adding new subscribers as fast. However, Muir did not say exactly which platforms are struggling. He mentioned that the company is “engaged with all of our key partners” to talk about new ideas and products. 

Earlier this year, UMG started a plan to save €250 million every year by 2026, which included cutting some jobs. 

Some Context

In recent months, deals with social media platforms have been tough for UMG. In May, UMG ended its partnership with Meta Platforms (META), which was licensing music videos for Facebook. UMG said these videos were not as popular as other music products on Facebook.

UMG recently bought most of Mavin Global Limited (Holdco), which was started by Don Jazzy, to strengthen its services in Nigeria through UMG’s global reach. Mavin’s music is sold internationally through Virgin Music Group. 

Artists like Rema and Ayra Starr are already well connected within UMG’s networks, with deals with U.S. labels such as Republic and Interscope. 

Mavin has many popular artists like Ayra Starr, Ladipoe, Johnny Drille, Crayon, Magixx, Bayanni, Boy Spyce, DJ Big N, Lifesize Teddy, and Rema. 

Rema’s song “Calm Down” [featuring Selena Gomez] reached No. 3 on the U.S. Billboard Hot 100. It’s the biggest Afrobeats song ever and the most watched video by an African artist on YouTube. It’s also the first track by an African artist to hit 1 billion streams on Spotify. 

What to Know

UMG’s streaming revenue fell by 3.9% in the second quarter, a big change from the 10.3% growth from the first quarter. They said this was because of slow growth on key advertising platforms and delays in renewing some deals. 

Despite these problems, UMG saw strong growth in other areas. For example, revenue from selling merchandise went up by 44% in the second quarter, helped by artists like Taylor Swift.

Top sellers in the first half of 2024 included Morgan Wallen, Noah Kahan, Billie Eilish, and Ariana Grande. 

UMG’s total revenue increased for the 12th quarter in a row to €2.93 billion ($3.18 billion), about 9% more than last year, beating expectations. 

Adjusted EBITDA (a measure of profit) went up by more than 11% from the previous year to €649 million ($705 million).