UMG’s revenues down 6.7% in 2014, reason for management shake-up?

Universal Music Group has seen its revenues drop by 6.7% in 2014. Although when looking at the figures at constant currency the decline is reduced to 3.8%, this still represents a blow to the major and is reflective of a global slowdown in music revenues in 2014, after 2013 had offered the hope that the industry had finally turned a corner. 

Recorded music revenues took an even bigger hit by registering a decline of 7.6% (reduced to 4.4% at constant currency). 

The company stated that although digital downloads were stable and streaming revenues had been growing significantly these factors could not make up for the continued decline in physical sales. 

UMG recently announced the departure of its President of Global Digital Business Rob Wells and of David Ring, Executive Vice President of Global Digital Business. Although the exact reasons for their departure were not disclosed, the latest figures left some wondering whether they may have been linked to the company’s performance and lead to a new strategy that will see UMG focus its efforts on paid subscription services. 

Wells had been a strong proponent of freemium services whilst the company’s CEO Lucian Grainge recently made it clear that patience towards freemium services (including Spotify) is wearing thin. In particular, the company would like to see services like Spotify allow new releases to be 'gated' to paying subscribers, whilst the services themselves maintain that if free users are given a sub-par experience/catalogue they will not upgrade to the premium service. 

UMG’s publishing arm, Universal Music Publishing Group, fared better with a revenue growth of 2.8%, with the synch department posting a particularly strong 2014 since revenues grew by 6%. 

(Andrea Leonelli)