Sony Music Group chairman Rob Stringer has updated investors at the parent company’s 2024 business segment meeting.
For the eighth year in a row, Sony Music Group set a new revenue record with an increase of 12% to $8.5 billion in fiscal year 2023. Since 2019, annual revenue has increased by $3.6bn, with $3.1bn of that from streaming revenue, outpacing market growth.
Recorded music frontline successes in the past year include SZA, Bad Bunny, Harry Styles, Doja Cat, Tate McRae, Luke Combs and Miley Cyrus. During the presentation, UK chart success was highlighted with six of the Top 10 singles for 2023 (hits by Miley Cyrus, Raye, Calvin Harris & Ellie Goulding, SZA, Libianca and Harry Styles), alongside five of the US Hot 100.
Sony Music Entertainment had four of the Top 10 Spotify Global Albums for 2023 (Bad Bunny, SZA, Peso Pluma and Harry Styles). Meanwhile, Sony Music Publishing has been the market leader since 2012.
“In the US, our recorded music current market share was higher for the fifth consecutive year and exceeded a new peak of 27% frontline share of overall consumption,” said Stringer during the presentation. “Five years ago, this was one of our main strategies to improve, and now we have the advantage of delivering strong catalogue sales in the years to come as a result.”
The latest Goldman Sachs Music In The Air report has a strong outlook for continuing industry growth.
Speaking about the strategies for further growth, Stringer noted the success of the traditional labels alongside the growing artist & label services operations, including the acquisition of AWAL. That’s resulted in a 24% increase in new tracks released to DSPs since 2019.
Discussing global expansion via mergers & acquisitions, particularly in emerging markets, Stringer said: “We are undoubtedly the most aggressive major music group in M&A over the last three years.”
The company is a leader in Latin music and has invested heavily in Rimas (home to Bad Bunny), as well as continuing the integration of Brazilian label Som Livre.
“We have focused our attention on rapidly developing India where we are the No.1 major music company…” Stringer added. “Similarly, key artist signings and strategic label deals supplemented our footprint in China, and we are the only global company to have artists represented on leading Top 10 streaming charts in the region.”
The major is also expanding in Africa and represents huge stars from the continent including Davido, Wizkid, Tems and Tyla.
“New investment will be vital in future years to ensure our powerhouse status worldwide,” Stringer continued.
With Luminate reporting that catalogue’s share of streaming increased to 73% in the US last year, Stringer noted the major’s “huge depth of catalogue both in recordings and written songs, which provide long-term profit to us”.
“New technologies and consumption trends are undoubtedly elevating the role of all of our catalogues,” he added. “Through targeted investment, we believe catalogue is the basis of our strategy to navigate a successful path through all future tech trends in the music space.
“We bring together some of the most iconic and largest libraries from all eras of music, including the work of contemporary stars, whose hits today become enticing hits tomorrow. In the coming year, we will be smart in our purchases that are curated to this approach.”
While Stringer didn't respond to reports that Sony is in the market for the Queen catalogue (suggested to be valued at $1 billion) – "I can't comment on any of the speculation today" – he did discuss the changing market for catalogues amid interest rate increases.
Although Stringer asserted that "the top content will always be highly priced because its extremely valuable", he also noted that valuations have come down overall compared to three years ago.
"We didn't enter the rush for catalogue acquisition," he said. "We were very careful and strategic, and we will continue to be very careful and strategic, bearing in mind the interest rates and bearing in mind the return on capital. We will be very, very sensible, but we do have an inside track on how these catalogues work – better than outside investment funds."
In terms of streaming, Stringer said it has become a “consistent driver in the economics of our industry”.
In the Q&A session he was quizzed about the row over Spotify’s bundling of audiobooks with music, which has resulted in a lower publishing royalty in the US.
“We are looking to fix that amicably,” said Stringer, who described it as a “loophole”.
We hope that our partners close that gap by asking consumers using ad-supported services to additionally pay a modest fee
Rob Stringer
Paid streaming accounts increased by 15.3% on an annual basis over the past three years. They drive 73% of overall streaming revenue.
However, Stringer drew attention to the “poor contribution” of free ad-funded services adopted by around 2.5 billion users.
“The value of the paid music product remains incredible, and we appreciate that our partners recognised that with price increases over the past year. However, it also highlights that the price gap between free and paid has gotten wider.
“In mature markets, we hope that our partners close that gap by asking consumers using ad-supported services to additionally pay a modest fee. This would help develop this segment of the streaming business to be more than just a marketing funnel for paid subscription and still be a tremendous value for users.”
The freemium model, which is seen as a funnel for paid services, has never been very popular with the music industry. Sony Music UK's boss Jason Iley spoke out against it during the UK streaming inquiry.
Stringer added: “We have a shared interest in better monetisation of free tiers. At Sony Music, we think everyone is willing to pay something for access to virtually the entire universe of music.”
Stringer did not get drawn into the row between TikTok and Universal Music (now settled), but he did note that “some of the leading platforms must deliver greater value”.
“These companies play a larger and larger role in music discovery and engagement amongst young listeners,” Stringer said of the short-form video platforms. “More and more, these are primary consumption sources and they need to be valued accordingly.”
Stringer also addressed the ongoing issues around generative. Sony Music recently made a public stand on behalf of its artists and songwriters.
“A sustainable business rights model needs to be established and respected, and we will take an active role in bringing one about,” said Stringer. “Once it is in place, AI will be a multi-dimensional tool for creativity, scalability, and efficiency in our industry.”
The major is actively engaging with responsible partners to define additive business rights models.
“In the last year, we have convened with more than 350 organisations in the technology space across the globe to set up these initiatives for now and the future,” said Stringer. “We will go where our artists want to go creatively in the AI space whilst protecting their rights at every step. And we look to find common ground with our future partners in this era.”
He added: “Whilst we are optimistic about this direction, we are not naive about how complex protecting our art form will be. We won’t tolerate the illicit training of AI models via reckless and unlicensed misuse of this art.
“We believe strongly that permission is the only way AI models can be trained with our content, and we followed protocols of the EU AI Act by sending over 700 letters to AI developers to opt our copyrights out of training.”
Sony Music Group has issued more than 20,000 takedowns of AI-generated soundalikes of its artists.
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