How Sony Music Group accelerated its standing because the world’s 2nd largest music rights firm in 2022

MBW’s Stat Of The Week is a collection through which we spotlight a single knowledge level that deserves the eye of the worldwide music business. Stat Of the Week is supported by Cinq Music Group, a technology-driven file label, distribution, and rights administration firm.

Sony Music loved a spectacular evening on the Grammys in Los Angeles earlier this month, as an array of its blockbuster recording artists, together with Beyoncé, Harry Types, and Adele claimed the evening’s most glittering prizes.

In the identical week, over in Tokyo, Sony Group Company – the mum or dad firm to Sony’s music operation – introduced its newest quarterly outcomes, in Yen, for the three months ending December 31, 2022 (Sony’s fiscal Q3, however calendar This fall).

By crunching the numbers on these quarterly outcomes, MBW has been capable of set up their worth in US {dollars}, in addition to figuring out how Sony’s music division carried out throughout the course of calendar 2022.

[Long story short on our methodology: We use a Yen-USD conversion rate for Sony’s global revenues in each calendar quarter at the prevailing rate for each period as provided by Sony Corp. It’s price noting that, throughout 2022, because of the energy of the greenback vs. many worldwide currencies, this system is definitely more likely to skew towards Sony, i.e. down-weighting its true international income efficiency – which is pretty outstanding when you think about the numbers under.]

[Last bit of arithmetical housekeeping before we get into the good stuff: Corporately speaking, Sony Group’s global music operation includes recorded music, plus music publishing, plus ‘Visual Media & Platform’ (VM&P). VM&P primarily covers mobile games and animation projects, and has been omitted from all revenue calculations in this analysis.]

So. In response to MBW’s calculations based mostly on Sony Corp’s bulletins, Sony’s mixed recorded music and music publishing operations generated USD $8.38 billion within the calendar yr of 2022.

That USD $8.38 billion determine was up by $889 million on calendar 2021, or +11.9% year-on-year.

Breaking down the numbers

Unsurprisingly, Sony’s international recorded music operation generated nearly all of its total music revenues in 2022.

These recorded music revenues on a USD-converted foundation stood at $6.37 billion within the calendar 2022 yr, up by $607 million – or +10.5% – year-on-year.

Inside that calendar-year recorded music determine, streaming contributed USD $4.33 billion, a determine which was up by $396 million – or +10.0% – year-on-year.

Recorded music bodily gross sales in calendar 2022 at Sony stood at $771.5 million, down on the $887.7 million Sony generated globally from CD and vinyl in 2021.

Maybe essentially the most historic income milestone breakthrough at Sony in calendar 2022 was its international publishing operation, which surpassed $2 billion in annual income (USD $2.008bn).

The place these figures grow to be additional attention-grabbing? After we use them to determine how Sony’s success in calendar 2022 prolonged the monetary hole between it and the third largest music firm on the earth, Warner Music Group.

Sony vs. Warner: How 2022 noticed the hole widen

Common Music Group (the world’s largest music rights firm) will announce its calendar This fall 2022 outcomes subsequent month, that means we don’t but have the numbers to make any comparability to Sony Music Group‘s annual efficiency within the 2022 calendar yr.

Warner Music Group, although – the world’s third largest music firm, behind Common and Sony Music Group – introduced its calendar This fall (fiscal Q1) outcomes earlier this month, on February 9.

This reality permits us to match Sony’s music leads to calendar yr 2022 (once more, together with recorded music and affiliated revenues, plus music publishing, however not together with ‘Visible Media & Platform’) with Warner Music Group’s equal outcomes.

(Handily, our international USD-aggregated outcomes from Sony type a like-for-like comparability with WMG’s reported quarterly figures, as New York-headquartered WMG reviews to its NASDAQ buyers within the ‘root’ forex of USD.)

The principle takeaway from this comparability? Sony Music Group – boosted by its acquisition of AWAL and its majority-acquisition of Alamo Data in 2021 – considerably stretched the hole between itself and Warner Music Group by way of annual income final yr.

MBW has beforehand identified that this hole could also be an enormous strategic pondering level for Robert Kyncl, the brand new CEO of WMG.

Warner is a number of instances bigger than the world’s fourth largest music rights firm, Korea-headquartered HYBE – which generated USD $1.37 billion in calendar 2022, vs. WMG’s $5.80 billion in total income in the identical interval.

But as we show under, Warner is itself, in flip, now materially smaller than Sony’s international music rights operation, to the tune of $2.5 billion per yr.

Sony vs. Warner: Recorded music

As you’ll be able to see within the chart above, in keeping with MBW’s calculations, Sony’s international recorded music operation (together with merch and affiliated revenues, however not ‘Visible Media & Platform’) generated USD $6.37 billion final yr.

That represented a gulf of $1.55 billion on Warner’s equal recorded music turnover in the identical calendar 12 months ($4.82 billion).

Within the prior calendar yr (2021) – as reported – Sony was roughly $997 million forward of WMG in annual recorded music turnover, suggesting this annual recorded music income hole grew by over $500 million within the 2022 calendar yr.

[Boring but important explainer: In each of its quarterly SEC filings, WMG provides an alternative figure for prior-year revenue that reflects what that prior-year quarter’s turnover would have been had reverse-constant currency been applied. This is irrelevant in the comparative calculations in this article, as Sony’s USD-aggregated revenues for 2021 have been converted from Yen to USD at the prevailing quarterly rates in that prior-year. However, for the sake of completeness, had Warner’s prior-year USD constant currency figures been applied to the figures for 2021 in the graphs in this article, that calendar year’s recorded music revenues at WMG would have been reduced by $231 million, its publishing revenues would have been reduced by $35 million, and its overall revenues would have been reduced by $266 million.]

Sony vs. Warner: Publishing

When it comes to music publishing, Sony’s worldwide operation (together with Sony’s separate Japanese publishing firm, plus its main international music publishing agency, Sony Music Publishing) generated USD $2.01 billion in calendar 2022.

That determine was $1.03 billion bigger than the equal music publishing turnover from Warner (Warner Chappell Music) in the identical calendar 12 months (see above).

Within the prior calendar yr (2021) Sony was roughly $915 million forward of WMG in annual music publishing turnover ($815m vs. $1.73bn).

In different phrases, the hole between these two corporations’ revenues didn’t develop too dramatically in calendar 2022, contemplating the ‘beginning scale’ of every enterprise on the high of the yr.

End result: Sony’s music publishing firm widened its annual income lead on Warner Chappell by round $120 million in 2022.

(Price saying: As a standalone entity, Sony’s international music publishing operation is the world’s No.1 by way of annual revenues, with Common Music Publishing Group at No.2, and Warner Chappell Music at No.3.)

Warner vs. Sony: Recorded music + Publishing = a $2.5 billion distinction

We will greatest sum up the income hole between music’s second and third largest music rights corporations in calendar 2022 once we mix their annual international recorded music revenues (together with merch and different affiliated revenues) plus their annual music publishing outcomes.

As you’ll be able to see within the two charts above, doing so informs us that Sony’s international music rights operation (not together with ‘Visible Media & Platform’) generated revenues in extra of $2.58 billion vs. Warner’s equal turnover (see: the bar in inexperienced above).

The general (recorded music + music publishing) turnover of every firm within the yr, for those who have been questioning? Warner with USD $5.80 billion, Sony with $8.38 billion.

That $2.5 billion hole between the 2 corporations’ annual recorded-music-plus-music-publishing income was up by round $600 million on the equal delta from 2021 ($1.91 billion).

Sony’s recorded music operation may have been boosted in 2022 by its first full yr with AWAL in its fold, in addition to some important success on the ‘chart’ finish of the worldwide market through acts like Dangerous Bunny, Harry Types, and Beyoncé.

Different extra frontline successes on the firm included Todd Moscowitz’s Alamo Data (through which Sony purchased a majority stake for round $200 million in 2021).

For Sony Music Group and its chief Rob Stringer, this all throws up an enormous query: Can Sony sustain this type of progress momentum in a world music panorama the place specialists predict subscription streaming progress will considerably plateau in main markets in 2023?

For Warner Music Group and its new chief, Robert Kyncl, it throws up an altogether completely different query: What can the corporate do to start out closing the income hole on Sony – and is doing so an excellent important a part of WMG’s technique going ahead?