Warner Music Group reported some great news for digital growth in the company’s October-to-December third quarter. The giant music publishing company’s digital revenue grew 15 percent in recorded music and 36 percent in music publishing, as these numbers were helped by iTunes expansion along with consumer adoption of Spotify.
What’s even more impressive about WMG’s third quarter is the company hit a milestone, as U.S. digital music unit sales surpassed those from physical for the first time. Also, revenue from digital music is far and away ahead of music streaming, with $204 million compared to just $15 million.
Spotify has yet to make a huge impact, but this could be due to Warner Music coming on board late. The company did acknowledge that it envisions Spotify’s unlimited-subscription model to be its future, as it shows better growth with subscribers locked in to paying a $120 a year premium.
“That flow of dollars is substantially greater than the average annual purchases with respect to an iTunes user.” CEO Cooper told analysts, “Both downloads and streaming provide us with meaningful economics. I’m personally agnostic – although you can draw your own conclusions from the streaming payments versus average iTunes users’ (payments).”
This news proves that publishing companies were overly paranoid when it came to fully embracing the unlimited-subscription model that’s offered from the Spotify’s or Rdio’s of the world. Warner Music Group flat-out admitted it’s more profitable for music publishing companies in the long-term. It’s good to see these guys finally come around, but I guess profits will do that.