Sony Music Entertainment’s global priorities were outlined in a strategy document published last week.
Now Sony Music Group chairman Rob Stringer has provided the detail behind the major’s plans to build on its global successes, across both recordings and music publishing, including strength in terms of streaming market share and metaverse initiatives.
Stringer spoke at Sony Group’s 2023 Business Segment Briefing, an annual presentation for investors in the parent company that featured other leaders of Sony companies.
The famously artist-friendly exec used this moment to speak out on the impact of AI. While noting the possibilities that the technology brings, Stringer said that industry-wide protections will be needed for artists and songwriters. So far, rights-holders and streaming services appear to be working in tandem to neutralise the threat from ‘fake’ tracks modelled on superstar acts.
“We are at the gateway of a new technological era with AI,” he said. “And unsurprisingly, music will be a core component of this process. AI promises to provide us tools so that our artists and writers can create and innovate. It also heralds greater levels of insight through machine learning, as well as potential new licensing channels and avenues for commercial exploitation.
“There is a lot of opportunity in this area to be excited about throughout our company. We are greatly aware of the challenges ahead too.
“We will protect our creators on every level possible whether it be creative, financial or legal in basis. Infringement and unauthorised usage of their rights should be the basis for a unique new set of artist and songwriter protections industry-wide. Tech does not simply overrule art.”
Outlining the major’s performance, Rob Stringer said: “We are achieving great success through our strong creative vision and laser focus on our business, having delivered record financial results on our key metrics for a sixth consecutive year.
“We outpace the industry in many of these benchmarks and this has led to us increasing our revenue from $4.1 billion in fiscal year 2018 to $7.6 billion in fiscal year 2022.”
He added: “These gains reflect more than an uplift in streaming. We are investing in creative talent, managing costs efficiently and, of course, delivering more hits.”
Sony’s Music Segment was the number one profit contributor in Sony’s financial results for the fiscal year.
We will protect our creators on every level possible whether it be creative, financial or legal in basis
The major averaged over 43% of the tracks in Spotify’s weekly global top 100, up from 36% a year ago. In the US, its market share has risen from 21% to 27% in the last four years.
“Similar performance was achieved all over the world,” added Stringer. “These results have relevance beyond our current success. They also provide future strength to our catalogue.”
In music publishing, Sony Music Publishing has retained its No.1 position last year. Sync licensing success included Kate Bush’s Running Up That Hill.
Global artist successes in 2022 and 2023 include Columbia-signed Harry Styles (As It Was was the most streamed song globally last year); Bad Bunny (The Orchard), who was once again Spotify’s No.1 streaming artist; and Beyonce, whose Renaissance helped her break the Grammys record for most wins.
SZA has one of the biggest albums of 2023 with SOS, while Miley Cyrus has the biggest global song of the year so far.
“We continue our aggressive investment in creators and our people to support them,” said Stringer. “In the last five years, our global roster and catalogue has grown by over 34% and we have doubled our creative teams to service this scale.
“Through full integration of recent transactions including Alamo, Som Livre and AWAL, we are enhancing this process and now have greater emerging talent than ever before. We aim to carry on expertly investing to build these assets.”
“At Sony Music our attention is on identifying quality, and not purely quantity, as we face competition from many investors and new companies wishing to capitalise on this sheer volume,” he added. “We are convinced that consumers want the same quality and remain concerned that DSPs are watered down by low quality and meaningless volume which negatively impacts music fans and real artists.”
As identified in Sony’s recent strategy document, the major aims to enhance its position through the integration of the AWAL acquisition alongside The Orchard artist/label services operation.
“We are carefully building our ecosystem to increase quality and scale at the same time,” said Stringer. “Our independent distribution network, The Orchard, continues to be at the heart of our wide-ranging system to which we recently added the artist services of AWAL.”
‘DSP fraud must be eliminated’
Stringer also spoke out on a key issue for the industry where technology has created opportunities for fraud. Streaming fraud includes operations such as streaming farms – the “bad actors” recently identified by UMG CEO/chairman Sir Lucian Grainge.
“As publicly reported, fraud on key DSPs is a problem that must be eliminated through aggressive enforcement by these DSPs and distributors or by changing payment methods to better reduce the incentive for fraud,” said Stringer.
Sony Music Group’s chairman welcomed the “long overdue” price increases from some streaming platforms.
“We look forward to more DSPs recognising that the value of music continues to rise,” he said.
Revenue from ad-supported audio and video services grew 14.7% at the beginning of the year, according to the major.
“While short-term softening in this segment is expected in line with the economy, we anticipate that advertising-backed music will grow over the next few years,” said Stringer. “This indicates a robust demand throughout the world for music-based content as total streaming is predicted to keep climbing.”
While welcoming the shift to new models for music based on social media, video games and short-form video platforms (presumably including TikTok, though none were named), Stringer stressed that it must come with proper licensing arrangements.
“With this transformation, proper compensation of artists and songwriters is required,” he said.
Of course, there are synergies within the Sony companies for music and gaming, particularly PlayStation, and Stringer promised new offerings in this space.
"Additionally, we’re supporting growth in promising areas like direct-to-fan solutions, creator-friendly licensing, and over the longer-term, Web3 and the metaverse," he added. "Across all of these next-generation platforms and experiences, we are diligently building revenue and ensuring our creators are properly compensated for the massive engagement, and tremendous value their work provides to these categories."
Stringer also noted the impact of key initiatives Artists and Songwriter Forward programmes, including a Legacy Unrecouped programme to enable legacy acts to earn from streaming.
“Whilst building these offerings, we firmly believe in being the most creator-friendly company in the industry,” said Stringer.