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Warner Music makes most of its money from streaming

Engadget Engadget 6/05/2016 Billy Steele
© Provided by Engadget

The rise of streaming services has definitely changed how we consume music. It's also changing how record labels make money. In its earnings report for Q1 2016, Warner Music Group, one of three major labels alongside Sony and Universal, revealed that streaming is now its biggest source of revenue in terms of recorded music. It also says it's the first "major music company" to report this transition. More specifically, Warner's revenue from streaming rose $72 million during the quarter, putting it ahead of physical sales and digital downloads for the label. Of course, the decline of physical sales has been well-documented both globally and the US.

Warner Music Group, like other labels, aren't settling for rising streaming revenue. If it's going to take over records sales, companies want to be adequately compensated for all music that's being streamed. That includes from so-called "safe harbors" that allow users to upload songs, like YouTube.

During Warner's earnings call, CEO Stephen Cooper said it's crucial to "ensure a fairer correlation" between royalties from paid subscriptions and those places where people can listen for free. He went on to say that Warner had made its position known to both the European Commission and the US Copyright Office. As streaming continues to grow and physical sales likely continue to decline, this battle over the "value gap" will certainly heat up.

Warner Music Group

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