Taylor Swift’s merchandise sales increase revenue.

Taylor Swift, the renowned singer-songwriter turned entrepreneur, has once again played a crucial role in Universal Music Group’s (UMG) soaring success in the second quarter of 2024. With her latest album, ‘The Tortured Poets Department,’ along with a surge in publishing revenue and merchandise sales, UMG witnessed substantial revenue growth during this period.

Despite facing a decline in ad-supported streaming that hindered growth in streaming revenue, UMG managed to achieve an 8.7% increase in overall revenue, reaching an impressive 2.93 billion euros ($3.16 billion). This noteworthy performance was announced by the company on Wednesday. The positive momentum extended to earnings before interest, taxes, depreciation, and amortization (EBITDA), which saw a significant rise of 17.4% to 580 million euros ($624 million). Additionally, the EBITDA margin showed improvement, increasing by 1.1 percentage points to 19.8%. Cost-effective measures, including layoffs earlier in the year, played a role in boosting EBITDA, although the impact of this was somewhat offset by lower-margin revenue from merchandise and physical sales.

In the recorded music segment, revenue witnessed a solid growth of 5.8%, reaching 2.2 billion euros ($2.37 billion). While subscription revenue showed improvement by 6.5% and amounted to 1.14 billion euros ($1.23 billion), other streaming revenue experienced a slight decline of 4.2%, totaling 343 million euros ($369 million). The overall dip in streaming revenue was attributed to slower growth in ad-supported platforms and the timing of deal renewals.

CFO Boyd Muir pointed out that subscription growth faced challenges due to two key factors. Firstly, price increases implemented in 2023 contributed to a boost in the previous year. Secondly, while platforms like Spotify, YouTube Music, and various regional services continued to show robust growth, some other subscription services struggled to drive global adoption effectively.

Physical revenue saw a notable increase of 9.5%, amounting to 357 million euros ($384 million). This growth can be attributed to successful releases by artists like Taylor Swift and Billie Eilish, which helped counterbalance a challenging comparison to a strong quarter in Japan for physical sales in the prior year. An upsurge of 18% in licensing and other revenue, reaching 315 million euros ($339 million), was also observed. On the other hand, download revenue witnessed a decline of 21.3%, totaling 48 million euros ($52 million).

Universal Music Publishing Group also experienced robust growth, with revenue increasing by 10.1% to 511 million euros ($550 million). The digital sector played a significant role in this growth, with digital revenue rising by 17.8% to 311 million euros ($335 million). Performance royalties were up by 3.1% to 100 million euros ($108 million), while synch royalties grew by 1.7% to 61 million euros ($66 million). However, mechanical royalties saw a slight decline of 10.3% to 26 million euros ($28 million).

The surge in merchandising revenue, jumping by a remarkable 44.6% to 227 million euros ($244 million), was a key highlight of UMG’s strong performance. This growth was primarily driven by increased direct-to-consumer sales and gains in touring merchandise sales, which were supported by tours from artists like Olivia Rodrigo, The Rolling Stones, Nicki Minaj, 21 Savage, and Morgan Wallen.

Here are the topline results for UMG in the second quarter:

• Total revenue of 2.93 billion euros ($3.16 billion), marking an increase of 8.7%.
• EBITDA of 580 million euros ($624 million), up by a substantial 14.9%.
• Recorded music revenue of 2.2 billion euros ($2.37 billion), showing a robust growth of 6.8%.
• Recorded music subscription revenue of 1.14 billion euros ($1.23 billion), up by 6.5%.
• Recorded music other streaming revenue of 343 million euros ($369 million), down by 4.2%.
• Publishing revenues of 511 million euros ($550 million), increasing by 10.1%.
• Merchandising revenue of 227 million euros ($244 million), soaring by an impressive 44.6%.